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5 lakh SMEs face deep peril

An industry association of small and medium enterprises fears that as many as 5,00,000 units face closure in 2009 as a result of the global crisis, reports Devraj Uchil.

business Updated: Mar 01, 2009 20:13 IST
Devraj Uchil
Devraj Uchil
Hindustan Times
Hindustantimes

An industry association of small and medium enterprises (SMEs) fears that as many as 5,00,000 units face closure in 2009 as a result of the global crisis, with the prospect of lockouts driven by a demand crunch hitting a sector that provides jobs to more than 2.8 crore people in 30 lakh firms that account for 40 per cent of government levies.

“Around five lakh micro, small and medium enterprises would have to shut shop in 2009 due to global crisis,” Chandrakant Salunkhe, president of Small and Medium Business Development Chamber of India said.

A Rameshkumar, chairman of SME Chamber of India (Northern Region) said SMEs need to innovate or use efficient technologies to stay ahead in an economic crunch. The Internet, which helps even far-flung firms take advantage of cluster-like structures that usually help small firms boost efficiency. “The Internet has come to the rescue here with close physical presence of enterprises not being a necessity to for a cluster,” said Rameshkumar.

Everything matters, including new ways to cut power bills. Abhimanyu Gupta, director, Actis Technologies advocated lighting control through use of dual motion sensors and daylight sensors to cut electricity charges.

Indian SMEs are not the only ones suffering.

According to a survey by Plantronics, a hardware company based in California, more than 7,000 SMEs have shut shop in Taiwan over the past two years on account of shrinking demand. Two out of three SMEs are likely to cut their financial turnover within the next six months while three out of 10 are expecting to fail by autumn 2009.