While most of the medium and large companies have survived the brunt of demonetisation, micro and small industries are yet to recover from the losses they incurred.
“Micro and small industries had a tough time for almost a year. We had been losing over 50% of our turnover. Even though the loss percentage has come down over a period of time, we are yet to recover from it. The pain is still there,” a city-based industrialist told TOI. “Though there was domestic demand for products including garments, pumps and spare parts, the industries could not make them due to cash crunch and could not adopt digital transaction methods. As a result, only one third of the industrialists have managed to survive.”
Most of the small and micro industries that were selling garments were used to cash transaction, K Selvaraj of the South India Mills Association (SIMA) said. “How could they be expected to migrate to digital transaction immediately? It will take them at least a few more years to make the shift.”Over 40% of the industries have migrated to digital transaction, said K Maniraj, president of the Kovai Power Driven Pumps and Spares Manufacturers Association (KOPMA). “Even now, many buyers are purchasing products only with cash. Cashless transactions are made rarely. In the present situation, achieving cent per cent digitalization is impossible. The skilled labourers, who turn into micro entrepreneurs, would not have much of IT skills. Also there is a lack of awareness about digitization,” he said.
Also, setting up the infrastructure to digitize the entire business is costly and difficult for most of the industries, said R Ramamurthy, president of the Coimbatore District Small Industries Association. He urged the government to provide subsidy to the industries, apart from providing training.
The loss could not be tagged just to demonetisation as the Central government had introduced another big reform – Goods and Service Tax – shortly after it, an industrialist said. “As two major reforms were introduced within a short period of time, we had no time to adopt them.”Instead of introducing new schemes, the government should come up with a solution to solve the pending issues, Selvaraj added.