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Photo: Bloomberg
Photo: Bloomberg

MSME hubs in S India struggle to restart biz

  • Many small factories are dependent on migrant workers from northern and eastern states
  • Manufacturing hubs across the South are staring at huge costs

In recent months, M.K. Hamsa, whose firm Southern Plywoods makes furniture for small-time businesses across India, partially shut down his Perumbavoor factory due to the pandemic.

As smaller businesses in south India strive to restart factories amid a further easing of curbs last week and removal of interstate travel barriers, some key challenges remain. These include labour shortages, transportation, debt pile-up and a credit crunch.

In Kerala’s Perumbavoor town, Hamsa’s biggest problem is that most of his workers are from 3,500km away, in Assam.

“Last week, I brought back 12 workers to Kochi by flight. It cost me around 6,000 a person. They are undergoing a 14-day quarantine, and I am taking care of their expenses. Given the cost, I don’t know if I will be able to get back more workers," said Hamsa. “Locals in Kerala will not work at the low pay of migrant workers. My orders are picking up, and I need to restart production."

Manufacturing hubs across the South are staring at huge costs. These small factories are built on the back of migrant workers from northern and eastern states. When the pandemic struck, millions in distress set off on long journeys home in independent India’s biggest domestic migration.

Now, the owners are doing everything they can to persuade them to return to work. Some are booking flights, many are buying seats on coaches, and everybody is praying for the resumption of train services.

The developments have put a spotlight on how difficult it is to unlock the economy for micro, small and medium enterprises (MSMEs), the growth accelerators of the economy that contribute about 30% to the gross domestic product.

In Tamil Nadu’s Tirupur, India’s biggest textile manufacturing centre, businessman Govindaraj is in a similar predicament.

He has offered free bus rides for migrant workers employed in his firm SRG Apparels Ltd to return to the factory, but finds it unsustainable.

“We are bringing them by buses; then we have to keep them in 14-day quarantine. For every person, we are spending 10,000 in transportation alone. It is as costly as a flight," said Govindaraj. “This is the time when we receive the winter, spring and summer orders for the next year. But my production is only back by 40%."

Industry estimates say the exodus of labour from Tirupur alone would number more than 120,000.

The situation isn’t different in Bengaluru’s Peenya industrial hub that employs more than 1 million people in about 5,000 units across auto parts, garments and light engineering. There are huge rental vacancies particularly close to industrial suburbs like Peenya, including those left vacant by migrant workers, said a city-based developer, requesting not to be named.

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