MSMEs on brink of collapse amid prolonged crisis in state
Source: Chronicle News Service / Mission Oinam

Imphal, December 28 2024: Micro, Small, and Medium Enterprises (MSMEs), which form the backbone of the state's economy, are facing a dire crisis as the state grapples with prolonged unrest for over 19 months.

These enterprises, crucial in generating employment and sustaining the local economy, are on the verge of collapse, leaving countless livelihoods at stake.

The compounding effects of armed skirmishes, blockades, curfews, and an extended internet ban have crippled businesses, with MSMEs bearing the brunt.

Adding to their woes are the lingering aftereffects of the COVID-19 pandemic and recent floods that have further destabilised the fragile economic ecosystem.

MSMEs have historically played an integral role in addressing unemployment.

MSMEs on brink of collapse amid prolonged crisis in state

With the government unable to provide jobs to all its youth, entrepreneurship emerged as a critical alternative, filling the gap in employment generation.

The entrepreneurial movement in the state began in the early 1980s, marked by the launch of the first Entrepreneurship Development Programme (EDP) in 1985 by the State Bank of India, under the sponsorship of the Small Industries Service Institute.

This initiative laid the foundation for nurturing a generation of entrepreneurs who have since contributed significantly to the state's socio-economic development.

Over the decades, several enterprises have provided direct and indirect employment opportunities, becoming lifelines for many.

However, the current crisis has unravelled these gains, leaving many businesses struggling to survive.

Among them is Rima Food Industries, a pioneering MSME that brought global recognition to the state's indigenous black rice, known as Chak-hao.

The enterprise was founded by 31-year-old Rima Laishram, who began her journey in 2016 with just Rs 1,000 earned from stipend during a short-term food processing training conducted by the District Industries Centre (DIC).

Through sheer determination and innovation, Rima expanded her business, introducing various bakery products made from Chak-hao.

Her efforts earned her a Memorandum of Understanding (MoU) with a foreign company facilitated by the State Horticulture & Soil Conservation Department, allowing her to export her products internationally.

At its peak, Rima Food Industries employed over 15 people and contributed to the promotion of Manipur's indigenous products on the global stage.

Rima's flourishing business, however, was collapsed by a series of crises.

The COVID-19 pandemic disrupted supply chains, while the prolonged crisis caused transportation and logistical issues, further complicating operations.

The final blow came with the recent floods, which submerged her manufacturing unit at Khurai Lairikyengbam Leikai, damaging all her machinery and raw materials.

With no means to recover from these cumulative losses, Rima's business operations came to a halt.

She has since been unable to pay her loan EMIs for months, and pressure from the bank has mounted to the extent that she now fears losing her family's homestead land.

The young entrepreneur, who once symbolised hope and resilience, is now seeking financial assistance of at least Rs 10 lakh to restart her business.

However, with no clear avenues for support, her hopes rest solely on the government's intervention.

Rima's story is not an isolated one.

Across the state, MSMEs are struggling to cope with similar challenges.

Frontier Food, another notable enterprise based in Bishnupur, exemplifies the widespread plight of small businesses.

Its proprietor, L Orenkumar, shared how the closure of the national highway has severed their ability to transport products outside the state, while the cost of raw materials has skyrocketed due to increased logistics expenses.

Transportation costs of raw materials, which were once Rs 6 per kg, have nearly doubled to Rs 10 per kg.

The current unrest in the state has forced Orenkumar to drastically reduce his workforce from 34 employees to just five, with even those employees working only three weeks a month due to financial constraints.

The limitations on market access and the rising costs of operation have made it nearly impossible for enterprises like Frontier Food to sustain themselves.

The broader economic impact of the crisis is evident in the mounting non-performing assets (NPAs) among MSMEs in the state.

Many businesses have defaulted on their loans, and once a loan becomes an NPA, borrowers lose access to further financial assistance from banks.

This vicious cycle leaves businesses with no means to recover or rebuild.

Entrepreneurs like Orenkumar have called on the government to implement special policies to support MSMEs, such as extending loan moratoriums or introducing financial aid packages tailored to the unique challenges faced by small businesses in Manipur.

The state government has made efforts to promote entrepreneurship through initiatives like Startup Manipur, which aim to encourage innovation and self-reliance among the youth.

However, the scale of the current crisis demands urgent and targeted intervention such as financial assistance, loan restructuring.

MSMEs are not just economic entities; they represent the aspirations and livelihoods of countless individuals who have poured their resources and energy into building businesses that contribute to the state's growth.

Without timely support, these enterprises risk permanent closure, which would have far-reaching consequences for the state's economy and social stability.

Unemployment, already a pressing issue in Manipur, is likely to worsen as MSMEs shut down, leading to an increase in social problems such as crime and substance abuse among the youth.

Entrepreneurs like Rima and Orenkumar, who have been pillars of the communities, now find themselves in desperate need of support.