Ahmedabad, August 4, 2025: Gujarat, long hailed as an industrial powerhouse, is facing a severe employment crisis as Gujarat’s employment engine stalls: MSME shutdowns, zero PMEGP uptake in key districts like Ahmedabad and Surat, and declining demand have led to the closure of 5,974 micro, small, and medium enterprises (MSMEs) since July 2020, according to the Union Ministry of Commerce and Industries. This has resulted in significant job losses, particularly in the textile and chemical sectors, with industry leaders citing post-pandemic challenges, inflation, and poor utilization of central funds as key contributors. Sampadak Express reports that the state’s failure to leverage schemes like the Prime Minister’s Employment Generation Programme (PMEGP) has exacerbated the situation.
MSME Shutdowns and Economic Impact
The closure of nearly 6,000 MSMEs since 2020 has sent shockwaves through Gujarat’s economy, with the state ranking third nationally in MSME shutdowns, behind Maharashtra and Tamil Nadu. The textile and chemical sectors, vital to districts like Ahmedabad and Surat, have been hit hardest. Sampadak Express reports that 250 of 674 reactive dye manufacturing units in Ahmedabad’s Vatva GIDC have halved production since 2024, while 35% of stainless steel MSMEs closed in 2023-24 due to cheaper Chinese imports. These shutdowns have led to an estimated loss of over 1 crore jobs, severely impacting Gujarat’s employment crisis.
Zero PMEGP Uptake in Key Districts
Gujarat’s employment engine stalls: MSME shutdowns, zero PMEGP uptake in key districts, and low utilization of central grants paint a grim picture. Despite the PMEGP’s aim to foster micro-enterprises and generate jobs, Gujarat utilized only ₹0.66 crore of the ₹5 crore allocated for the Strategic Investment Plan (SIP) as of June 2024. Key districts like Ahmedabad and Surat reported no PMEGP uptake, with only 27% of targeted jobs created in 2021-22. Industry experts attribute this to bureaucratic hurdles and lack of awareness among entrepreneurs.
Gujarat’s entrepreneurial culture has historically driven its MSME sector, contributing to sectors like textiles, chemicals, and engineering. However, demonetization, GST implementation, and the COVID-19 pandemic have dealt successive blows. The recent political turmoil in Bangladesh further disrupted textile exports, compounding issues like cash flow shortages and high logistics costs. Sampadak Express reports that the state’s inability to adapt to these challenges, coupled with reliance on large-scale investments, has left smaller enterprises vulnerable.
Policy Failures and Future Challenges
The Gujarat government’s low utilization of central schemes like RAMP and SIP, designed to enhance MSME competitiveness, reflects systemic inefficiencies. While the state has attracted FDI and large corporations, MSMEs face barriers like stringent investment requirements in emerging sectors like semiconductors. Industry leaders urge for easier credit access, subsidized logistics, and policy reforms to revive Gujarat’s employment engine stalls: MSME shutdowns, zero PMEGP uptake in key districts, and lack of targeted support.
Gujarat’s employment crisis demands urgent action and the state must prioritize reviving its MSME sector through streamlined access to PMEGP funds, reduced compliance burdens, and incentives for small businesses. Strengthening local industries and addressing import challenges could restore job growth. This crisis, while severe, offers an opportunity for Gujarat to recalibrate its economic strategy, ensuring inclusive growth and sustainable employment for its workforce.
