The Hindu Business Line : Govt must protect SSIs from rising steel prices: Tanstia

THE prices of iron, steel and other metallic raw materials continue to rise because the manufacturers are not passing on the benefits of Centre's concessions - aimed at dampening prices - to the small-scale sector, according to the Tamil Nadu Small and Tiny Industries Association (Tanstia).

The Parliamentary Committee on Industries had come out with a clutch of short and long-term measures to control raw material prices to support the SSIs, but the Government is yet to react to the recommendations, it added.

For instance, the committee had recommended that excise duty on movement of raw materials be done away with and Customs duty on iron, steel and other raw materials be cut to 10 per cent.

But the Government has cut Customs duty on steel raw materials to 20 per cent from 25 per cent and withdrawn the special additional duty. The manufacturers are also not passing on this benefit to the SSIs.

The concessions represent a reduction of Rs 2,000 per tonne and the manufacturers have been asked to bring down prices by an additional Rs 2,000.

But according to Tanstia, the small-scale sector is not getting any of the benefits of the reduction because the manufacturers are resisting the move.

According to a copy of the Parliamentary Committee's report, the panel is of the view that the Government should come to the rescue of the SSIs to ensure availability of steel at reasonable prices.

"While a long-term strategy may be framed in six months, an immediate intervention is needed."

It has also suggested that the Union SSI Ministry ensure supply of the sector's raw material requirement and at a reasonable price. "The Government should assure supply at stable prices for at least six months."

Any agreement between Government agencies and suppliers should provide for an escalation clause to absorb increases in raw material prices.

The consumer associations and small-scale industry associations could agree with steel manufacturers including the Steel Authority of India Ltd for long-term purchases and get price benefits and incentives, it said.

The committee has also recommended that a `triggered price mechanism' be put in place to reduce Customs duty and special additional duty when prices increase.

"A co-ordination committee could keep track of prices. This may be considered as a short-term measure to stabilise prices."

A competition commission may be formed to prevent cartelisation by steel majors, as alleged by the SSIs and the automotive component manufacturers' association. It has also asked the Centre to take up in the WTO the issue of cartelisation at the international level.

More Stories on : SSI | Steel | Tamil Nadu

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page