Coronavirus impact: 60% firms run at less than 25% capacity, says CII

The movement of workers and raw materials remain key hurdles to resuming businesses despite the government allowing major chunks of the industry to operate.

Crippled by lack of inputs, funds and key information, 60% of firms are operating at less than a quarter of their full capacity, with just 10 per cent managing plant utilisation at over 50 per cent, a survey by the Confederation of Indian Industry (CII) shows.

The movement of workers and raw materials remain key hurdles to resuming businesses despite the government allowing major chunks of the industry to operate, the survey has pointed out.

Conducted on April 24, the survey shows that businesses consider getting permits for enterprises to restart, passes for daily travel of workers and establishing earlier supply chains, as their biggest headaches. For sectors allowed to function, 46 per cent of surveyed enterprises say permits are either not

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provided or are delayed. The CII has recommended that approvals of applications must have clear deadlines with a provision for automatic permits after the specified time.

“For facilitating restart of economic activities, the CII has suggested that in non-containment zones, businesses should be allowed to function without requirement of permits and only through intimation to local authorities. Workers can be permitted to commute on the basis of a letter issued by the employer organisation, with the facility to travel on own vehicles,” said Chandrajit Banerjee, director general of CII.

Covid-19 lockdown 2.0: Need govt support to keep units open, say MSMEs

On Tuesday, MSME Minister Nitin Gadkari had stated during a meeting that unpaid dues of MSMEs at the central and the state levels will be released at the earliest.

Micro, small and medium enterprises (MSMEs) across the country are keeping a wary eye on the government's decision to allow select manufacturing units to reopen on April 20. While MSMEs in most sectors have welcomed the latest move, they argue that lack of financial support from the government might result in these firms not running even if they manage to reopen.

The Confederation of Indian Industry (CII) has recommended focus primarily on increasing the financing available to MSMEs with relaxed collateral norms, an extension of the RBI moratorium and wage support. It also suggested expediting fund of funds for MSMEs which has been under the government's consideration and augmenting the assets of MUDRA Bank.

“Many MSMEs are an important part of larger supply chains and their health has a bearing on the supply chain, including large firms. Therefore, special, immediate, and substantive support measures are required to see MSMEs through this crisis," said CII Director General Chandrajit Banerjee.

To ease the liquidity crisis that most MSMEs had been facing for the last couple of months, Assocham has suggested a 40 per cent government or Reserve Bank of India guarantee on fresh loans, while the balance risk premium can be made up by a huge spread available to banks between their cost of funds and the yields.

On Tuesday, MSME Minister Nitin Gadkari had stated during a meeting that unpaid dues of MSMEs at the central and the state levels will be released at the earliest. He estimates Rs 40,000-50,000 crore could be injected into the market by releasing the due payments.