Farmers Movement Archive

Tepid demand chokes small-scale industries

In May last, when thousands of factories in the capital’s industrial areas were allowed to open after lockdown, imposed to contain the spread of Covid-19, their operations were hamstrung by labour shortage, cash crunch, disruption of supply chains, and lack of demand.A year on, these Micro, Small and Medium Enterprises ( MSMEs) continue to be beset by many of these problems — and a few new ones. While the supply chains remain disrupted and the demand is far from reaching pre-pandemic levels, the rising cost of raw material and transportation has added to their woes.Shashi Mahajan, a shoe manufacturer in Udyog Nagar in Delhi, one of India’s biggest footwear manufacturing hubs with about 200 factories, says that he is working at only 40% capacity compared to pre-Covid days. “Earlier, I used to make 10,000 shoes a day, now I make about 4,000 only,” says Mahajan.It is an unusually hot March afternoon and inside Mahajan’s factory about 50 men are working at the conveyor production line — where the stitched uppers of shoes are moving from a counter moulding machine to toe- lasting and then to sole- pressing machines. “We are majorly into school shoes and most schools continue to be closed across the country. We had our biggest market in Gujarat and Maharashtra, where Covid cases are rising fast again,” he says. The factory has stickers on the walls warning employees that not wearing a mask will result in a deduction of ₹2,000 from their salary.Mahajan says that most of his 100 employees who had gone to their villages have returned, but he has been able to re-hire only half of them, as demand continues to be tepid. Gian Dhamija, another shoemaker, says that he is working at 60% capacity. “ Eighty per cent of my business comes from schools; I am still sitting on almost 1 lakh pair of unsold shoes from last year,” says Dhamja.The factories here source raw material used in the production of shoes — such as polyvinyl chloride (PVC ), polypropylene ( PP), ethyl-vinyl acetate ( EVA) as well as shoe colours — both domestically and from countries such as Austria, China, and South Korea. “But their rates have almost doubled, and we have to wait for the supply for much longer, ” says Ashok Gupta, president, Udyog Nagar Factory Owners Association. “Right now, the cost of raw material is the highest that it has been in 10 years,” says Kamal Kiran Seth, another factory owner.“The high cost and the disrupted supply of raw material are delaying recovery,” says Virender Nagpal, owner Sportsline, an original equipment manufacturer for some of the top sports brands, such as GM and Slazenger. He makes a range of products, including cricket helmets, batting pads and abdominal guards.The demand for his products, he says, started picking up in August, but is nowhere near the pre-Covid levels. “Fifty per cent of our products are exported. Since many countries in Europe are still under lockdown restrictions, and sporting events are yet to resume fully, the demand is only 50% compared to pre-pandemic levels,” says Nagpal, who also manufactures skateboards, roller skates, cycle helmets, under his own brand name Yonkers.“ Here in Udyog Nagar, we have proved that we can match any country in terms of quality; otherwise, we would not be manufacturing for top global brands.”Framed pictures of Nagpal with past and present cricketing greats such as Sunil Gavaskar, Sachin Tendulkar, and Virat Kohli, among others, adorn the stair walls of his office. “Almost every top cricketer has worn our helmet and batting pads,” he says.In Okhla, the city’s oldest and the largest industrial estate, a majority of factories are operating at 50% capacity says Sunil Malhotra, president, Okhla Industries Association. “The garment factories are among the most badly hit. The pandemic has hastened the decline of Okhla, which is an important part of the city’s industrial heritage,” he says.For the uninitiated, Okhla Industrial Estate, which derives its name from Okhla village, was set up by the National Small Industries Corporation ( NSIC), and is one of the 12 such estates developed across the country to encourage small industries after Independence. The construction began in 1952, and it was was inaugurated in 1958.Okhla, a symbol of industrialisation in Delhi post-Independence, has been home to some of the biggest electronics companies, including early television manufacturers, garment manufacturers, pharmaceutical companies, plastic and packaging industries, printing presses, among others. As imports from China increased, many factory owners here became traders and importers, turning their factories into warehouses, office spaces and automobile showrooms.Today, Okhla’s factories manufacture garments, cardboard boxes, speciality plastic films, and electric items, among others. Besides, it is also a hub of printing presses.Anil Varma, a garment manufacturer, says that Covid-19 has ripped through the garment industry in Okhla that has about 200 manufacturers, which make garments for many international apparel brands. Most say their orders have dwindled sharply and they are working at 40 to 75% capacity. “The lockdown was sudden and all manufacturing had to stop overnight. There were shipments in warehouses, in transit and heaps of half-sewn garments that were wasted,” says Varma, who makes garments for top apparel brands in Australia and France. “ Many manufactures here have lost clients to Bangladesh, Cambodia and Sri Lanka. “What is also not helping is the fact that the cost of cotton has gone up by 25% in the past few months.”Things are no better in Narela, which is home to over 3,500 factories. Like elsewhere in Delhi, most factories here are working at reduced capacity. “I am operating at 50% capacity as demand continues to be a problem,” says Basant Somani, who runs a plastic factory in Narela. “The continuing blockade of the Singhu border due to the farmers’ protest has also led to a rise in transport costs and has disrupted supplies,” he says. “The road to recovery is going to be much longer than we had thought”

Hindustan Times

22-03-2021

Delhi