54,672 MSMEs units opt out from govt registration; marginal spike in employment

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By Our Special Correspondent

New Delhi, December 19: The government on Monday told the Rajya Sabha that as many as 54,672 units have exited from the Micro, Small and Medium Enterprises (MSME) registration on Udyam portal in the last two years. In the last eight months alone, 30597 MSME units have exited the Udyam registration.

The sharp spike in the number of units opting out of the MSME registration is in line with the economic distress as seen in the GDP growth slowing down fast along with the rising cost of accessing capital after the Reserve Bank of India sharply increased the Repo Rate this year, which has made bank capitals too costly.

Minister of State for Micro, Small and Medium Enterprises, Bhanu Pratap Singh Verma in a written reply in Rajya Sabha on Monday, said that the MSMEs currently employed over 1.31 crore people. The current employment in the MSMSE units has seen a marginal increase from last year’s about 1.13 crore employments.

The data provided by the government in the Rajya Sabha showed that the registration of the MSMEs along with employment by them had seen sharp increase between 2019-20 and 2020-21. While there were 1103970 MSMEs registered with Udyam portal in 2019-20, they shot up to 1841253 in the next year. Also, employment by the MSMEs had seen a sharp jump from 6622941 in 2019-20 to 11297690 in the next year.

While reasons for such a large number of the MSMEs exiting Udyam portal are not immediately known, industry participants have been raising concerns of rising cost of doing business with the bank rates going higher after the Reserve bank of India following the US Fed in aggressively hiking the rate to check the runaway inflation. Also, the industry participants claimed that the dumping of the goods by China is going unchecked, which because of price advantage is making the businesses of the MSME units unviable. It has been pointed out by several industry leaders that Chinese imports, essentially of the industrial intermediaries, have seen sharp jump in the last couple of years.

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