The Federation of Indian Micro, Small, and Medium Enterprises (FISME) has expressed serious concerns over the escalating input material shortages impacting the MSME sector. Rising raw material costs, supply chain disruptions, and dependency on imports have created significant roadblocks for these enterprises. FISME has urged the government to intervene immediately, emphasizing that this challenge could severely affect production schedules, export commitments, and overall sectoral growth in 2025.
Key Issue: Input Material Shortages in MSMEs
MSMEs, often referred to as the backbone of the Indian economy, are grappling with a shortage of raw materials essential for production. Industries like manufacturing, automotive parts, and electronics have reported a sharp rise in input costs due to limited availability and soaring global demand.
Anil Bhardwaj, Secretary-General of FISME, highlighted the urgency of the issue:
“The shortages are crippling production capacities, leading to delays in order deliveries and loss of trust among international clients. Without government support, many MSMEs may not sustain the current pressure.”
Contributing Factors
- Global Supply Chain Disruptions:
The pandemic-induced disruptions and geopolitical tensions have led to reduced availability of key inputs like steel, aluminum, and semiconductors. - Increased Global Demand:
As the global economy rebounds, demand for raw materials has surged, causing price hikes and limiting supplies. - Dependence on Imports:
Many Indian MSMEs rely on imported raw materials, making them vulnerable to currency fluctuations and trade restrictions.
The shortage of input materials has had a cascading effect on the sector:
- Rising Costs: MSMEs are forced to purchase materials at inflated prices, reducing profit margins.
- Production Delays: Inconsistent material availability has disrupted production schedules, leading to missed deadlines.
- Export Challenges: Export-focused MSMEs are struggling to meet international commitments, tarnishing their reputation and reliability.
A recent report by FISME indicates that nearly 70% of MSMEs surveyed reported a significant impact on their operations due to raw material shortages.
Experts believe that immediate policy interventions are required to mitigate the crisis. Suggestions include reducing import duties on critical raw materials, incentivizing domestic production, and improving supply chain logistics.
“We need a two-pronged approach—short-term relief measures and long-term strategies to reduce dependency on imports,” said Rajiv Mehra, an industry analyst.
Possible Solutions
- Government Support: Reduction in import tariffs and the introduction of subsidies for domestic raw material production.
- Diversification: Encouraging MSMEs to diversify their suppliers and explore alternative sourcing options.
- Digital Supply Chains: Adopting digital tools to optimize inventory management and improve supply chain efficiency.
Globally, countries like China and the US have implemented measures to support small enterprises amidst similar challenges. These include creating centralized procurement systems and incentivizing local sourcing. India could benefit from studying these models to develop sustainable solutions for its MSME sector.
FISME has appealed to the Ministry of MSME to prioritize this issue in upcoming policy deliberations. The organization has also suggested setting up an emergency task force to monitor and address the evolving situation.
Anil Bhardwaj concluded, “India’s MSMEs are resilient, but they need immediate support to overcome this hurdle and maintain their competitive edge globally.”
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Source: https://www.aninews.in/news/business/msmes-facing-ims-challenge-fisme20250122132629/
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A product manager with a writer's heart, Anirban leverages his 6 years of experience to empower MSMEs in the business and technology sectors. His time at Tata nexarc honed his skills in crafting informative content tailored to MSME needs. Whether wielding words for business or developing innovative products for both Tata Nexarc and MSMEs, his passion for clear communication and a deep understanding of their challenges shine through.
