Small and medium-scale industries face big problems

Peenya Industrial Area comprises thousands of small and micro enterprises that employ lakhs of workers. It is a critical infrastructure as it manufactures almost 50% of machine tools produced in the entire country and accounts for over 60% of Karnataka’s total production of machine tools

Rajesh Kumar, a 55-year-old entrepreneur, who had set up an auto component manufacturing unit in Peenya Industrial Area (PIA) in North Bengaluru, had to shut it down in August 2022 following severe loss in business, especially after COVID-19 pandemic.

Mr. Kumar, who had set up his company a decade ago, was successful in running the business until issues pertaining to the rising costs of raw materials during the pandemic forced him to shut down the unit, which led to loss of jobs to 85 employees.

“Steep rise in prices of raw materials over the past two years has severely affected us as well as many other Micro, Small, and Medium Enterprises (MSME) in the PIA. My company had long-term contracts with big companies without a price hike clause. The price rise affected my manufacturing unit, and it became difficult to sustain, especially after the pandemic. I had no option but to close down the business,” Mr. Kumar said.

PIA comprises thousands of small and micro enterprises that employ lakhs of workers. Manjunath. H., President of PIA, said around 20% of companies based in the industrial area have shut down after the pandemic.

“According to our internal report, we have seen that 20% of MSMEs in our industrial area have shut down. The main reasons MSMEs are shutting down are increased raw material rates and industries not being able to repay bank loans. During the pandemic, most industries didn’t run due to the lockdowns. After the industries shut down, thousands of employees have lost their jobs and gone back to their hometowns,” Mr. Manjunath added.

The Peenya Industrial Area is a critical infrastructure as it manufactures almost 50% of machine tools produced in the entire country and accounts for over 60% of Karnataka’s total production of machine tools.

“The COVID-19 pandemic further exposed the vulnerability of the MSME sector in Peenya. During the pandemic, our industrial area was the worst hit on account of the demand and supply shocks caused and the measures taken later to curb the spread of infection. The sector is still struggling to survive and recover from the pandemic-induced issues, while the post-pandemic issues also led many MSMEs to shut down,” Mr. Manjunath pointed out.