Maharashtra, Tamil Nadu, Gujarat Lead In MSME Closures Since 2020

Gandhinagar, Dec 7 (KNN) Gujarat, a state renowned for its industrial prowess, is experiencing a significant economic challenge as thousands of micro, small, and medium enterprises (MSMEs) have been forced to close operations.

According to recent data from the Union Ministry of Commerce and Industries, Gujarat ranks third nationally in MSME closures, with 5,974 businesses shutting down between July 2020 and November 2024.

The state follows Maharashtra, which recorded 15,220 MSME closures, and Tamil Nadu, with 7,894 enterprises ceasing operations during the same period. 

Industry experts attribute this widespread business failure to a complex combination of factors, including the lingering economic aftermath of the COVID-19 pandemic, persistent inflationary pressures, and consistently weak market demand.

Particularly hard-hit sectors include textiles and chemicals, where declining consumer demand and escalating operational costs have created an increasingly challenging business environment. 

The compounding economic pressures have made survival difficult for many small businesses, especially those lacking robust financial infrastructure and adaptability.

Pathik Patwari, Chairman, Indian Chamber of Commerce (ICC) Gujarat, provided critical insights into the crisis. 

He highlighted the pandemic's domino effect, explaining that many MSMEs were already vulnerable before inflationary pressures pushed them towards closure. 

While government initiatives like the Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) were designed to address cash flow concerns, many micro-enterprises remained unable to access these benefits due to limited banking facilities.

Beyond immediate financial challenges, Patwari also noted that technological upgradation and skill development gaps have significantly impacted business sustainability. 

Many enterprises found themselves unable to keep pace with rapidly evolving market dynamics, ultimately leading some business owners to diversify or completely shut down their existing operations.

The situation underscores the fragile ecosystem of small businesses in India, highlighting the need for comprehensive support mechanisms, targeted financial interventions, and strategic skill development programs to ensure the long-term resilience of the MSME sector.

(KNN Bureau)