Amid the recent HSBC India Manufacturing Purchasing Manager’s Index (PMI) report indicating a concerning 12-month low in manufacturing activity, the Federation of Indian Micro and Small & Medium Enterprises (FISME) has urged the government to take immediate action to mitigate the impact of rising protectionist measures on the sector.

       During a meeting with Chief Economic Advisor V Nageswaran, FISME representatives outlined several key recommendations to address these pressing issues. FISME has called for a thorough analysis of the proposed quality control orders (QCOs), anti-dumping measures, and safeguard duties by reputable institutions such as the Indian Institutes of Management (IIMs) or the Indian Institute of Foreign Trade (IIFT) before any new tariffs or non-tariff barriers are imposed.

       They stressed the importance of consulting micro and small & medium enterprises (MSMEs) and user industries to ensure their perspectives are included in the final decision-making process. Additionally, they recommended that a group of ministers (GoM) oversee these measures to ensure balanced and effective outcomes.

       During the meeting, FISME representatives raised alarms over the recent QCOs for steel, which impose 151 stringent standards and effectively hinder imports, allowing domestic producers to raise prices significantly. They also highlighted that similar restrictions are being extended to critical materials like copper, aluminium, and polymers, jeopardising MSMEs' access to competitively priced inputs. FISME said that the protectionist approach has led to increased production costs, reduced profitability, and weakened global competitiveness for MSMEs.

       FISME representatives emphasised that the decline in competitiveness could result in significant job losses, impacting related sectors such as transportation, logistics, and retail. A less competitive MSME sector would struggle to create jobs, ultimately hindering overall employment growth in India.

       "The decline in MSME competitiveness due to higher input costs and reduced market access will lead to job losses within the sector. And job losses in the MSME sector will have a ripple effect, impacting employment in related sectors like transportation, logistics, and retail. A less competitive and dynamic MSME sector will have limited capacity for job creation, hindering India's employment growth,” said a FISME memorandum submitted to the government.

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