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Photo: Reuters
Photo: Reuters

Consumer demand needs to pick up for the key sector to stay afloat

Experts say there is a need to focus on demand as MSMEs will be running against time, if demand doesn’t pick up

MUMBAI : While easy access to affordable credit is an important factor in helping small businesses stay afloat, any improvement in their prospects will not happen till consumer demand picks up. Speakers at the Mint’s Pivot or Perish webinar on the MSME sector said the Centre must step in to ensure increased spending for demand to return.

“Speaking for the auto components sector, our three big challenges are cash, labour and raw material," Deepak Jain, president, Automotive Component Manufacturers Association, said. “There are green shoots we can see where the government has given benefits. Like in the agriculture space, where the government has done a direct benefits transfer to farmers and due to that covid-19’s impact is less in the rural sector... What we need to focus on is demand. Globally, governments have stepped in to encourage consumer demand. MSMEs will be running against time if demand doesn’t kick in."

Naushad Forbes, co-chairman, Forbes Marshall, concurred. “The loan moratorium does not help with solvency issues, it only helps with immediate liquidity issues," he said. “But, to stimulate demand, the central governments need to make payments against their bills—the government owes 3 trillion to large companies, state governments and MSMEs. If one paid those bills, that is a huge liquidity infusion across the enterprise sector."

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