10k MSMEs shut between 2016 and 2022; 96% in 5 years

According to Udyam Portal, as many as 10,067 MSMEs were shut between 2016 and 2022, with 96% of the closure in three years, confirming the ravaging impact the pandemic has had on the sector. Several policy steps to spur formalization of the economy, including the measures to curb evasion of goods and services tax (GST), have also had a short-term adverse effect on the labour-intensive sector.

“Closure of MSMEs is certainly a concern for the government for which necessary steps and studies have been undertaken. Closure is one of the reasons cited by units for cancelling MSME registrations, but the reason for closure is not always mentioned by them. Other reasons for cancelling registrations include stopping the manufacturing of goods or moving to other businesses or they just don’t need the registration anymore.” said Ishita Ganguli Tripathy, Additional Development Commissioner at Ministry of MSME.

In a written reply in Rajya Sabha on 25th July 2022, Minister of State for MSMEs Bhanu Pratap Singh Verma noted that while 400 MSMEs were shut during the 2016-2019 period, 9,667 were shut between 2019 and 2022. On the Covid-19 impact on MSMEs,Verma said that 2870 MSMEs registered on the Udyam Portal were shut between April 1,2022 and July 20,2022, along with employment loss for 19,862 people.Similarly, 6,222 Udyam registered MSMEs were shut in FY22 with 42,662 people losing jobs.

The Government should prioritize on reviving the MSME Ecosystem which had taken a huge blow because of the Covid Pandemic as this sector would prove to be the driving force in taking the Indian economy to the $5 trillion mark.

Source: Article by Sandeep Soni, Economy section, Financial Express