Big boys and dumping threaten Gujarat SMEs

As China and large Indian companies grab their share of the market, small and medium units in the state face an uncertain future.

The chemical and dye stuff SMEs of Gujarat are going through a lean phase as average turnover nosediving from Rs 7.5 crore a few years ago, to Rs 4 crore in 2006. About 60 percent of India's export of chemicals and dyes is from Gujarat.

"Dumping from China has impacted the industry here. Also with the rise in petroleum prices, the cost of raw materials have gone up. The condition in Vatwa in Ahmedabad where many SMEs are located has been worsening day by day," said Magan Patel, president of Gujarat Small Scale Industries and vice-president of Indian Council of Small Scale Industries.

The contribution of SMEs to the the industry turnover has reduced from 80 per cent to 60 percent in the last one year, Patel added.

Vatwa contributes to about Rs 1500-2000 crore to the Gujarat dyes and chemicals industry.

"The overall sales turnover of Gujarat which is about Rs 1200-1500 crore has remained stagnant. This is due to the fact that large industries have grabbed the market share of SMEs," said Sailesh Patwari, former president of Gujarat Dye Stuff Manufacturers' Association.

There are about 7,000 chemical units in Gujarat, of which above 70 per cent are SMEs. Of this 1500 have closed down in the past few years whereas about 3500 are working at under 50 per cent capacity, Patwari said. The industry provides employment to about 5 lakh people.

"We had also taken up the issue with the finance minister. However, they have gone unheard," said Patwari.

In Vatwa, there are about 600-650 chemical SMEs of which 100 have closed down and about 150 are working under capacity, said Kirit Patel, president of Vatwa Industries Association. Only industries that could produce bulk products have survived, he pointed out.

"The chemical industries of Gujarat began buying raw materials from China at cheaper prices years ago. So, many of the units producing raw materials here faced closure. China has stopped exporting raw materials for some time now, leaving this already struggling industry in a crunch," he added.

Earlier some products were reserved for SMEs but the government kept opening them one by one for large scale industries also, Kirit Patel said.