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50,000 MSMEs shut down in Tamil Nadu!!

50,000 MSMEs shut down in Tamil Nadu!!

That was the screeching headline of a rather sombre article in the "The Hindu" dated June 8, 2018. 50,000 MSMEs shutting down is too darn disturbing and depressing. May be MSMEs should all run out of the TN state. After the tax dispute with Nokia and arbitration with Nissan came another major industrial jolt in the form of pollution in Thoothukudi. Who cares if the Sterlite Copper unit is polluting the environment, industrial climate or our political system, the fact is that the industrial climate in Tamil Nadu has gone from "companies closing down" to "companies being asked to shut down". Not surprising though that the MSMEs who thrive in the "catchment areas" of the bigger industrial fraternity are being left behind high and dry. This is the disturbing news to infer from the article.

What baffled me in the article is a quote from an industrialist that the major reasons for the MSMEs are 2015 floods, 2016 Cyclone Vardah, Demonetisation and GST. The floods in 2015 were devastating. Agreed. I lost my car and I can clearly empathise with someone whose industrial unit would have been submerged ruining all equipment, short circuited hard drives, etc. It was chaos indeed. Didn't the MSMEs do any risk planning, atleast after the 2015 floods? Were they waiting for the cyclone in 2016, only to blame it post facto? No matter, how small the MSME is, they should have braced for the worst and done some planning to recoup their losses after 2015. A simple solution could have been to buy insurance to cover some portion of risk. The whole world knew that GST was coming and the transition is going to be bumpy. Again, some financial planning, re-organising inventory, cost optimisation, etc could have been done to reduce the impact, especially after the sudden announcement of demonetisation in Nov 2016.

The article also quotes few MSME owners who want a rehabilitation package from the State Govt. Knowing the speed at which any Govt works, this is not a solution. In my view, solutions always come from market forces, industrial collaboration and innovative mindset. Has TN lost its mojo of industrial collaboration and innovative mindset. If so, that would be really depressing!! So, who should play an active role in rebuilding the success stories of TN's MSMEs - Govt? Large Industrial Units? Financial Institutions? Employee Unions? - all of the above and ofcourse, MSMEs themselves. Everyone needs everybody else!!!