FKCCI calls for a quick reassessment of minimum wages to prevent closure of MSMEs
The cost of doing business in Karnataka is now significantly higher than in neighbouring States such as Tamil Nadu, Telangana, and Andhra Pradesh and such cost escalations coupled with an improper minimum wage structure have been putting a lot of pressure on small entrepreneurs in the State, said M.G. Balakrishna, president of the Federation of Karnataka Chambers of Commerce and Industry (FKCCI), on Wednesday.
'The cost of doing business in Karnataka is now significantly higher than in neighbouring States like Tamil Nadu, Telangana, and Andhra Pradesh,' he said.
The FKCCI, after wide consultations with member industry associations, has voiced grave concern over the recent hike in minimum wages across Karnataka, highlighting its devastating impact on the State's industrial landscape, particularly on the micro, small and medium enterprises (MSME) sector.
Speaking at a special meeting organised by the trade body for its member associations here, he demanded an urgent reassessment of minimum wages to prevent the closure of the MSME units in the State.
'The indiscriminate wage hike, without assessing the paying capacity of small-scale industries, is leading to a situation where many of them are considering shutting down,' he cautioned.
At the meeting on Wednesday, representatives of the Peenya Industrial Estate, Asia's largest small-scale industrial cluster, revealed that the increase in variable dearness allowance (VDA) and resultant wage hike has rendered the operations of many small units financially unviable, and consequently, some 20% of units were at risk of closure if the government did not take immediate corrective steps.
The high minimum wages, while well-intentioned, were eroding Karnataka's competitive advantage in attracting investments, especially in labour-intensive sectors such as textiles, light engineering, electronics, and packaging, Mr. Balakrishna added.
The trade body further cautioned that, if a high wage regime continued, there would be loss of jobs across the State and loss of tax revenue to the government.
'Under a high minimum wage structure, the MSMEs will succumb to closure or decide to shift to neighbouring States where the minimum wages are lower than what they are in Karnataka,' he said.
Some of the recommendations made by the FKCCI to the State government include introducing differentiated minimum wage slabs for MSMEs vs. large industries, immediately convening a wage rationalisation committee, and providing relief through power tariff subsidies, labour cess waivers, or working capital support.
The trade body also asked the Central government to enforce a uniform national minimum wage ceiling, announce wage-linked incentives or subsidies under MSME schemes, and reduce the regulatory burden on small industries to retain employment generation.
The FKCCI also urged various labour unions and civil society outfits to participate in constructive dialogue and recognise the unique vulnerabilities of the MSMEs, which collectively contribute over 45% to industrial jobs in Karnataka.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Hindu
a day ago
- The Hindu
Bengaluru-Mangaluru National Highway blocked by protesters near Solur
Traffic movement on Bengaluru -Mangaluru National Highway was disrupted near Solur as hundreds of farmers of Magadi area in Ramanagara district took out a protest march seeking implementation of Hemavathy Express Link project. The project that seeks to provide Hemavathy river water from near Gubbi in Tumakuru district is being opposed by farmers of Tumakuru who fear water shortage due to the project. The Congress legislator from Magadi H.C. Balakrishna led the protest march on the national highway resulting in the pile up of vehicles on the highway as well as the service road. The farmers are demanding early implementation of the project that will bring water to water starved areas in Ramanagar district. Police tried to convince the protesters from withdrawing protest, but later took the protesters, including Mr. Balakrishna, to custody to clear the traffic.
Time of India
a day ago
- Time of India
Andhra Pradesh government revives anti-plastic drive with new incentives
Vijayawada: In a renewed effort to combat plastic pollution, authorities in Andhra Pradesh are reviving past initiatives to drastically reduce the use of single-use plastic, particularly in major urban centres like Vijayawada, Visakhapatnam, Tirupati, and Kurnool. Tired of too many ads? go ad free now These initiatives aim to protect the environment while also creating new employment opportunities, especially for women and rural communities. The state's municipal department estimated in 2018 that over 70% of single-use plastic in cities could be eliminated by replacing plastic bags and food packaging with eco-friendly alternatives. Although a formal ban was imposed that year, enforcement weakened over time, especially during the COVID-19 pandemic, when the use of plastic surged again due to hygiene concerns. In Vijayawada alone, 150 metric tons of garbage is generated daily—over 90% of which is single-use plastic. To curb this, the Vijayawada Municipal Corporation (VMC) initially encouraged the use of cloth and jute bags and promoted food packaging in lotus or banana leaves. The initiative gained initial support but later lost momentum due to cost and availability issues. With the new NDA govt in place, the anti-plastic campaign is being re-energised. The govt now plans to provide training and subsidies to women-led self-help groups under the MSME programme for manufacturing biodegradable items such as banana-leaf plates and wooden spoons. Lotus leaves cultivated in ponds near urban areas are also being promoted for use in hotels and meat shops, aligning with both environmental goals and rural employment generation. To further encourage public participation, the municipal department plans to convince sellers to offer discount-based incentives. Hotels offering takeout will give concessions to customers who bring their own containers, while meat shops will provide a 3% discount for those avoiding plastic bags. The AP pollution control board (APPCB) and voluntary organisations are also working together to develop a sustainable plan to eliminate plastic use through public awareness campaigns and competitions.
Time of India
a day ago
- Time of India
MSE procurement targets surpassed in previous fiscal
New Delhi: Central ministries exceeded the target of buying goods and services from micro and small enterprises (MSEs) by over 94% in FY25. The ministries that had a minimum MSE procurement target of ₹100 crore bought goods and services worth ₹92,675 crore from these enterprises in the last fiscal, against a target of ₹47,676.88 crore, according to data from the MSME ministry 's Sambandh portal. These ministries had procured ₹73,800 crore worth of goods and services from MSEs in FY24. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Access all TV channels anywhere, anytime Techno Mag Learn More Undo The petroleum & natural gas ministry led the group in procurement value, followed by the defence ministry and the power ministry. However, the finance ministry, the health & family welfare ministry and the department of space fell short of their procurement targets by huge margins, achieving only 58%, 19.60% and 2.30%, respectively, of their procurement targets. The petroleum & natural gas ministry's procurement stood at ₹31,304 crore, the defence ministry's was at ₹13,039 crore and the power ministry procured ₹11,584 crore worth of goods and services from MSEs in last fiscal. Live Events In percentage terms, though, the shipping ministry was the top performer, exceeding its procurement target from MSEs by 300%. It was followed by the ministries of petroleum & natural gas and civil aviation, which exceeded their targets by 173% and 148%, respectively.
