Ease of doing business for SMEs: Of the total closures, 5,528 or 99.1 percent were micro-enterprises, 42 or 0.75 percent were small firms and only seven or 0.12 percent were medium-sized firms.
Ease of doing business for SMEs: 5,907 companies registered with the MSME ministry as micro, small and medium enterprises were closed during fiscal years 2020-21 and 2021-22 (until March 9, 2022) in the country, according to government data . During FY21, 330 MSMEs were shut down. These include 155 Udyog-Aadhaar-Memorandum (UAM) registered units which were closed in the period April-June 2020 and 175 Udyam registered units between July 2020 and March 2021. UAM registration portal for SMEs was replaced by Udyam registration in July 2020 . the current fiscal year, the number of MSME closures has increased nearly 17x to 5,577 Udyam entities. The data was shared Monday by the Minister of State for MSME Bhanu Pratap Singh Verma in a written response to a question in Rajya Sabha about the closure of registered MSMEs.
The top five states that recorded maximum closures of MSMEs in the current fiscal year recorded 1,608 closures, followed by 527 in Bihar, 521 in Tamil Nadu, 442 in Uttar Pradesh and 435 in Gujarat. Of the total closed SMEs, 5,528 or 99.1 percent were micro-enterprises, 42 or 0.75 percent were small firms and seven or 0.12 percent were medium-sized firms.
“If we look at the total base of registered MSMEs, 6,000 would not be a very significant share. Knowing the challenges that MSMEs have gone through over the past two years, it is a relief that the number of MSMEs that have closed is not very high. However, this number could be higher if entities that are not registered as SMEs are taken into account. Apart from Covid, lack of financial discipline, lack of availability of sufficient staff, high raw material costs and others could also be the reasons for MSMEs to close,” Rajan Raje, Chairman, MSME Forum, Chamber of Commerce and Industry and Group of Bombay CEO of agrochemical company Nichem Solutions told Financial Express Online 77 lakh MSMEs have registered on the Udyam portal so far since its launch.
Responses from the MoS office were not immediately available for this story.
Subscribe now to the Financial Express SME newsletter: your weekly dose of news, opinions and updates from the world of micro, small and medium enterprises
However, in his response, Verma said the government has taken a number of recent initiatives under the Aatma Nirbhar Bharat Abhiyan to mitigate the negative impact of Covid-19 on small businesses in the country. These include Rs 20,000 crore subordinated debt for stressed MSMEs, Rs 5 lakh crore ECLGS scheme, Rs 50,000 crore equity injection through MSME Self-Reliant India fund, new revised criteria for the classification of MSMEs, new Udyam portal for registration of MSMEs, and no global procurement tenders up to Rs 200 crore.
Importantly, the National Small Industries Corporation (NSIC) conducted an online survey of approximately 5,774 SMEs in August 2020 to assess the impact of Covid. According to the survey, 91 percent of SMEs were found to be functional, while only 9 percent were closed due to the pandemic.
Also in January of this year, SIDBI surveyed a random sample of 1029 MSMEs. According to the survey, 67 percent of respondents reported a temporary business shutdown for up to three months during Covid in fiscal year 2020-21. The survey results were shared by MSME minister Narayan Rane in response to a question in Lok Sabha in February. More than 50 percent of respondents had witnessed a more than 25 percent drop in their revenues during FY21, while about 66 percent of units claimed a drop in profitability due to stable fixed costs and a decline in revenue.
However, no study has yet been conducted to assess the impact of Covid on small businesses in the informal sector. “Since MSMEs are present in both the formal and informal sectors, records of temporary or permanent shutdown of the units are not kept by the Government of India in the Ministry of Micro, Small and Medium Enterprises (MSME),” said former MSME minister Nitin Gadkari said. in a written response to a question in the Rajya Sabha in February last year.
This post Nearly 6,000 MSMEs Shut Down During FY21 and FY22: Government Data was original published at “https://www.financialexpress.com/industry/sme/msme-eodb-nearly-6000-msmes-got-shut-down-during-fy21-and-fy22-govt-data/2461592/”