MP SMEs find it difficult to compete with high labour rates

Unavailability of cheaper labourers and increased mandatory minimum wage rates, coupled with devaluation of rupee have hindered growth of small scale and medium enterprise (SMEs) in Bhopal, Govindpura and Mandideep industrial areas. SMEs in Bhopal primarily manufacture engineering goods, power equipment or medicines.

The local industries are mainly dependent upon Indian Railways, Bharat Heavy Electricals and state-owned power utilities.

"In 2005 there were sign of revival in Govindpura industrial area, now the situations have changed. SMEs are again finding it difficult to compete since Madhya Pradesh is no more a cost effective labour state. Also organisations like BHEL now adopts 'reverse auction process' for any job. This triggers a cut-throat completion among participants in any tender," Yogesh Goel, secretary Govindpura Industries Association said.

According to the association as many as 750 industries were sick before 2004, now all 1100 are running and doing good business but on-going economic slow-down and gloomy scenario in power sector has marred the growth of the SMEs.

"State government has fixed minimum wages to Rs 242 per day for skilled labour while BHEL offers hardly Rs 35 per hour for any job, how can an industry survive at this competition?" asks Vipin Jain, secretary general Madhya Pradesh Laghu Udyog Sangh.

A cross section of members of various associations from Mandideep, Govindpura and Bhopal said that negotiations on job-work from any industry is prevalent not on BHEL but in other sectors like Railways.

"It is a tough time due to political intervention at policy level. In the next five year plan, China has been given 42000 Mw of equipment manufacturing orders of the total 88000 Mw orders in India. Also 15000 Mw orders will go to private companies. Now what is left for BHEL, even if we have 100,000 Mw capacity? If SMEs have to survive they will have to adopt modern technology reduce expenses and ensure timely delivery," advises a senior official in BHEL Bhopal unit.