Outlook on MSMEs during COVID 19 — Part 2
This 4 part series helps in understanding the Micro, Small and Medium Enterprise Businesses during the Pandemic.
In the previous article, we looked at the problems faced by MSMEs during this Lockdown period, which can be found here:
This article will cover an extensive case study on the marble industry’s whereabouts during this pandemic.
Case Study on Marble Industry
The COVID 19 pandemic has ensured that the marble industry’s fight for survival is going to be more onerous and painful. The stone industry of the country which is valued at Rs. 60,000 Crore has come to a standstill. Factories are closed, godowns are full of stock and owners are sitting at home. High export growth has come off in the past 4–5 years. But there was still some growth; it was very marginal, but now this will also be wiped out due to the pandemic and economic slowdown.
In the past few years, the marble industry has faced several setbacks like the ‘open general licence’ that allowed everybody to import marbles, impacting the processing of local marble, demonetization, implementation of GST. Despite the industry’s labour oriented operations, marble is considered as a luxury product. Stone slabs come under the 18% bracket of GST and blocks under 12%, before the new tax system came traders used to pay only 5% VAT. These were one of the main reasons for decreasing revenues in the industry and now the coronavirus lockdown might be the last nail in the coffin.
The Indian stone industry, as every other Indian industry has suspended entire operations owing to Government directives to contain the pandemic. This includes quarry activities, processing facilities, allied logistics, administrative offices. This had led to huge losses in revenues and opportunity costs. Although the government authorities have allowed many industries in various states to gradually begin production, provided safety guidelines like masks and sanitizers are followed. There is no chance that the industry can regain its functionality. It will only get rolling when they get their labour and demand in place.
Due to the economic slowdown, real estate has unsettled the industry. There are not many builders who are resuming construction activities during this time as COVID has changed the market dynamics by much and won’t be able to launch new projects also, hence there is a remote possibility of demand for marble anytime soon, therefore, traders are losing out on revenue generated through these sources. And the biggest fear for the factory owners is to pay off the salaries of employees and coping with the interest rising on the side with almost zero income during this crisis.
The situation for labourers is also very miserable and remorseful. Migrant workers are struck in different states away from their native places. After almost two months of no work, several labourers left for their native place, but many of them are still stuck with very little food and money within the factory premises. They desperately want to return to their native places hoping that they will be able to earn something to eat and support their families at home. However, the factory owners want the labourers to stay back because they won’t be able to resume the business once all the workers go home and return of labour seems to be impossible once they leave.
Factories may not start working even when the restrictions are eased because of the unsold goods in the inventory and lack of labour along with a cash crunch in the market. The pandemic surely puts the marble industry in a spot of bother.
Now we move forward to the next article in the series which concentrates on the asks from the citizen’s side and aims at providing various suggestive measures that the government can act on:
