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Lockdown could wipe out over 40% of defence MSMEs

An Ernst & Young study shows that unless the government offers a support package, lockdown could wipe out about 40% of the defence sector’s micro, small and medium enterprises within three months. It adds that a complete revival of all MSMEs is expected to take a year and the cost of products could go up marginally when production is resumed.

“It is anticipated that due to complete halt of all activities, the problems of cash flow, raw material prices and logistics problems will arise after lockdown is over,” the research by Ernst & Young, India, says. It states further that the that input cost for defence equipment may rise and defence modernisation may be impacted after the lockdown is lifted as budgets are stretched. It also adds that there should be no reduction in capital procurement, even if training activities have to be tapered in the coming months.