MSMEs hugely impacted by power crisis, fear job losses


According to industry executives, small businesses have been hit disproportionately hard by the ongoing power crisis, with several having to shut down operations during outages, resulting in production losses, and others with power backup forced to bear higher costs during the second half of April, when outages were more frequent and prolonged.

“Power failures result in lost production opportunities, and using backup generators practically doubles the cost of power,” said Anil Bhardwaj, secretary general of the Federation of Indian Micro, Small, and Medium Enterprises (Fisme).

In the event of a power outage, he added, the cost of power rises to $12–13 per unit, up from the $4–6 per unit that distribution firms typically charge.

According to Animesh Saxena, former president of Fisme, the overall cost of production for micro, small, and medium enterprises (MSMEs) increased by 4—5 percent in the second half of April due to a sharp increase in the cost of power.

Furthermore, only MSMEs typically have power backup in the form of diesel-powered generators.

Because of their high operating costs, micro enterprises generally do not have such backups, forcing them to shut down operations during power outages.

MSME clusters across the country felt the impact of the power crisis last month, from Delhi-NCR (Faridabad, Gurugram, Noida, and Sonipat) to Ludhiana in Punjab and Coimbatore in Tamil Nadu.

Although industries have previously experienced power outages, the current crisis is more significant because businesses are now in recovery mode following the massive blow from successive waves of the pandemic and the resulting lockdowns and restrictions.

According to Vinod Kumar, president of the India SME Forum, some industrial units have been working 16 hours a day to recover from pandemic lows, and these are the very businesses that have been most severely impacted by the outages, which mostly occur in the evening due to peak power demand.

“There are a lot of units that work at night as well, and some of them are in the continuous process (of manufacturing),” Saxena explained.

According to Kumar, the president of the India SME Forum, non-availability of uninterrupted power could cost small and medium enterprises in the state between 3,000 and 3,500 crore per year. According to the survey, SMEs across the country could lose thousands of crores in revenue.

Along with profitability, power outages have an impact on business debt levels because bank repayment must be postponed in the event of revenue losses,” Kumar explained.

Questions sent to the ministries of micro, small, and medium enterprises and power remained unanswered as of press time.

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