Industry associations on Sunday cited growing operational and financial pressures among small and medium-sized enterprises (SMEs), exporters and energy-intensive industries, warning of a potential exodus of migrant workers amid concerns about cooking fuel due to supply shortages due to the West Asia war.
The situation remains volatile, with supply-side pressures persisting across energy, logistics and trade channels, the Confederation of Indian Industry (CII) said. “While the first round of policy measures has mitigated the immediate impact, many sectors continue to face operational and financial pressures,” it said, citing industry feedback.
Vinod Kumar, president of the India SME Forum, noted growing labor market instability in the country’s 78.9 million SMEs, which employ about 340 million workers, with early signs of reverse migration emerging in select groups. He added that fluctuating energy prices had affected major industrial centres, including ceramics in Morbi, glass in Firozabad, foundries and blacksmithing units in Ludhiana and Kolhapur, and textile processing in Tirupur and Surat, citing a recent study.
“For migrant workers, access to cooking fuel has become a major issue. They cannot afford to pay the same amount $4000-5000 pounds for a 5 kg gas cylinder on the black market. We’ve asked our members to organize community kitchens so workers can get two square meals. He said the government should support the establishment of temporary canteens in major clusters of MSMEs.
Industries in parts of Gujarat have already started setting up such facilities, he added. India SME Forum has around 1.02 lakh direct members and over 1.27 million SME subscribers through its branches in the state.
“India’s experience during previous crises has shown that coordinated fiscal and monetary action can significantly enhance resilience. Hence, the next phase of the policy response may need to focus on targeted liquidity support, credit facilitation, trade cost management and foreign exchange stabilization,” said Chandrajit Banerjee, Director General, IIF.
CII proposed several measures for immediate, short- and long-term consideration, including the Conflict-Linked Emergency Credit Line Guarantee Scheme (CL-ECLGS) which provides additional collateral-free working capital to affected companies, particularly targeting micro, small and medium enterprises, exporters and gas-dependent sectors. Other recommendations include a three-month interest moratorium, contractual relief for industry through extending timelines for delivering supplies to government agencies, and a time-bound rationalization of the structure of taxes and fees on energy inputs such as waiving about 2.5% of customs duties on liquefied natural gas imports.
The Investment Institute also proposed that the Ministry of Finance adopt a standardized approach to managing subsidies, particularly in the area of fertilisers, by gradually moving towards direct benefit transfer (DBT)-based delivery mechanisms, with improved targeting through linkage to land holding size, cropping patterns and soil health indicators. This would help strike a balance between fiscal prudence and protecting vulnerable beneficiaries, he added.
The Priority Sector Lending (PSL) norms may be reviewed to enable banks to respond more flexibly to sector-specific pressures during external disruptions, the CII said. He proposed establishing an institutional coordination mechanism among ministries, including industry, to enable real-time monitoring of sectoral pressures, facilitate seamless policy responses across financial and trade areas, and ensure effective implementation of relief measures.
