SME Forum seeks govt support as fuel costs hit MSME clusters hard

Industry body flags rising fuel costs, shipping disruptions and labour stress in key clusters; proposes relief measures including subsidies, liquidity support and worker welfare schemes

The India SME Forum has submitted a policy proposal to the government, seeking emergency support for energy-intensive Micro, Small and Medium Enterprise (MSME) clusters, such as Morbi’s ceramics hub and Firozabad’s glass industry. Rising fuel costs and shipping disruptions linked to the West Asia crisis are beginning to trigger production cuts, higher operating costs and labour instability, it said.

 

In the proposal submitted to the Ministry of Micro, Small & Medium Enterprises and the Department for Promotion of Industry and Internal Trade (DPIIT) last week, the industry body said volatility in global fuel prices and shipping routes is raising input and freight costs for MSMEs, while delayed payments and weaker export demand are tightening working capital cycles. 

   

The forum noted that India’s MSME sector comprises about 7.89 crore enterprises employing nearly 34 crore people, making cluster-level disruptions a significant economic risk.

 

Emails sent to both the MSME ministry and DPIIT did not elicit a response until press time.

 

The proposal flagged several energy-intensive manufacturing clusters for immediate policy attention, including Morbi’s ceramics industry, Firozabad’s glass sector, Ludhiana’s forging and textile units, Tiruppur’s knitwear exporters and Surat’s textile processing units, noting that their heavy reliance on fuel-intensive production and export markets makes them particularly vulnerable to rising energy costs and trade disruptions.

 

According to the note, rising fuel costs and supply disruptions are triggering production cuts and labour instability, with worker attendance in some clusters down 5-15 per cent and 3.5 lakh to 8 lakh workers potentially vulnerable if pressures persist.

 

As an emergency measure, the note proposed a National MSME Worker Support and Common Kitchen Programme, under which cluster-level kitchens would provide subsidised meals of ₹20-₹40 through public-private partnerships to help stabilise migrant labour in industrial hubs.

 

The forum also recommended temporary relief on electricity and gas tariffs for energy-intensive clusters, along with pooled fuel procurement to reduce costs, and longer-term support for energy efficiency and renewable adoption.

 

The stress on MSME clusters comes as the West Asia crisis has disrupted energy supply chains, pushing up global gas prices and tightening availability. This has translated into higher fuel costs, hitting energy-intensive MSME units that have limited ability to absorb price volatility.

 

To ease liquidity stress, the proposal called for faster Goods and Services Tax (GST) refunds, stricter payment enforcement, wider use of Trade Receivables Discounting System (TReDS), expanded credit access through Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) and bank-led emergency support.

 

Other measures included shared LPG facilities, portability of welfare benefits under One Nation One Ration Card, and affordable worker housing near clusters.

 

The proposal also suggested a National MSME Cluster Resilience Framework, supported by cluster-level special purpose vehicles to develop shared infrastructure.

 

For exporters, it recommended temporary freight support and measures to help MSMEs diversify markets and meet certification requirements amid global disruptions.

 

The proposal also called for a digital MSME cluster resilience dashboard to track indicators such as energy prices, production, export orders, freight costs and labour availability, enabling policymakers to identify stress early and intervene before disruptions escalate.