As the chairman of the five member inquiry committee write an investigative report on the

economic slow down in small and micro scale industries due to the prevailing pandemic
situation in India.

Much has been written about how COVID-19 affects people in developed countries, but little has
been written about what is happening in developing countries. Contrary to popular belief, the
first images of COVID-19 that India associates with are of migrant labourers trudging back to
their villages hundreds of miles away, lugging their belongings. With the majority of the economy
shut down, the vulnerability of India's labour market was obvious. It is estimated that nearly 10
million people returned to their villages in the first wave, with half of them walking or bicycling.
According to the International Labor Organization, 400 million people in India are at risk of
falling into poverty as a result of the economic shutdown.

According to MSME Ministry data released on May 16, 2021, India has approximately 6.3 crore
MSMEs, which contribute approximately 29 percent of the country's GDP through national and
international trade. This industry accounts for nearly half of the country's exports. According to
the 73rd Round of the National Sample Survey (2015-16), the MSME sector provided
approximately 11.10 crore jobs, with 3.6 crore in manufacturing, 3.9 crore in trade, and 3.7 crore
in other services. Given all of these facts and figures, it is clear that the growth of SMEs is
critical for India's goal of becoming a $5 trillion economy by 2025.

Because of its size, scale of business, and availability of financial resources, the MSMEs sector
has been one of the most vulnerable sectors during the pandemic. According to studies and
surveys, approximately 95 percent of firms were negatively impacted by the national lockdown
imposed in April 2020, and 70 percent of businesses were disrupted until August 2020. Even
after progressive unlocking, reports indicate that nearly 40% of businesses will be disrupted until
the end of February 2021. MSMEs face three critical barriers: market access, overall
productivity, and access to more funds. The average decline in business volume of Indian
MSMEs due to lockdown in 2021 was 11 percent, compared to a 46 percent decline during the
nationwide lockdown in 2020.

From March to May 2020, the export sector's apparel manufacturing units lost more than Rs.
150 crore. In the global market, the loss of India's leather industries has been estimated to be
Rs. 11,210 crore. The All India Manufacturers Organisation conducted a survey on MSMEs and
found that the self-employed MSME units, which account for 35 percent of the MSMEs sector,
do not have any hope of reviving their businesses and have already begun winding up their
operations.

MSMEs must assess their financial situation and security as soon as possible. To assist MSMEs
during a pandemic crisis, the government may offer soft loans with longer repayment terms and
increased credit limits. MSMEs must re-strategize their overall value proposition by improving
product quality, strengthening distribution channels, and utilising innovative promotion methods,
among other things. There is a need to build a strong digital ecosystem in order to increase
market outreach among buyers and suppliers.
According to the Retailers Association of India's (RAI) latest Retail Business Survey, retail sales
in August 2021 were 88 percent of pre-pandemic levels (August 2019), up from 72 percent in
July 2021. Quick Service Restaurants (QSR) showed signs of growth, with a 12 percent
increase in sales in August 2021 compared to August 2019 sales, while the food & groceries
category showed a 4 percent increase. Beauty & wellness, which includes salons, apparel,
footwear, and jewellery, has yet to catch up to pre-pandemic sales figures. According to an
entrepreneurship survey, more than 60% of small businesses in India are optimistic about their
business recovery, despite the economic slowdown caused by the pandemic.