Published
Mar 30, 2020
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Extended lockdown could sink a quarter of MSMEs

Published
Mar 30, 2020

Over a quarter of India’s micro, small, and medium enterprises could be forced to shut down operations indefinitely if the government extends India’s lockdown beyond two months.

MSMEs could suffer under an extended lockdown - Freepik

 
MSMEs, which are the main employer in India, are bearing the brunt of India’s lockdown. With business suspended and no cash flow, many have little funds to keep them going. The longer the lockdown and the fight against Covid-19 persist, the more MSMEs may fold, the Global Alliance for Mass Entrepreneurship (GAME) chairman, Ravi Venkatesan told ET Bureau.
 
Venkatesan highlighted the precarious position MSMEs now find themselves in and told ET Bureau that “19% to 43% of the MSMEs may disappear if the crisis persists four or eight weeks,” citing data available with All Indian Manufacturers' Association.

In a bid to help MSMEs stay afloat, GAME is creating a $100 million (Rs 738.7 crore) Small Business Stabilisation Fund, said Venkatesan. The fund would be used to offer low interest loans to MSMEs. These loans would be designed to keep the businesses going and prevent them from needing to lay off too many employees.
 
Before the pandemic, the Union Government had been highly vocal of its support for MSMEs, heralding them as the sector that will drive the next wave of economic growth in India. MSMEs, a large number of which are fashion, accessories, and jewellery businesses, are not only facing the current lockdown, but the reduction in consumer spending, which is expected to follow. 

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