A silver lining amid the crisis

Covid-19 lockdown might have wreaked havoc on Micro, Small, and Medium Enterprises (MSMEs), but the pandemic is likely to bring in more opportunities, especially in manufacturing and sunrise sectors like semiconductor and electric vehicles, as the migration of industries from China continues.

The Union government has also announced production-linked incentives (PLIs) for companies to set their production units in the semiconductor and mobile phone sectors. When global companies come into India, MSMEs benefit as they hope to supply to these large companies.

K E Raghunathan, Chairman, Association of Indian Entrepreneurs, says the MSMEs should be on a “strong footing” when these companies come into India.

Read | GST, pandemic pull the plug on thousands of MSMEs

“While we are wooing large corporations by product-linked incentives, we did not renew a scheme for duty drawback immediately after it expired for exporters. We should take care of our people first and ensure they serve as ancillaries to these big companies. The incubation centres should not be used only for start-ups, it should also help rehabilitate sick units,” he said.

Human development economist Santosh Mehrotra said the government has to understand that competing countries like Bangladesh, Vietnam, and Cambodia are pulling ahead.

“We should be active in collecting information about companies that are migrating out of China and looking for locations. We can possibly attract some of these as we are a much bigger market than other countries that are trying to woo them,” he says.

Global firms like Taiwan’s Foxconn, a major contract manufacturer for Apple iPhones, have already evinced interest in making their foray into semiconductor manufacturing. Home-grown Tata Group is also scouting for a location to set up its own semiconductor unit as the world reels under a shortage of chips that are used in vehicles to mobile phones.

Entrepreneurs say the MSMEs should also gear up to tap this new opportunity, while governments make use of opportunities that such industries will bring.