Tamil Nadu MSMEs Adapt Amid West Asia Crisis
Amid turmoil, MSMEs look to adapt
Image: The Times Of India
Tamil Nadu's micro, small, and medium enterprises (MSMEs) face challenges due to the West Asia crisis, impacting logistics and raw material costs. However, industry leaders see opportunities for growth, particularly in Tirupur's knitwear sector, which aims to establish a new industrial cluster to boost production and exports.
- 01Tirupur, known for its knitwear, plans to create a second industrial cluster requiring investments of approximately ₹10,000 crore.
- 02Tamil Nadu accounts for 40%-45% of India's leather and non-leather footwear exports, valued at $4.7 billion in FY26.
- 03The ongoing crisis has led to a 25%-30% increase in logistics and delivery costs for MSMEs in Tamil Nadu.
- 04A six-month moratorium under the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 has been proposed to support MSMEs facing liquidity issues.
- 05LPG shortages have severely impacted production in the Coimbatore region, with capacity utilization dropping from 70% to around 50%.
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The West Asia crisis has significantly affected Tamil Nadu's micro, small, and medium enterprises (MSMEs), particularly in logistics and raw material costs. Key industry figures, such as Raja M Shanmugam from the Tirupur Exporters Association, emphasize the need for adaptation and view the crisis as an opportunity for growth. Tirupur aims to establish a second industrial cluster, requiring around ₹10,000 crore in investments, which could potentially double production and exports. Tamil Nadu is a major player in India's leather and footwear exports, accounting for 40%-45% of the market. However, rising logistics costs, which have increased by 25%-30%, and significant price hikes in raw materials like tungsten carbide (up nearly 300%) pose challenges. Industry leaders are advocating for government support through initiatives like the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 and addressing LPG shortages that have severely impacted production capacity in regions like Coimbatore. Overall, while the crisis presents challenges, it also opens avenues for strategic growth and market diversification.
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The crisis has led to increased operational costs and production losses for MSMEs, particularly in the Coimbatore region.
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