Micro industries in Coimbatore hit hard by drop in demand

James, who had two CNC turning centres and employed two people, stopped operating his micro industry in Coimbatore three months ago. “I am looking for someone who will run it on lease,” he says.

James is among the thousands of micro industry owners in Coimbatore who are struggling to remain in business. He was doing job orders for a couple of pumpset companies and has not had orders for the last three months.

“Textiles, pump and motor, and automobiles are the main businesses for Coimbatore’s micro industries. Textiles and pump and motor sectors are seeing a steep slump in orders for nearly two years now,” says C. Sivakumar, president of the Coimbatore Tiruppur District Tiny and Micro Entrepreneurs’ Association.

“The first and second quarters of the current financial year were a washout for the pumpset industries in Coimbatore. There is inventory at all levels. Usually order picks up in the northern markets after Deepavali. We will know in a week how the demand will be in the northern States. Even if the demand picks up, the inventory will be sold and manufacturing will pick up only in December,” says Mithun Ramdass, president of the Southern India Engineering Manufacturers’ Association.

Even as the industries struggle to remain open, the price of copper, which is the main raw material for the pumpset industry, has risen 15 % in the last two to three months. This is a major disruption. Some of the big companies in Coimbatore gave the workers a long holiday during the puja holidays (Navarathri) because of the slump in orders, he says.

Mr. Sivakumar adds that orders for spares from the textile sector has seen a 60 % drop in the last two years. “So many machinery have gone to scrap that the minimum requirement for spares is met from the scrap too. So business is down for two years now,” he adds.

J. James, president of the Tamil Nadu Association of Cottage and Tiny Enterprises, and Mr. Sivakumar say apart from the drop in demand, structural and policy issues have hit the micro industries hard.

Refusal of the Central and State governments to reduce the GST rate for job working units to 5 % is one major issue, says Mr. Sivakumar. There is no point in placing the demand to the government now because no one is willing to listen, he says.

High power costs, drop in labour charges paid by the large industries, excess availability of production capacity, and shrinking competitiveness of the industries in Coimbatore have all hit the micro sector hard. So many micro industry owners are moving to other businesses, adds Mr. James.