The fourth of a five-part series looks at the situation in the industrial heartland of Western UP where firms prefer GST refunds, supportive policies over handouts
Less than an hour’s drive away from Delhi, Meerut is the second largest and most diverse industrial hub in NCR with an estimated 17,000 industrial units.
Meerut might have been deserted on Wednesday, apart from some policemen, but the industrial enclave of Partapur saw traffic jams with trucks bringing back equipment and workers cleaning up the accumulated dust inside factories of the two-month long lockdown.
Armed with requisite permissions, the owners of the 300-odd units say all they need is some cash to restart operations. Speaking almost in total unison, from the smallest back alley unit to industrial estates employing hundreds, they insist that, rather than handouts from the centre, they want a targeted upgrade of norms relating to bank loans, cash flows, and GST refunds.
“An entrepreneur does not look for free cash doled out by the government, but is interested in setting up a smooth highway on which his industry can survive global competition. Now, exporters want their GST refunds and duty drawback payments, which are stuck in government funds, to be made immediately,” said Mayank A Gupta, MD of Olympic Zippers.
Gupta’s company rates itself as the largest manufacturer of polyester, metal and plastic zippers, much of which is exported. “It will take 50-60 days to reach optimum output levels. Domestic sales are insignificant as most markets are still to revive and only those materials which had been ready by 22 March are being shipped,” said Gupta.
Less than an hour’s drive away from Delhi, Meerut is the second largest and most diverse industrial hub in NCR with an estimated 17,000 industrial units. Industrialists often shuttle between the two cities and exert a significant influence on policy-making.
But the pandemic has kept the doors shut for these medium, small and micro enterprises or MSMEs, many of whom had demanded factories be opened after April 20 when the lockdown was relaxed for industry.
Many of the 100,000 workers employed in these units left for their homes in other parts of Uttar Pradesh. But a local government official said the Yodi Adityanath government may announce dedicated funds for the city, along with other industrial centres, soon.
Earlier this week, the Meerut Industrial Development Forum suggested to the MSME Ministry that the GST refundable from the government or recoverable from sales billing should be financed by the banks while instalments of term loans payable next year should not be classified as a current liability.
“Everyone knows banks have their own problems and can’t suddenly start disbursing more. With the order cancellations, we would be happy to hit 80 per cent of our revenues from last year,” said Girish Kumar, MD, Sai Electricals which makes transformers.
His business, said Kumar, is cost intensive and until construction picks up, demand from power distribution companies or private buyers will remain slow.
At the company’s manufacturing unit outside the city, only a fifth of the nearly 100 workers have resumed work and are struggling to meet already extended deadlines. District quarantine rules allow 33 per cent of workers in a single shift if there are more than 50 employees.
Meerut has more than 400 Covid-19 cases as of May 28, the second highest figure in Uttar Pradesh after Agra. In trying to subdue the contagion, the authorities have imposed the lockdown with a heavy hand.
“The entire city was declared a hotspot in early May and every neighbourhood became a containment zone. As a result, the retail business continues to lose upwards of Rs 2 crore a day. We had long requested the government to provide enabling policies to upgrade facilities and ease goods movement,” said a senior member of the Western UP Chamber of Commerce and Industry in Meerut.
Arguably Meerut’s most famous industry – sports goods – has faced the most challenges, losing more than Rs 200 crore in April alone as orders were cancelled, according to the Sports Goods Export Promotion Council.
The 3,000 sports goods manufacturers used to employ some 25,000 workers. “Meerut is the second largest hub for sports equipment after Jalandhar, but it has a bigger footprint in exports. With the district boundaries closed, shifting out even finished products is almost impossible,” said Pramod Aggarwal, owner of a small unit that makes tennis equipment.
Away from the industrial din, in the narrow alleys where it has flourished for 350 years, one of Meerut’s most resilient exports – the metal scissors industry of Kainchi Bazaar – may quietly die. It has weathered many a challenge over the years, from a lack of trained hands to tight price competition by Chinese firms.
But the lockdown has pushed many to the edge of the precipice. “Many don’t even have enough funds to repair the rudimentary instruments that we use for sharpening and welding. I haven’t got a single payment in the past five months,” said Mohammed Rais, a scissor maker who employed 15 people till February.
All but three have left. Rais is the third generation in his family to practise the craft. It looks as though it will end with him.