In May 2020, finance minister Nirmala Sitharman raised the thresholds for the tags of micro, small and medium enterprises (MSMEs), acknowledging that the sooner definitions have been creating an unintended incentive for models to stay ‘small’. She cited pan-India information of MSMEs scaling up, however for tons of of models in South Delhi’s Okhla Industrial Area (OIA), the journey since then has been decidedly downhill. The pandemic and a relentless rise in labour and enter prices have crippled most models right here.
So, one might discover a number of models on this chaotic industrial city within the nationwide capital, which in 2020 match the standards for a ‘medium’ enterprise introduced by the minister, however have since been relegated to the ‘small firm’ class, as their turnovers slid steeply from over Rs 100 crore then to Rs 40-50 crore or much less now. And many ‘micro’ models have since shut operations or come to have solely a minimal, sombre existence. Large sections of the factories right here – principally producers of clothes, leather-based, prescribed drugs and packaging supplies – are additionally dealing with an acute labour scarcity as not all the migrant labourers who left town in the course of the pandemic have returned.
While MSMEs in different components of the nation can also be dealing with related issues, Okhla models even have the extra constraints of being housed within the nationwide capital, the place environmental norms at the moment are being diligently enforced. Also, implementation of minimal wage norms have inflated labour prices.
In his early 40s, Mahipal makes ready-made clothes for youths in a small manufacturing unit at Sanjay Colony in phase-II of OIA. From 10 folks within the pre-pandemic days, his worker power has now come down to simply three and even they don’t seem to be getting enough work on account of lack of demand from wholesalers. As a outcome, his month-to-month gross sales are down 70% now from the pre-pandemic ranges. “If things go on like this, we will have to bring down the shutters in a not-so-distant future,” he says in exasperation.
Operating from the identical space amongst 250-odd different wholesale merchants is Vishal Chowdhury, who offers in dupattas. His gross sales have greater than halved in contrast with the pre-pandemic days. “The cost of the raw materials has gone up by around 50%. Only a portion of the extra cost can be passed on to the retailers,” Chowdhury says. The latest cotton scarcity additionally hit his enterprise, as his common suppliers have minimize operations.
Not surprisingly, on the the garment hub in OIA, solely a few vans have been ready for importing items on Friday. Since the lockdown, solely 3-4 vans function within the industrial space in contrast with 12-13 earlier, a labourer says. A ‘green tax’ – Rs 1,700-1,800 for a 14 ft diesel truck – has dented the margins of truckers.
A few kilometres away, Deepak Gupta is discovering it tough to run his printing unit at full capability. Gupta doesn’t face any demand scarcity, however the price of his key uncooked materials – artwork paper – has risen from Rs 60/kg a yr in the past to Rs 115/ kg now. Labour prices have gone up too. “Stringent pollution checks are making the business all the more difficult to run,” he says. Not surprisingly, many printing models are leaving Okhla to settle in close by Noida, Gurgaon and Faridabad.
OIA features a cluster of 600 printing models with annual turnovers between Rs 5 crore to Rs 50 crore. More than 20 have closed down and round 40 models have shifted to Noida and Faridabad. Even among the many working models, most are utilizing barely 50% of the capability. Just per week in the past, one agency offered a pricey imported machine and it’s now left with just one, Gupta informs. “The buyer of the machine will soon start operating from outside Delhi,” he says.
“Labour is a big problem. While we pay a worker the minimum wage of around Rs 16,500 a month, he will work for just Rs 9,000-9,500 in Noida or Faridabad. Our margins are getting squeezed. Printing press business in Okhla will survive for a maximum of five more years,” Gupta predicts.
Garment exporters from OIA had been doing comparatively effectively until the pandemic hit in 2020 due to common patrons in Europe. They at the moment are busy discovering new patrons in different shipments to Europe have develop into erratic after the pandemic. “In the absence of the Europe market, we are targeting the US market. Apart from leather garments that we used to deal with earlier, we have now added cotton garments to our basket,” says Lallan Kumar, who works as a supervisor in one of many many export corporations within the space.
Okhla Chamber of Industries president Arun Popli says OIA has now became a hub of micro enterprises. Higher electrical energy prices, costlier labour and exorbitant parking charges have led many manufacturing unit homeowners to vacate their locations and hire them out to new tenants who’re turning them into workplaces, he provides.
“All the big units of Okhla have fled to various parts of NCR primarily because of higher labour costs. Okhla started losing its charm from 2016-17 when the Delhi government increased minimum wages. The wages here are now double the level in neghouring areas,” Popli says.
Not many Okhla models have benefitted from the federal government’s flagship assured mortgage scheme, the protection of which was widened by Rs 50,000 crore to Rs 5 trillion within the newest Budget, or the Credit Guarantee Trust for Micro and Small Enterprises. These schemes have been prolonged by the Narendra Modi authorities, ackowledging the necessity for a protracted interval of succour to start-ups and small companies as they grappled with fallout of Covid-19.
Source: www.financialexpress.com”