Domestic slump, global uncertainty hit TN SME, leather biz

It is not just big industries that have been hit by global uncertainty and the domestic slowdown. Small and medium enterprises (SME) have taken a body blow that has left many crippled. CNBC TV18's Poornima Murali reports that the textile and leather industries in Tamil Nadu are nearly at death's door.

Global economic slowdown is a crippling situation that threatens the livelihood of thousands especially those involved in tanning and the manufacture of leather, and textiles Also read: Centre, SEBI accept Jaya's NLC proposal; workers end stir In 2012, products worth US 20 billion were exported from these two clusters. But with demand from key export markets falling, exports have dropped over 10-15 percent. To add to it, the acute power shortage in the state has led hundreds of units to shut shop. Over 60,000 people have lost their jobs since 2012. The leather industry alone, which has seen growth falling from 6 percent to 4 percent over the last 3 months, is bracing form more shutdowns. M Rafeeque Ahmed, chairman, council for leather exports said, “There is slowdown in EU (European Union), which contributes 65 percent of our exports. Power cuts have hit small scale industry badly. Around 100-150 SMEs (Small and Medium Enterprises) have closed down and 2-4 large units have been shut resulting around 15,000 people losing jobs. The textile industry has had it worse. It has been contracting for the last three years due to the slowdown in the key export markets of Europe and the US. But this sector's bigger problems have more to do with difficulty in restructuring a staggering debt burden and the government's policy paralysis. “On the one side side, industry has gone back to the govt on two occasions in the last 5 years asking for reschedule of loans. We have been hit by two policy aberrations”, said Manikam Ramaswami, chairman of the cotton textiles export promotion council (TEXPROCIL). The government has been making the right noises It has made promises of steps to boost exports, to introduce labour reforms, and provide additional help in restructuring loans. But so far, this has not translated too much. These sectors cannot see a lot of light at the end of the tunnel.