Tuesday, June 18, 2024

Small and medium-scale industries face big problems

Rajesh Kumar, a 55-year-old entrepreneur, who had set up an auto component manufacturing unit in Peenya Industrial Area (PIA) in North Bengaluru, had to shut it down in August 2022 following severe loss in business, especially after COVID-19 pandemic.

Mr. Kumar, who had set up his company a decade ago, was successful in running the business until issues pertaining to the rising costs of raw materials during the pandemic forced him to shut down the unit, which led to loss of jobs to 85 employees.

“Steep rise in prices of raw materials over the past two years has severely affected us as well as many other Micro, Small, and Medium Enterprises (MSME) in the PIA. My company had long-term contracts with big companies without a price hike clause. The price rise affected my manufacturing unit, and it became difficult to sustain, especially after the pandemic. I had no option but to close down the business,” Mr. Kumar said.

PIA comprises thousands of small and micro enterprises that employ lakhs of workers. Manjunath. H., President of PIA, said around 20% of companies based in the industrial area have shut down after the pandemic.

“According to our internal report, we have seen that 20% of MSMEs in our industrial area have shut down. The main reasons MSMEs are shutting down are increased raw material rates and industries not being able to repay bank loans. During the pandemic, most industries didn’t run due to the lockdowns. After the industries shut down, thousands of employees have lost their jobs and gone back to their hometowns,” Mr. Manjunath added.

The Peenya Industrial Area is a critical infrastructure as it manufactures almost 50% of machine tools produced in the entire country and accounts for over 60% of Karnataka’s total production of machine tools.

“The COVID-19 pandemic further exposed the vulnerability of the MSME sector in Peenya. During the pandemic, our industrial area was the worst hit on account of the demand and supply shocks caused and the measures taken later to curb the spread of infection. The sector is still struggling to survive and recover from the pandemic-induced issues, while the post-pandemic issues also led many MSMEs to shut down,” Mr. Manjunath pointed out.

A file photo of a labourer working at one of the manufacturing units in the Peenya Industrial Area in Bengaluru.

A file photo of a labourer working at one of the manufacturing units in the Peenya Industrial Area in Bengaluru.

Civic infrastructure deficiencies

Once considered to be southeast Asia’s oldest and largest industrial area, Peenya has also been grappling with civic mismanagement issues in the last few years. Bad roads, solid waste management issues, poor underground drainage systems, and a polluted lake and groundwater, besides being poorly lit and crippled by irregular power and water supply, are common complaints.

Mr. Manjunath complained that waste was often not picked up with civic workers claiming that it is industrial waste.

“Garbage lies in heaps on roads; the drains are clogged, and sewage overflows. Apart from this, sewage is also getting mixed with the drinking water. The best example is the sole water body in Peenya, the Shivapura lake; if you look at the lake, it is completely destroyed. The local authorities have done nothing to prevent encroachment or letting sewage into it. The area around the lake stinks and it is unbearable,” Mr. Manjunath said.

Prathap Raj, an employee in one of the industries, said the local representatives are not interested in the area. “No elected representatives and civic officials are interested in improving infrastructure here as they don’t get many votes from an industrial area, while officials just do not care for our repeated complaints,” he alleged.

PIA members said industries in the area contribute crores of rupees as taxes, but the infrastructure provided to them is poor.

In protest against the steep rise in prices of raw materials, businesses in Peenya observed a bandh in December 2021.

In protest against the steep rise in prices of raw materials, businesses in Peenya observed a bandh in December 2021.
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PIA awaits township status

The area is still awaiting a township status, almost three years after the B.S. Yediyurappa-led government proposed to set up the necessary infrastructure for the township backed by a budgetary allocation of ₹100 crore.

“After decades of our constant follow-ups came the breakthrough in the form of a budgetary allocation of ₹100 crore and the proposal for the township in the last budget. However, it has still not been approved by the government. We are continuously meeting the Chief Minister and the file is in his office, but not yet approved. The Electronics City Industrial Association came much after Peenya but became a township long ago and Peenya is still waiting for it,” said Mr. Manjunath.

The Karnataka Small Industries Development Corporation (KSIDC) had been given the responsibility of preparing a detailed project report (DPR), and according to a trade representative from the Peenya Industries Association, the DPR is ready, and cabinet nod is pending.

“In 2022, there was a high-level meeting involving representatives from the government and all departments concerned and office-bearers of PIA to discuss the matter again. After that, we have constantly been following it up. Allotting a township status to Peenya and constituting a statutory authority is not a big task for the Government. It can do it in a month itself. Our only request to the government is not to delay any further,” he added.

“As Asia’s largest industrial zone, Peenya Industrial Area has a pre-eminent status, and the government should expedite the formalities involved in converting it into a township authority, as this would give it a fair amount of autonomy which would go a long way in improving the maintaining the amenities and industrial infrastructure. As per the 74th amendment to the Constitution, once given township authority status, Peenya Industrial Area would be excluded from the jurisdiction of BBMP, which would inject much-needed freedom for the industries themselves to maintain the infrastructure on their own,” Mr. Manjunath explained.

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