Published: 14th May 2020
IIT Madras collaborates with industry bodies to study impact of COVID-19 on MSMEs in TN
Based on the outcome of the research, the plan is to outline the immediate and long-run policy initiatives for the MSMEs in Tamil Nadu in order to overcome the economic shock due to the pandemic
Indian Institute of Technology Madras is collaborating with industry bodies to understand the impact of COVID-19 crisis on Micro, Small and Medium Enterprises (MSMEs) in Tamil Nadu. The study is expected to be completed within three to four weeks.
In the context of the stimulus package announced by the Hon’ble Union Finance Minister Smt. Nirmala Sitharaman for the MSME sector, this exercise will be a time-bound study for understanding the resilience of the MSMEs in Tamil Nadu.
Tamil Nadu accounts for one of the largest numbers of MSMEs in the country with more than 6.89 lakh registered enterprises. This, in turn, accounts for more than 15 per cent of the total MSMEs in India. Given the significance of MSMEs in Tamil Nadu, the disruption caused by the COVID-19 is a major concern.
The study is being led by IIT Madras Department of Humanities and Social Sciences Faculty, Dr Subash Sasidharan, Associate Professor of Economics, and Dr Santosh Kumar Sahu, Assistant Professor of Economics.
Based on the outcome of this study, the researchers plan to analyse the Adaptation and Coping Strategies to overcome the shock due to the pandemic, which could help in quick recovery of the MSMEs in Tamil Nadu.
Speaking about the focus of this study, Dr Subash Sasidharan, Associate Professor of Economics, Department of Humanities and Social Sciences, IIT Madras, said, “MSME sector is the largest employer in the country. The survival of these enterprises is at stake due to this pandemic. Therefore, there is an urgent need to undertake research to analyse the challenges of these enterprises in detail.”
The Institute is partnering with ConsoTree, a pioneer in Research and Industry Development; and industry bodies - Tamil Nadu Small and Tiny Industries Association (TANSTIA), an apex body of MSMEs, and district level bodies including Coimbatore District Small Industries Association (CODITSSIA) and Madurai District Tiny and Small Scale Industries Association (MADITSSIA).
Further, Dr Santosh Kumar Sahu, Assistant Professor of Economics, Department of Humanities and Social Sciences, IIT Madras, said, “Given the contribution of MSMEs in employment, output and export is significant; an early revival of this sector is the key to the road to recovery.”
This kind of voluntary industry-academia collaboration is expected to further stimulate such research efforts in other states, which will be useful to formulate national-level strategies to strengthen the MSME sector in the post-COVID-19 scenario.
The first phase of the lockdown witnessed a revenue shortfall of more than 44 per cent in the Tamil Nadu MSMEs sector. The extension of the lockdown may further increase the revenue loss to more than 60 per cent. This pandemic created an unprecedented crisis to the MSMEs in Tamil Nadu, with a severe shortage of working capital, which includes delay in payments, shortage of labour and acute disruption in the supply chain.