The impact of sectors like textiles and pharmaceuticals on India’s export prospects is projected to be positive despite the current geopolitical crises, according to a CRISIL report. However, more than one-fourth of India’s micro, small, and medium enterprises (MSMEs) lost more than 3 percent market share as a result of the COVID-19 pandemic in fiscal 2022.
Moreover, half of these MSMEs saw a contraction in their earnings before interest, tax, depreciation, and amortisation (EBITDA) margins due to a steep increase in commodity prices when compared to the pre-pandemic (fiscal 2020) level. It was also found that approximately 40 percent of SMEs did not lose much market share. This was due to the fact that these SMEs were either ‘essential’ in nature, like agricultural millers/pharmaceutical, or because they had a high share, for instance the brass industry, according to CRISIL Research’s SME Report 2022.
Regarding what’s in store for MSME garment manufacturers in India, Elizabeth Master, Associate Director, CRISIL Research, said “Amid the pandemic and ongoing geopolitical crisis, sectors such as textiles and pharmaceuticals have offered a ray of hope for exports. Cotton yarn exports have benefited from the US ban on Xinjiang, China-made items, apart from the China+1 policy. The readymade garment industry, with 70 percent MSME share, gained from supply constraints in China, and from emerging global opportunities. Going forward, Tiruppur-based MSME garment manufacturers could benefit from export orders diverted from an economically floundering Sri Lanka.”
