Economic Slowdown: Small-scale Industries from Pune Fear Shutdown

As the entire country struggles to deal with the economic slowdown since the past one year, Maharashtra—the most industrialised state—is not an exception. Falling in line, Pune, which is called the state’s industrial centre and one of the biggest automobile hubs of Asia, too, is feeling the heat of the recession.

Amit Mohite

(24) is a first-generation entrepreneur with a degree in mechanical engineering. While he was in college itself, he started a small setup of fabrication works in Bhosari [Pune district]. He used to make trolleys for vehicles with his average monthly production crossing 600 trolleys. Now, it has been reduced to only 20 or 30 trolleys per month.

“In October so far, I haven’t made a single trolley. Not a single one. Because nobody is there to buy. Everything has come to a standstill,” said Mohite. His firm had employed 16 workers, but 12 of them now have been laid off. “Even clearing the salaries of these four workers [who are still working at the unit] is becoming difficult for me. I am now giving them their salaries from my personal account. How are we supposed to run the business in a situation like this?” questioned Mohite, adding, “I am in debt of Rs 13 lakh. I owe about Rs 53 lakh to three big companies. I am in a really bad shape.”

This Maharashtra Industrial Development Corporation’s (MIDC’s) setup in Bhosari has almost 7,000 small and medium-scale units. “You go anywhere in this MIDC and you will see layoffs. Contractual workers are losing their jobs. Boys of my age come to me, asking for jobs. But it is not possible for me or anyone here to offer anything to them,” he said.

Umesh Bhegade runs the business of making chairs in Talegaon MIDC. His business has been down by almost 50% for the past one year. “We have been experiencing a slowdown for the past two years—especially, since the GST came into effect. Now, it has worsened,” said Bhegade.

Explaining why the small-scale entrepreneurs are suffering more, he said, “There are big industrial tycoons in the business of furniture-making business. Also, there are people like us who make 100 cushion chairs or 200 to 300 plastic chairs per month. Now, the government is imposing GST on the big industries as well as small-scale businessmen like us in the same manner. So, in such a battle of rates, the big companies survive. Because they have larger capital with them to keep going. We don’t have that.”

Bhegade claimed that earlier, he used to over thousand chairs per month. After a slack period of the monsoons, he said, his business would jump back in the month of October, every year. “Now, the number of orders is down to 20%. You can imagine the gravity of the situation here,” he said.

Against this backdrop, the small-time entrepreneurs have formed an association called Forum of Small Scale Industries Association to voice their issues. It is headed by Ajay Bhor, who has been a part of the rubber industry for the past 40 years. “My business is down by 50% in the last six months. The biggest reasons are GST and demonetisation. After notebandi (demonetisation), business went down to 60%. It had recovered to some extent, but then the repercussions of GST hampered it again. Now, it is a question of existence for us,” said Bhor.

Ajay Bhor, head of small scale association forum

Bhor's factory makes rubber parts of vehicles. Although his main customers are big automobile companies, substantial amount of his business comes also from retail sale. “Small shopkeepers or small vendors don’t have GST compulsion. But I need bills of sale. Then, they starts reducing the orders. Now I am facing the heat, as automobile companies have reduced their orders and retail is also down. This kind of a problem needs to be solved carefully; otherwise, small-scale industries will die very soon,” said Bhor.

“Our association has members from Mumbai, Nasik and Kolhapur as well. You will get to hear similar problems from them. We expect that government will understand our issues and will do something that would help us,” said Bhor.

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