Early in Posting, The government has taken measures to ease prohibitions for the manufacturing sector to resume operations. This may encourage companies to re-start operations. Issues of manufacturing sector amid Lockdown:
Asia’s 3 largest economies are germinating a huge hit from the ongoing nationwide lockdown, which started on March 25, and its gross domestic product is expected to shrink for the first time since the mid-1990s this quarter
Record contractions in output, new orders, and employment pointed to a severe deterioration in demand conditions.
Amidst new orders and output shrinking at the steepest pace since at most invisible early 2005 factories cut jobs at the fastest rate in the survey’s history, signaling a high chance of recession.
A record depreciation in both input and output prices, suggesting a sharp fall in overall inflation which has held above the Reserve Bank of India’s medium-term target of 4% for 6 months, failed to stoke demand
Enterprises suffer from low productivity given that their small size and lockdown prevents them from achieving economies of scale.
Some jobs the small enterprises create are low-paying ones.
India encounters stiff competition from South-East Asian and other South Asian countries.
Global technological and geo-economic changes.
Impact of a strong rupee in recent times on the Indian industry and the economy.
MSME Sector: The Micro, Small and Medium Enterprises (MSMEs) are literally the backbone of all Indian sectors and often engaged in manufacturing and export activities — two key drivers of the Indian economy.
Almost all MSMEs are out of action due to the lockdown, chocking all production activities at major firms across sectors. it is evident from several reports that indicate how MSMEs are reeling under crisis and have no money to pay their employees.
From leaders to experts and industry bodies, everyone has appealed to the government to increase its relief package for the MSME sector, which contributes to over 30 percent of India’s GDP.
It is worth mentioning that a majority of the small units may have to shut shop if they do not get a relief package soon.
The world is going through something unprecedented. Nearly a third of the globe is in lockdown. Due to this lack of trade and shrinking sales, MSMEs are feeling the burden of loans, repayments, GST filings, etc.
Even after getting support from the government, many of them are almost on the verge of losing their control over losses and unable to generate revenues as well and fighting for their survival.
Opportunities For India: There are, however, opportunities that appear to be emerging.
This offers a huge opportunity for India as many Companies plan to shift out of China. We need to prepare the ground forthwith to welcome such investment into India. We need to try and make life easy for investors.
Way Forward: Its inclination to be very important for the government to take initiatives and announce more relief packages.
The government provides cash infusions that allow companies to give workers jobs and buy raw materials.
The government will also need to increase the insolvency limit for SMEs and MSMEs to 1 crore from 1 lakh.
India’s corporations could learn a lot from the IT sector’s experience in promoting the large-scale development of s
relentless focus on education will help attract foreign investment and also help the economy overcome the challenges.
Favorable market access policies
Investor’s confidence must be improved.
Enhancing physical infrastructure from transport systems to the power sector is essential.
Enhancing the flexibility of labor regulations.
FDI policy needs a review to ensure that it facilitates greater technology transfer, leverages strategic linkages, and innovation.
Winning remuneration to motivate people to join the manufacturing sector.