Entrepreneurs Turn Labourers As Small Industries Shut Shop In Tamil Nadu

Over the last two years, 50,000 small and medium industries have shut shop in Tamil Nadu.

Over 5 lakh people have lost jobs due to cash crunch.

Coimbatore: Everyday, when Krishna Kumar serves lunch to his customers along with his wife at the roadside cart he owns in Coimbatore, he says he is reminded of the misfortune that hit him.

Less that two years ago, Krishna Kumar owned a micro enterprise in the same city with a monthly turnover of over a lakh rupees. He employed eight people. But cash crunch due to demonetisation and then the introduction of Goods and Services Tax (GST) by the central government crippled his unit, he claims.

Recollecting the losses his business suffered due to the double whammy, he says, "Earlier I gave money to others. Now I receive money from others by serving food."

P Pandian, who also lives in Coimbatore, has a similar story to tell. He now runs a conventional unit with Rs 10,000 monthly turnover, ten times lesser than what he was earning before note ban in 2016 when he owned a more advanced, computerised unit.

"Earlier, I paid salaries for ten families. Now in less than three years, I've been to pushed where I was 20 years ago. It's sad," he shares.

M Saravanan, who now works for a salary of Rs 10,000, earlier owned an auto-engineering unit. But due to burden of debt, he also had to sell everything and had to work for another unit.

Over the last two years, 50,000 small and medium industries have shut shop in Tamil Nadu and around five lakh people have lost jobs due to the cash crunch after demonetisation.

"I used to be an employer. But now I've become a labourer. We are in a deep pit. Unless the government lends a helping hand, things are unlikely to improve," says Saravanan.

While enterprises with a turnover less than Rs 20 lakh need not sign up for GST, many entrepreneurs say big companies engage only with those who register for the central tax. The system, they say, also pushes them towards the wall due to mandatory monthly GST payment or penalty though their customers pay them only two to three months later.

J James, District President of Tamil Nadu Cottage and Tiny Entrepreneurs Association, seeks government intervention. "The government should give 100 per cent exemption to medium and small enterprise owners from GST. Only then, the MSMEs will develop and we can address unemployment to a certain extent."

Coimbatore's famous water pump and grinder industry has suffered a 50 per cent drop in business following a 13 per cent hike in tax after GST was introduced. Referring to the pile-up of stocks in his godown, C Venthan, Partner in Alpha Pump Technologies, says he has sacked thirty workers in the last two years. "We are contemplating to quit. We are all going down," he says.

The Coimbatore District Small Industries Association wants those the MSME owners to be treated as service providers and introduction of composition scheme for them.

Some experts blame it all on redtapism. V Sundaram, president of the association, says "It takes up to 90 days to even register a company. This has to be reduced. In the state, though it's single window clearance, the process still takes it's own time".

The crisis, the government says, is not due to GST. Union Minister Nirmala Sitharaman last week said, "We are not asking anyone to shutdown. If their turnover is less than Rs 20 lakh they would do business as they did earlier. So if you say GST is responsible for closure it's not acceptable. We will have to investigate".

With shutdowns and massive job losses the "Manchester of south India" as it is called, Coimbatore is struggling to preserve its rich industrial heritage. The industries, many say, want urgent government intervention before it's too late.
More News