Micro, Small, and Medium Enterprises (MSMEs) in India, which contribute significantly to the nation's manufacturing output, are increasingly vulnerable to the escalating impacts of climate change. A recent report by the World Resources Institute (WRI) highlights how extreme heat and variable rainfall patterns are severely disrupting their operations, productivity, and supply chains.
Climate Risks Threaten Manufacturing Stability
The WRI study, titled Resilience of Micro, Small and Medium Enterprises to Climate Risks: A Vulnerability Assessment in the Manufacturing Sectors of Gujarat and Tamil Nadu, surveyed 310 manufacturing MSMEs across Surat, Chennai, and Coimbatore. It presents a stark picture of climate change's disproportionate impact on these enterprises due to their lower adaptive capacity.
- Heat Stress: An overwhelming 92% of surveyed MSMEs reported operational impacts directly linked to heat stress.
- Reduced Productivity: 78% of MSMEs noted a decrease in worker productivity due to high temperatures.
- Workforce Impacts: Over half experienced increased absenteeism, while 41% reported heat-related illnesses among workers, and a quarter saw a rise in accidents and injuries.
Flooding Causes Widespread Disruption
Beyond heat, erratic rainfall and subsequent flooding pose a significant threat. While flood exposure varies geographically based on infrastructure and urban planning, its impact is widespread. In Chennai, all surveyed industrial areas reported flood-related business disruptions. Surat also showed moderate, albeit differentiated, exposure.
Cascading Effects of Inundation
Flood impacts extend far beyond immediate physical damage. Over 90% of MSMEs located in inundated areas reported operational disruptions, with nearly three-quarters forced to close during flood events. Crucially, a substantial number of MSMEs not directly flooded also faced disruptions and closures, underscoring the interconnectedness of infrastructure, services, and supply chains.
The report emphasizes that flood impacts on MSMEs generate widespread disruptions across supply chains, labor availability, and market connectivity, extending well beyond direct asset damage.
As climate conditions continue to change, particularly rising summer temperatures and altered rainfall patterns, MSMEs must confront these challenges to ensure stability and continuity in industrial production.