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Over 10,000 MSMEs shut during 2016-2022 period; 96% in past 3 years, shows govt data

Ease of Doing Business for MSMEs: “Closure of MSMEs is certainly a concern for the government for which necessary steps and studies have been undertaken,” Ishita Ganguli Tripathy, Additional Development Commissioner, Ministry of MSME told Financial Express Online.

Over 10,000 MSMEs shut during 2016-2022 period; 96% in past 3 years, shows govt data
2,870 MSMEs registered on the Udyam portal were shut between April 1, 2022, and July 20, 2022, along with employment loss for 19,862 people. (Image: pixabay)

Ease of Doing Business for MSMEs: The government has come out with consolidated data on the number of MSMEs closed over the past six years including the Covid period in the country. According to the combined data from the Udyam registration portal and the erstwhile Udyog Aadhaar Memorandum (UAM), 10,067 MSMEs were shut from 2016 to 2022.

Sharing data in the Rajya Sabha on Monday in a written reply to a question on the closure of units, Minister of State for MSMEs Bhanu Pratap Singh Verma noted that 400 MSMEs (4 per cent of total closures) were shut during the 2016-2019 period as per the UAM data. On the other hand, the majority 96 per cent units — 9,667 were shut between 2019 and 2022, according to the UAM and Udyam portal data.

In reply to a separate question on the Covid impact on MSMEs, Verma shared that 2,870 MSMEs registered on the Udyam portal were shut between April 1, 2022, and July 20, 2022, along with employment loss for 19,862 people. Likewise, 6,222 Udyam-registered MSMEs were shut in FY22 with 42,662 people losing jobs. Between July 1, 2020, and March 31, 2021, 175 Udyam units were closed and 724 jobs were lost.

“Closure of MSMEs is certainly a concern for the government for which necessary steps and studies have been undertaken. The closure is one of the reasons cited by units for cancelling their MSME registrations, but the reason for closure is not always mentioned by them. Other reasons for cancelling registrations include stopping the manufacturing of goods or moving to other businesses or they just don’t need the registration anymore,” Ishita Ganguli Tripathy, Additional Development Commissioner, Ministry of MSME told Financial Express Online.

Citing studies by SIDBI, SBI, and others, Tripathy noted that while there have been closures, some of them have been temporary and due to schemes such as Emergency Credit Line Guarantee Scheme (ECLGS), many MSMEs have been able to save employment as well.

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According to a SIDBI survey of a random sample pool of 1,029 MSMEs undertaken late last year across 20 States and two union territories and submitted on January 27, 2022, 67 per cent MSMEs reported temporary closure for up to a three-month period during Covid in the financial year 2020-21. The survey results were shared by MSME Minister Narayan Rane in Parliament during the Budget session. On the other hand, as per an SBI report in January this year, ECLGS had saved the livelihood of 6 crore families of workers employed in MSMEs as nearly 13.5 lakh MSME loan accounts were saved with credit support.

Among the measures announced by the government post pandemic under the Aatmanirbhar Bharat package for the MSME sector apart from ECLGS and Udyam portal were Subordinate Debt for stressed MSMEs, Rs 50,000 crore equity infusion through Self-Reliant India Fund, revised definition of MSMEs, and no global tenders for procurement up to Rs 200 crore.

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