How are power outages affecting small industries in India?

India’s small and medium businesses had only begun to recover from the economic impact of the pandemic followed by the geopolitical crisis, but the early onset of summer and recurring heat waves across north India paralysed them again. Demand for electricity shot up beyond expectations, leading to a nationwide power crisis.

With coal stocks at a critical level at many thermal power plants, states found themselves in a desperate situation, resorting to unscheduled power cuts. While the bigger, urban businesses are managing to sail through the crisis, small businesses and residents are not as fortunate.

A series of ground reports by Business Standard spanning across northern and western India chronicles the plight of MSMEs in Surat, Manesar, Kanpur and Jalandhar, where power shortages made matters worse for those already struggling with production lags and high prices of raw materials.
 
Haryana’s Manesar has been experiencing regular power cuts in industrial areas, forcing major industries to turn to diesel generator sets for backup. With soaring fuel prices, even major automakers like Maruti Suzuki are feeling the heat.
 
Surat, Gujarat’s textile hub, is facing a labour shortage as many workers have gone back to their hometowns.
 
To make the situation worse, power cuts in the city have brought down production by 10 per cent, say industry estimates.

Ashish Gujarati of Southern Gujarat Chamber Of Commerce and Industry, Surat, shares the concerns of small businesses.

For many small businesses, April is the time for peak production. But power outages have brought their dreams crashing down. While most are struggling with deep losses, some are being forced to shut down.
 
Jitubhai Vakharia, President, South Gujarat Textile Processors’ Association, Surat says, "The input cost of coal has almost doubled, the whole textile industry is dependent on imported coal. Since the Russia-Ukraine war, the availability of coal has reduced and its price has shot up."  He adds, "The cost of dyes and chemicals has increased by 25 to 40 per cent and the price of some chemicals like sodium hydrosulfite of soda or discharging agent like safolite have increased by 140 to 150 per cent. Thus, the input costs have increased, and increasing prices is difficult for us as the demand is already low in the market." 
 
Amid coal shortage, the textile industry, though largely resilient against power cuts, is also struggling with rising prices of coal. A near-doubling in the cost of imported coal is impacting value chains.
                                                    
The situation is no better for leather businesses in Uttar Pradesh’s Kanpur. Here, power has to be supplied non-stop, since any disruption could cause a loss of the raw hide. With no alternative, anyone who can afford it has had to move to diesel gen-sets, as they stare at rising energy costs.

Speaking to Business Standard, Nayyar Jamal, Member, UP Tanners’ Association, Kanpur says, "There’s no declared power shortage in this area but we experience power outages 5 to 6 times a day. This leads to a lot of problems, as we have a continuous operation process which involves the use of chemicals. So, during sudden power cuts, our material gets wasted. The cost of electricity for industries is highest in Uttar Pradesh. As such, competitive electricity rates will help us improve production."
 
Let’s turn to Jalandhar, Punjab’s export hub. The industries here are also struggling with major power shortages and are worried that the situation could deteriorate in the coming months.
Businesses outside the industrial belt have regularly been subjected to unscheduled power cuts, and the heavy machinery-centric operations are turning unsustainable to run even on power backups for most MSMEs.
 
PTC by Dhruvaksh Saha of Business Standard.

With the paddy-sowing season nearing, electricity, if not managed, would soon be diverted from industry to the agricultural sector. Industry bodies in Punjab fear the new state government might not be prepared for that situation.  

If the power crisis is not enough, industrial workers of Punjab and Haryana are also facing a health crisis since last month — unprecedented heat waves are causing daily wagers to fall sick, and labour-intensive businesses are uncertain how to deal with the double whammy.