Amid the ongoing economic slowdown, more than 24 small industrial units have closed down production in the past month in Kanpur, failing to sustain feasible profits post-production, due to the weakening rupee and increased value added tax (VAT) rates.
Sunil Vaishya, president of the Kanpur chapter of the Indian Industries Association (IIA), said around 2,500 small and large industrial units in the city were facing deep troubles in operation, due to declining orders from abroad.
“The raw materials for automobile component and plastic manufacturing are largely imported from abroad and the weakening rupee has increased the production costs significantly,” he added.
The city’s production, which was pegged at Rs 6,000 crore per month, has reduced to Rs 3,000 crore. The production costs have increased by 20 to 25 per cent due to the falling rupee. “Surviving in the domestic and the international market under such circumstances is proving difficult for local manufacturers,” said Vaishya.
R.K Dhawan, chairman, Federation of Indian Export Organisations, said that due to increased VAT rate, production amounting to about Rs 5,00 crore has suffered in the last few days.