Almost 30% of pumpset manufacturing industries in Coimbatore have closed down in the last two-three years because of multiple reasons that have affected the competitiveness of these units, said Mithun Ramdass, president of the Southern India Engineering Manufacturers Association (SIEMA).
Higher GST rate for pumpsets, lack of fund availability at affordable rates, and the PM-KUSUM scheme are some of the factors that have eroded the competitiveness of the pumpset industries in Coimbatore. A pumpset has about 100 components and the slump in market for pumpsets has had a cascading impact on the micro and small-scale industries that supply to the pumpset factories.
Mr. Ramdass said several farmers do not buy agriculture pumpsets as they anticipate distribution of pumpsets through the KUSUM scheme. The Central and State governments subsidise 80% of the pumpset cost in the scheme. But, most of the orders for pumpsets for it goes to just a handful of large-scale manufacturers. “The norms are so stringent that the MSMEs cannot supply for KUSUM scheme. The government should accept supply from all manufacturers who comply with Bureau of Indian Standards (BIS) norms,” he said.
Another major factor impacting the pumspet sector in Coimbatore is the incentives offered in Gujarat. Not only is raw material available at almost 20% lower cost, the Gujarat government offers incentives for working capital, power, and capital costs. “Many pumpset manufacturers in Coimbatore are actively considering the incentives offered in States such as Madhya Pradesh,” he said.
Adding to the stress faced by the pumpset manufacturers is the levy of 18% GST on pumpsets. “Before the introduction of GST, pumpsets had 11 % duty. When GST was introduced, the pumpsets had 12% duty. But, the government increased the duty to 18%, enabling the unorganised sector to gain higher market share,” he said.
The Tamil Nadu government should recognise pumspets as a thrust sector so that the manufacturers get access to finance at a lower cost. The Centre plans to distribute 1.5 crore pumpsets under the KUSUM scheme. So far, it has sanctioned only 13.4 lakh pumpsets and distributed 4.9 lakh pumpsets. If the scheme should benefit 1.5 crore farmers, the government should source pumpsets from more industries, he said.
The GST should be reduced to 12 % so that more manufacturers are covered by GST and there is a level-playing field, Mr. Ramdass said.
Published – December 06, 2024 06:45 pm IST