The Hindu Business Line : CII-Kerala puts cost of motor stir at Rs 700 cr

THE CII-Kerala has come out against the Saturday's State-wide motor strike called by trade unions and public transport owners, saying that the frequent strikes and hartals would affect the competitiveness of the industry in the State.

The Chairman of CII, Mr T.R. Raghulal, said in a statement that the total loss of production due to strikes and hartals would be to the tune of Rs 650-700 crore and the trade unions and political parties involved in it did not realise the extent of damage it causes to the industry. Besides, it would also prejudicially affect the investment climate in the State, he said.

The industry has to bear the incremental cost of stocking additional raw materials including demurrage, which would be 4 per cent to 6 per cent of the cost of production. The cost of raw materials also increases due to materials stuck in the ports. The logistics and transit costs would be increased by three per cent of the total cost of production.

There would be variations in volume of production by 6 per cent to 8 per cent and all this would affect the competitiveness of the products, which in turn will have cascading effect due to results in decrease in sales; not meeting export obligations/delivery schedule; increased cost of distribution and ultimately resulting in customers choosing alternative brands and export orders being cancelled.

The CII Chairman pointed out that the 12-hour strike could not bring in reduction in oil prices. On the merits of the price hike, it can be said that it was inevitable due to rise in crude prices in the global market.

The Government has announced reduction in excise duty as a measure to contain the actual price revision, which means that there is scope for rationalisation of duty structure. Though the price hike was long overdue, the actual crude oil price in the international market has come down, however the oil marketing companies need to recover the losses already incurred as per their assessment.

It is imperative therefore that there is transparency for all the parties concerned, especially the consumers to understand the dynamic of pricing. This underlines the urgent need for a Regulator, who will oversee the whole process, ushers in transparency in pricking like in the case of Electricity Regulator and that the consumer is not taken for granted.

Those calling for strike and hartals have no long term vision or pragmatic solutions. They should push for a Regulator for oil prices rather than disturbing the temp of the society, through conspiracy and whim and fancies, he added.

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CII-Kerala puts cost of motor stir at Rs 700 cr