According to GCCI, “industrial sickness” is a major issue facing Gujarat and the situation has become much more severe in the current scenario.
Claiming that attacks on migrant labourers, ban on plastics and hurdles posed by implementation of GST in Gujarat are having a crippling effect on the MSME sector, the Gujarat Chamber of Commerce and Industry (GCCI) on Friday said that industrial production in the state was down by 40 per cent and there was at least a 25 per cent rise in the number of sick units among MSMEs. According to the industry body, the plastic sector alone is expected to see 50,000 lay-offs in the coming days.
“Many of the major sectors of Gujarat are showing declining growth trends and this is a major concern for sustaining the industrial and economic growth of Gujarat. In fact, 80 per cent of the sectors in Gujarat are seeing a de-growth. The industrial production has dropped by 40 per cent to what existed about two years ago and there is a 25 per cent growth in the number of sick MSME units in Gujarat,” said Jaimin Vasa, president of GCCI, while addressing mediapersons.
“The plastic industry in Gujarat is facing a crisis after the plastic ban. Over 2,000 SMEs are on the verge of closure due to the ban in cities like Vadodara, Ahmedabad, Rajkot and around 50,000 people may lose employment due to this ban,” said Vasa while listing out the sectors that were being adversely affected.
He pointed out that the issue of attacks on migrant labourers as well as the impact of GST has impacted the sector badly and it is set to reduce production by at least 20-25 per cent. “Due to this, India’s overall textile output is expected to reduce by 10-15 per cent this year. This is a serious situation,” he said, adding that Surat’s synthetic cloth production had come down to 2.5 crore meters from the earlier four crore meters.
About hurdles faced due to GST implementation, Vasa said the prescribed format for GSTR-9 annual return mentions a lot of details such as HSN codes of all inputs used in production, which needs to be provided. “It will be very difficult especially for MSMEs to provide such details. The issue of getting timely refunds in case of minor mismatch is another issue that needs immediate resolution. Further, the input tax has to be paid and then exporters have to wait to get it back in the form of refund, which takes time and this is blocking their working capital. This is causing negative impact on textile as well as other similar export-oriented industries,” he said.
GCCI members like Nayan Seth also pointed out that “red tapism” and “rampant corruption” were prevalent in the GST offices in Gujarat where dealers still have to make physical visits to claim refunds.
Talking about other adversely impacted sectors in Gujarat, Vasa said, “In gem and jewellery sector, the exports in 2017-18 have declined by 4.3 per cent. There are nearly 50,000 MSME units in Surat and Saurashtra that employ close to two lakh workers. Some of these units may have to down shutters in the coming months as the delay of input credit refund is putting pressure on capital for day-to-day operations.”
According to GCCI, “industrial sickness” is a major issue facing Gujarat and the situation has become much more severe in the current scenario. “The situation is worse for the MSMEs as they do not get any finance or support once they are classified as sick. Lack of orders, extended credit cycles, delayed payment of buyers, rising prices of raw materials are some of the reasons beyond the control of the units due to which they turn sick,” he said, adding that the number of sick units in Gujarat is expected to increase by 25 per cent compared to the 42,000 sick units that existed at the end of March, 2016.
GCCI which has already apprised the state government of the existing poor sentiments in the MSME sector also pointed out that the industries department of the Gujarat government did not have adequate funding to provide benefits to the MSME units under various incentive schemes as a result of which the disbursement of funds is pending since April, 2017. “The industries are being severely affected due to this issue as they are in dire need of such funds in the current scenario,” Vasa added.
GCCI has also demanded that keeping in view the “overall adverse scenario of industries in Gujarat”, state run-GIDC should temporarily suspend levy of “non-usage penalty” for non-usage of factory premises located within the GIDC. Such charges are negatively impacting those industrial units who had to temporarily stop production due to the present downtrend in the domestic market. Vasa said it was critical for the state government to resolve these key issues on the domestic front before it goes ahead and host the Vibrant Gujarat summit in January next year.
Source- Indian Express.