Rising Costs, High Taxes: Himachal’s SMEs Face Uncertain Future

S Gopal Puri
Dharamshala: Small and medium enterprises (SMEs), which form the backbone of Himachal Pradesh’s economy with a 42% contribution to the state’s GDP, have been facing severe challenges.

Rising operational costs, high taxation and sluggish market demand have pushed many small businesses to the brink of closure. Industrialists and business leaders are now urging the government to intervene with urgent policy reforms to safeguard the state’s economy.

Global models: A lesson for Himachal

Countries like Germany and Japan have transformed their economies by strengthening their MSME (micro, small and medium enterprises) sectors, where small businesses contribute 60-70% to the GDP.
Experts suggest that Himachal Pradesh must follow a similar path to ensure the survival of its local industries.

Why the SME crisis is a major concern

Economists warn that the collapse of small businesses in Himachal will have widespread consequences, including rising unemployment as SMEs are major job providers, decrease in state revenue due to business closures and weakening of the overall economy, which would impact long-term growth.

Industrialists call for immediate remedial measures

Prominent voices from the state’s industrial hubs have raised serious concerns over the survival of small businesses.

Rajiv Aggarwal, prominent industrialist from the Baddi-Barotiwala-Nalagarh Industrial Area, says, “Small industries are the lifeline of Himachal’s economy, yet they lack essential support. The state must adopt SME-friendly policies like Gujarat and Maharashtra to ensure their survival.”

Shailesh Aggarwal, industrialist from Baddi, says, “High taxation and sluggish market demand have pushed many MSMEs toward shutdown. The government must provide financial assistance and ease regulatory burdens to help businesses thrive.”

Rajinder Guleria, another industrialist from Baddi, opines, “Small industries generate employment, yet they struggle due to capital shortages, high-interest loans and government neglect. Immediate relief measures are needed to safeguard jobs and businesses.”

Sumant Vir Kapoor, industrialist from Kandrori in Himachal, says, “Germany and Japan prioritised small industries, making them economic giants. Himachal must adopt a similar approach and support local businesses with robust policies.”

What can be the way forward?

Experts suggest that the Himachal Pradesh government should implement urgent reforms, including tax relief for struggling SMEs, easy financing options to boost business sustainability and simplified regulations to ease bureaucratic hurdles.

With Himachal Pradesh at an economic crossroads, timely government intervention would determine whether the state’s small businesses survive or collapse, say experts.