Gujarat, a state renowned for its industrial prowess, is facing a stark economic challenge as 5,974 micro, small, and medium enterprises (MSMEs) have closed their doors since July 2020. Official data from the Union Ministry of Commerce and Industries, recently presented to Parliament, reveals that Gujarat now ranks third nationally in MSME closures, behind Maharashtra with 15,220 and Tamil Nadu with 7,894 business shutdowns.
The aftermath of the COVID-19 pandemic, compounded by spiralling inflation and weak market demand, has pushed small businesses to the brink of survival. The textile and chemical sectors have been particularly hard hit, with declining demand and rising operational costs creating an increasingly hostile business environment.
“The post-Covid economic stress triggered a domino effect. Many MSMEs were already vulnerable, and inflationary pressures pushed them to the brink. While the government introduced the CGTMSE scheme to address cash flow concerns, many micro enterprises lacked access to formal banking facilities, leaving them unable to benefit. Mounting financial pressures forced them to close,” explained Pathik Patwari, Chairman of the Indian Chamber of Commerce (ICC) Gujarat.
Patwari also noted that some entrepreneurs chose to diversify their ventures or start afresh, further contributing to closures. “The lack of upgradation and skill development hindered many businesses, particularly micro enterprises, from adapting to changing market demands,” he added.
To address the crisis, experts are calling for targeted interventions, including improved access to credit, subsidised logistics support and policies tailored to revive the sector.
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