Over a third of MSMEs may end up shutting down operations, says AIMO survey

Around 35 per cent of the country's Micro, Small and Medium Enterprises (MSMEs) and about 37 per cent of self-employed persons are starting the process of shutting down operations despite the financial packages announced by the Government of India, according to a survey conducted by the All India Manufacturers' Organisation (AIMO). The study said the financial stimulus provided by the government is not applicable to start-ups, which account for over 11 per cent of the MSMEs in the country.

The results are based on 46,525 responses AIMO received from across industry segments including self-employed, MSME owners, corporate CEOs, employees and experts. The Survey was conducted in collaboration with social technology enterprise Digitally 4 Empowerment (D4E) and other trade bodies like Federation of India Industry (FII), Association of Indian Industry (AII), Cement Manufacturers Welfare Association (CMWA), Consortium of Women Entrepreneurs of India (CWEI), Federation of Indian Women Entrepreneurs (FIWE), First World Community (FWC), Chamber of Small Industry Asso (COSIA), Federation of Small and medium Industries (FOSMI) and Amausi Industries Association, Lucknow (AIA). 

This is the first of the three parts of the survey results that will be released by AIMO.

"The most striking aspect was that 35 per cent of MSMEs and 37 per cent of self-employed respondents said that they see no chance of recovery in their businesses and have begun shutting down operations. To put this in perspective, India has over 130 million self employed and about 65 million MSMEs employing over 150 million people. This kind of mass destruction of business has not been witnessed since our Independence," said  K E Raghunathan, Immediate Past President, AIMO.
 

 

As per the survey report , uncertainty of continuing business, rather undecided category of respondents , is about 11 per cent in MSME category and about 17 per cent in Self Employment category. They still have scope to recover, it said.

“The Corporate respondents indicated that while business was affected it, 46 per cent felt may take 3 months to recover while 26 per cent felt they will bounce back by the end of the year , a 6 months period. This sector will not see many closures but will see many people losing jobs, scale down of operation’s, focus on core business and a fine financial balancing act.” added Kenny Ramanand, general secretary of AIMO.

Raghunathan said that the benefits of financial packages announced by the Finance Minister has still not reached the doorsteps of the MSME’s and also inadequate to meet the impact of Covid over business in the last 3 months of non operation.

Around six per cent of the Corporate and 11 per cent of the self employed respondents were buoyant and were unaffected by the Covid-19 situation as well. These respondents were primarily employed or involved in the essential sector.