The Hindu Business Line : SIAM seeks long-term contracts from steel cos

New Delhi, April 22 In order to ensure assured supplies of steel at a negotiated price through long term contracts, the Society of Indian Automobile Manufacturers (SIAM) will meet primary steel makers represented by the Indian Steel Alliance over the next few days.

The move is aimed at keeping vehicle prices stable, at a time when the economy is reeling under rising inflation and the automobile industry hit by declining sales.

“We are meeting different steel associations to have a common approach. We plan to meet ISA to ensure availability of steel at a price where the cost of vehicles is not affected,” said Mr Dilip Chenoy, Director General, SIAM.

In the new contracts being negotiated, steel companies have asked automobile companies a price hike in the range of 20- 35 per cent.

At this rate of increase, SIAM estimates that the cost of commercial vehicle is required to increase in the range of Rs 50,000- 75,000. Earlier, this month Tata Motors and Eicher amongst others have already increased prices.

While two-wheeler makers have already hiked prices in the range of Rs 500- 1,000, car manufacturers are also likely to take a decision by next month.

Sources in the steel industry said that finalising the long term contract prices with automobile manufacturers may take a little longer than usual this year because there are strong possibilities of the Government initiating fiscal measures to bring down steel prices.

The Ministers of Finance, Steel, Commerce and Mines had met recently over steel prices and had sent their recommendation to the Prime Minister for a final decision. The various proposals sent for consideration include cut in excise duty on steel from the present 14 per cent to 8 per cent.

The final contract price with the automakers would probably be decided only after there is clarity on the Government front, an official in a steel making company said.

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