Low demand, rise in raw material prices key problems of MSMEs: Survey

The decline in demand and rise in raw material prices due to high transportation costs are the major problems faced by micro, small and medium enterprises in the last 27 months, according to a survey.

The report by Bhartiya Yuva Shakti Trust (BYST) also said that though markets have stabilised, about 57 per cent of the units that participated in the survey are struggling to get new orders for their merchandise.

"Lesser purchasing power of consumers lead to reduced demand and increased raw material cost due to higher transportation cost with increase in fuel prices have been cited among key problems faced by entrepreneurs during the last 27 months," Lakshmi Venkataraman Venkatesan, Founding and Managing Trustee, BYST, said.

Over 5,600 Micro, small and medium enterprises (MSMEs) participated in the survey.

While the impact of COVID-19 has been slowly receding, the economic situation is yet to completely stabilise due to multiple factors, according to the report.

About 27 per cent of the entrepreneurs have said that they are finding it difficult to repay their loan instalments on time, it added.

As per the report, 53 per cent of MSMEs stated that they are doing better in some aspects in comparison to the pre-pandemic phase.