Thiruvananthapuram: According to estimates, Kerala will take several years to recover completely from the damage caused by the recent floods that hit the State. The calamity which virtually brought the daily life to a grinding halt, has severely impacted Micro, Small and Medium Enterprises (MSMEs) in the State as well.

While the State Government estimates damage to be Rs. 634 crore, industry insiders and other stakeholders peg it much higher at Rs. 800 crore or more, calling for the State Government to raise the bars of compensation and provide immediate relief to the small players in the sector. As it is almost two months since the calamity has struck the State, it is time to analyse and evaluate the government measures to support the sector given that the State’s economy is largely dependent on the productivity of the MSME sector.

Even as the industry players allege laxity on the part of the government in implementing the initial announcements, the Department of Industries and Commerce is of the view that comprehensive remedial measures could be initiated only after conducting thorough field studies.

“The loss is much more than the government estimates and more so when we factor in the ‘lost opportunities’. The floods have caused the MSMEs to miss two good seasons.The department has assessed only the industries in the flood-affected areas,” says Damodar Avanoor, former president, Kerala Small Scale Industries Association (KSSIA). But the Department of Industries and Commerce claims that elaborate field surveys to assess the damage suffered by the MSME sector are underway. “We are trying to go to each place and collect details of every affected MSME unit,” says K Biju IAS, Director, Department of Industries and Commerce.


The Department is planning an Interest Subvention Scheme for the flood-affected MSME units. As per the scheme, the government will give a maximum of Rs. 5 lakh towards repayment of interest for loans taken for the purchase of machinery.
The Department is also poised to introduce a modified Entrepreneur Support Scheme (ESS) focussing on plant and machineries lost in the floods. The existing ESS will be modified to help the flood-affected units. That scheme will have a subsidy component as well. “We plan to introduce these two schemes at the earliest,” Biju says.

Besides, according to officials, the Industries Department is also planning to hold insurance adalats jointly with banks. The data pertaining to the impact of floods on the sector will be shared with lead bank managers in each affected district in order to help them chart out viable loan restructuring programmes for MSMEs.

According to the Department, the estimated loss caused by the ‘loss of opportunity’, as sought by industry stakeholders, has also been factored in under the government estimates on ‘Product Input and Inventory Losses’.

Bank loans are another vexing issue for the affected MSME units. Although the moratorium imposed on banks loans is widely welcomed, the possibility of compound interest being levied for the interim period is a matter of concern for the units.

“We welcome the moratorium onloan repayments. However, interest should not be compounded for the period. It will make matters worse,” says Damodar.

“If there is going to be any such issue, it could be raised at the district-level bankers’ committee meeting. There solutions could be found through discussions,” says Biju when asked about the matter. He further assured that feasible suggestions from the industry in this regard are welcome.

“The point is we cannot quantify every loss and compensate an entrepreneur. An entrepreneur, in the view of the Directorate, is to be compensated for the fundamentals like capital, plant, machinery and interest component which she or he has been paying to the banks. Once the fundamentals are corrected they can stand on their feet and carry on with the business. You cannot compensate for everything at one go through a government framework,” he adds.


The Industries Department aims to create a level playing field for the businesses affected by the natural calamity. According to officials, the government is trying to bring in new policies which could focus on the ‘business sentiments’. In a bid to achieve the goal, the government is also preparing to modify existing land lease and other related policies.

“The industries have been adequately covered in the recommendations of the State Level Bankers’ Committee (SLBC), the new government schemes and the World Bank proposals in so far as providing relief is concerned,” assures the Director of Industries and Commerce.

Meanwhile, it is also learned that Kerala Bureau of Industrial Promotion (K-BIP) has not shelved any of its ongoing projects in the aftermath of floods. “K-BIP as an agency will work proactively to promote businesses and B2B events. It will continue to ensure that the entrepreneurs are getting opportunities which are due to them,” said an official.


Small industries and businesses – 70 percent of them in the manufacturing sector – were the first to find themselves at the receiving end of the floods that hit the State. Working capital-intensive nature of the sector and limited access to funds made the matters worse. One of the main problems faced by these businesses is the lack of working capital to take the affairs back to normal. The Department of Industries says that such clusters in the affected areas will be identified through surveys and provided additional assistance. Especially weavers of the Chendamangalam stretch and plywood industries in Ernakulam region will be given special attention. However, the financial assistance offered to affected industries at present is Rs.10 lakh. This is considered relatively insignificant as the quantum of business and turnover of affected industries are much more than the offered assistance.

“We are trying to bring them back to normal working conditions. We cannot compensate the entire business in the way we would compensate a house which has collapsed in a landslide. Banks have been generally supportive and we must understand the process has only started. I don’t think there is going to be any major hiccups in compensating the small industries,” says Biju.


A government team of officials has met with specialists from ADB and World Bank with K Biju IAS as the nodal officer for discussions.While funding for the redevelopment of flood-hit regions involves procedural issues, espcially when it comes to accepting external help, the State Government has taken the international financial agencies into confidence regarding the financial assistance programmes.

The Director expressed confidence in the process, saying that it is going to be a tripartite decision taken by the Central and State Governments and banks. The discussion will decide on how the funds are going to be arranged and what are the instruments to be used in the process.

State Industries Department is expecting funding from world agencies soon and is awaiting the final report from the Centre as the matter is considered under the Rapid Disaster Need Assessment. The government will also meet officials from the United Nations Development Program (UNDP).


