According to the Industrial Estate Manufacturers Association, Guindy, the sector needs financial assistance of at least Rs. 2 lakh a unit – half as subsidy and the balance as interest-free loan repayable after the units revive.
Addressing media persons, Shanmuga Velayudham, Advisor to the association, said the assistance is needed as they have to start from the scratch. It could be funded through the relief package from the Center.
The association estimates the loss of production across all the flood-affected areas at about Rs. 7,000-10,000 crore with over 2 lakh workers displaced. The units need Rs. 2,000 crore for repair and replacement of machinery and about Rs. 2,500 crore for raw materials, tooling, software and interiors. The State will also have to rework some of the existing assistance schemes. For instance, the back-ended capital subsidy of 25 per cent for micro industries could be given as an advance to leverage 75 per cent bank loan. Taxes and duties should be deferred by 5 years. These will not cause additional outgo for the State government and the Center, he said.
The floods in the first week of December inundated Chennai, Thiruvallur, Kancheepuram and Cuddalore causing huge loss of life and property.
More than half the industrial enterprises in the MSME sector are concentrated in the flood-affected areas.
The industrial hub on the outskirts of Chennai was submerged when the Adyar River overflowed. Costly machines have been irreparably damaged according to the association which represents over 2,000 units in Guindy and Ekkatuthangal.
The State government has declared Tamil Nadu as ‘flood-affected’ and passed an order advising banks and cooperative credit institutions to extend relief and concessions in line with RBI guidelines.
Under the relief package through a Government Order on December 20, for the flood-affected industries, the excess working capital drawn over the existing limit will be converted to term loan with a 24-month moratorium on repayment from November 1, 2015.
Repayment will be spread over seven years after the two-year moratorium. As an immediate relief, in addition to the regular limit, the borrower can get additional working capital facility with a minimum of 50 per cent working capital term loan converted.
Source: Business Line