‘MSMEs in Tier II and Tier III cities are struggling to survive’: KASSIA

November 28, 2018

The Micro, Small and Medium Enterprises (MSMEs) in Tier-II and Tier-III cities and rural areas face more survival challenges despite being treated as a priority sector, said The Karnataka Small Scale Industries Association (KASSIA) in a press conference on Tuesday.

According to media reports, the association made the statement while recognising that access to easy finance and modern technology, regulatory constraints and lack of basic infrastructure were hindering the MSME growth. Other factors identified were the dearth of marketing and distribution networks, skilled labour and outdated labour laws.

The KASSIA said the problems continue to exist even after they were raised by MSME associations. There are also many studies that highlight the difficulties faced by MSMEs.

In a press conference, Basavaraj S Jawali, President, KASSIA said, “Frequent policy changes and procedures in land allotment and inadequate power and water supply are disrupting the development of MSMEs in the state”.

He added that costs have also gone up, making it difficult to run a business. The office-bearers in the association corroborated the statement and,said that MSMEs have no control over their product pricing because it was in the hands of large industries who operate in a buyers’ market. The officials noted that MSMEs are subjected to pressure from buyers and the free market which has thrown up unexpected challenges and put their survival at stake.

Jawali added, “A large number of applications from MSMEs have been kept pending by both the Karnataka Small Scale Industries Development Corporation (KSSIDC) and Karnataka Industrial Area Development Board (KIADB) for many years. Some of the applications were pending for more than ten years. The government must take steps to clear these applications for land allotments to encourage investments and projects which benefit the state as well as the people.”

At the press conference, the KASSIA also demanded an infrastructure upgrade in  industrial areas, citing the plots developed by KSSIDC and KIADB lacked basic facilities such as roads, drinking water, drainage, street lights, etc. The association also sought MSME loans at 4 percent interest to reduce the initial mortality rate, and that subsidised funding should be increased to a maximum of Rs 5 crore.

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