Talking about the Chennai industry, the hub of automobile and engineering manufacturing in India, P.S. Ramesh, President of Ambattur Industrial Estate Manufacturers' Association (AIEMA) said there is a clear absence of the feel-good factor among the small and medium scale industries and they do not see a possible return of the lost glory anytime in the near future. During an exclusive interaction with SupportBiz, Ramesh has been very vocal about the government apathy towards the dismal state of small scale industries and his views were clearly echoed in the observations by V. Parthasarathy , Vice President and T. Nalangilli, Secretary, AIEMA.
“The government is only interested in its day to day business and it runs with no vision for the future of the centre of our economy. When we met the Minister of Commerce, he bluntly said the ministry is only interested in exports because it has to meet the target of about Rs. 1.7 lakhs crores by March next year. Most of the government policies are framed just to siphon off the funds. The skill development program for MSME is a clear example. They are only bothered about the foreign exchange and refuse to heed any attention to the domestic market,” all three were univocal in this opinion.
Nearly 15-20 per cent of the Ambattur Industrial Estate’s revenue comes from exports and which is currently doing well, thanks to the rupee depreciation. However, that’s pretty temporary and does not paint a rosy picture of the industry at all. The stark reality is that nearly 10 per cent of industries in the estate have closed down their operations. “The industry is going through a very tough phase now because of the general recession. So many industries are closing down, relocating or renting out their places for various reasons. We have removed 110 members from the association recently because they have closed their units here,” Ramesh said.
Adding to his point, Nalangilli opined the problem lies in the domestic market. He said the entrepreneurs are tired of the vague policies and delays by various government agencies. Infrastructure has taken a terrible hit due to the lack of proper policies. Quoting sources, Ramesh said about 1 lakh core rupees have not been paid to contractors because of non-completion of projects. The political uncertainties over various scams and the upcoming general elections have stalled the commencement of many projects. “BHEL has halted nearly 8-9 projects because of the coal scam resulting a severe negative impact on the supply chain because the payments are stopped at some point in the process. This has severely affected many small players, of which a few are our members,” Ramesh said.
The automobile industry is also taken a huge hit which directly affects the small scale industries providing components to them, Parthasarathy noted. “We have become economic slaves. If you really look at the automobile sector, it’s largely controlled by the giants like Maruti, Hyundai, Nissan and the likes and the industry revolves around their requirements and demands,” he said.
The issues are innumerable ranging from faulty initial planning to lack of proper information, government apathy, insufficient/diversion of funds, delay in sanctions and approvals, ever-changing market conditions, labour issues, increasing raw material/labour costs, various levels and types of taxes and more. What the association demand is a strong political and administrative will to bring an effective change.
So what are your suggestions? AIMEA shoots a long list of recommendations, some of which are:
- Introduce additional industry (product) specific programs.
- Frame relevant training programs and make them mandatory for entrepreneurs.
- Interest free / low interest loans, grants for deserving ventures should be considered.
- Take over/closure of the unit may be considered.
- Effective single window system should be introduced.
- Industry associations, especially product based associations should be consulted to have specific understanding on the industry.
- One audited statement in specific format with all details should be sufficient to all department concerned.
- MSME act should be effectively implemented.
- Innumerable returns to different departments should be eliminated.
- A decent exit policy should be in place.
Although the total revival of the industry seems an unlikely scenario in the near future, AIEMA is hopeful that right policies at the right time with a strong and persistent will to implement can take the industry back to its days of glory. However, the apathy to initiate industry friendly policies can have a cascading effect on the small scale industry of the country and the automobile industry in the state will become history, just like what happened in Detroit.