Rising cases and mounting restrictions have meant that economic activity has buckled in April. The central government may have avoided a lockdown but growing local restrictions, rising infections and fear, along with slowing demand are hurting small businesses, which may not have the staying power that larger enterprises do.
BloombergQuint spoke to representatives of small businesses to understand conditions on the ground as India grapples with the second Covid-19 wave.
Different States; Different Rules
The strictest restrictions have so far been announced in Maharashtra. While manufacturing continues, rules on operations and staffing have been tightened.
Only a fraction of manufacturing activity is permitted in states such as Maharashtra, said Sushma Morthalia, director general at the India SME Forum.
Other states have also slowly started imposing restrictions amid rising cases but each differs from the other.
Considering the interconnectedness in the economy, different states having different guidelines and varying restrictions has disrupted economic activity across small businesses, said Animesh Dixit, president at the Federation of Indian Micro, Small and Medium Enterprises. If manufacturing in one state is shut, even if surrounding industrial areas are permitted to operate, it does not help, he said. MSMEs mostly place orders on spot rather than enter into long-term contracts and the current restrictions have caused supply chain disruptions, Dixit said.