1. Restructuring/Rescheduling of existing loans

One year moratorium for loans to Micro & Small Enterprises. (May extend upto 18 months on case to case basis)
Working capital limits, for micro & small enterprises may be restructured to Working Capital Term Loan (WCTL) with duration upto maximum 36 months (including moratorium period) on need basis.
In term loans extension of repayment period by one year and rescheduling instalments & current dues accordingly for micro & small enterprises
For medium enterprises, a need based moratorium and restructuring/rescheduling for a period based on overall repaying capacity of the borrower vis-à-vis total liability

2. Fresh Loans/Additional Loans

Need based fresh loans may be extended as per case to case assessment of requirement, and repayment capacity of individual borrowers
The primary consideration for extending fresh/additional credit for rehabilitation shall be the viability of the unit after rehabilitation
Security & Rate of Interest shall be as per individual bank policies
Margins shall be waived for micro and small enterprises
Rescheduled/restructured loans shall be treated as standard asset
Fresh loan shall also be treated as standard asset
Insurance claim if any should be adjusted to rescheduled loan


1. Entrepreneur Support Scheme (ESS)
Affected units may be assisted under ESS with relaxations for financial ceilings
The assistance can be extended to MSMEs which undertake partial or full replacements of fixed assets
The existing guidelines of 25 per cent increase in plant, machinery and production capacity for additional assistance for units undertaking expansion/modernisation/diversification may be relaxed for units in flood-affected areas
2. Interest Subvention Scheme
Flood-affected units in the MSME sector may be assisted with 6% to 8% interest subvention by reimbursement of interest payable to bank every year for a period of three years. Maximum amount eligible per unit may be limited to Rs. 5 lakh



No. of Units: 10
Infrastructure Losses: Rs. 26 L
Equipment Losses: Rs. 40.5 L
Product/Input Losses: Rs. 1.25 Cr
Total: Rs. 1.92 Cr
People Affected: 50
Affected Industries: Plastic, Building material, Garments


No. of Units: 41
Infrastructure Losses: Rs. 1.07 Cr
Equipment Losses: Rs. 6 L
Product/Input Losses: Rs. 4.99 Cr
Total: Rs. 6.07 Cr
People Affected: 220
Affected Industries: Wood, Garments, Light Engg, Cashew


No. of Units: 410
Infrastructure Losses: Rs. 5.85 Cr
Equipment Losses: Rs. 15.24 L
Product/Input Losses: Rs. 9.89 Cr
Total: Rs. 31 Cr
People Affected: 2100
Affected Industries: Handicraft, Food, Garments, General Engg., Wood, Plastic, Rubber


No. of Units: 820
Infrastructure Losses: Rs. 4.05 Cr
Equipment Losses: Rs. 11.84 Cr
Product/Input Losses: Rs. 36.69 Cr
Total: Rs. 52.58 Cr
People Affected: 3422
Affected Industries: Food, Fish Processing, Garment, Light Engg., Plastic, Paper, Building Material


No. of Units: 204
Infrastructure Losses: Rs. 1.33 Cr
Equipment Losses: Rs. 2.38 Cr
Product/Input Losses: Rs. 3.71 Cr
Total: Rs. 7.42 Cr
People Affected: 980
Affected Industries: Plastic, Rubber, Food, Gen. Engg., Cement, Paper, Garment, Construction


No. of Units: 79
Infrastructure Losses: Rs. 78 L
Equipment Losses: Rs. 1.47 Cr
Product/Input Losses: Rs. 6.51 Cr
Total: Rs. 8.76 Cr
People Affected: 368
Affected Industries: Food, Gen. Engg., Spices, Construction, Garment, Food


No. of Units: 1126
Infrastructure Losses: Rs. 19.76 Cr
Equipment Losses: Rs. 211 Cr
Product/Input Losses: Rs. 160.15 Cr
Total: Rs. 390.15 Cr
People Affected: 6400
Affected Industries: Food, Wood, Cement, Garment, Handicraft, Paper, Gen. Engg., Plastic, Rubber


No. of Units: 630
Infrastructure Losses: Rs. 12.64 Cr
Equipment Losses: Rs. 54.76 Cr
Product/Input Losses: Rs. 51. 13 Cr
Total: Rs. 118. 53 Cr
People Affected: 2910
Affected Industries: Food, Wood, Garment, Paper, Rubber, Gen. Engg.


No. of Units: 59
Infrastructure Losses: Rs. 17.14 L
Equipment Losses: Rs. 2.52 Cr
Product/Input Losses: Rs. 2.30 Cr
Total: Rs. 4.99 Cr

People Affected: 300
Affected Industries: Cement, Garment, Paper, Light Engg., Plastic, Rubber


No. of Units: 97
Infrastructure Losses: Rs. 36.41 L
Equipment Losses: Rs. 2.25 Cr
Product/Input Losses: Rs. 1.16 Cr
Total: Rs. 3.88 Cr
People Affected: 504
Affected Industries: Food, Construction Material, Handicraft, Garment, Food, Wood


No. of Units: 52
Infrastructure Losses: Rs. 7.5 L
Equipment Losses: Rs. 87.32 L
Product/Input Losses: Rs. 3.15 Cr
Total: Rs. 4.09 Cr
People Affected: 298
Affected Industries: Wood, Garment, Food, Light Engg.


No. of Units: 61
Infrastructure Losses: Rs. 41 L
Equipment Losses: Rs. 1.84 Cr
Product/Input Losses: Rs. 1.48 Cr
Total: Rs. 3.73 Cr
People Affected: 255
Affected Industries: Food, Spices, Construction Material, Light Engg., Handicraft


No. of Units: 1
Infrastructure Losses: 0
Equipment Losses: Rs. 1.43 L
Product/Input Losses: Rs. 2.52 L
Total: Rs. 3.95 L
People Affected: 3
Affected Industries: Rubber