All India Council of Association of MSMEs (AICA), an umbrella body of 170 MSME associations, has come out with a slew of suggestions for the government to address the unprecedented raw material price increases that have crippled the Indian economy’s backbone – MSMEs (micro, small and medium enterprises).

The MSME associations have alleged that raw material price increases go unchecked and are a matter of grave concern. AICA has already made representations to the Prime Minister and various other Ministers in the Union government to control raw material prices. However, nothing has happened and the situation is only getting worse with continuing irrational increases in prices of the input materials.

AICA has called for a one-day closure of all industries on December 20 and plans to conduct peaceful demonstrations against the price hikes. Members of Tamilnadu Small and Tiny Industries Association (Tanstia) and Kakkalur Industrial Estate Manufacturers Association (KIEMA), among others, confirmed their participation. “We are all participating in this as it is a matter of big concern for MSMEs,” they said.

Soaring prices

Prices of raw materials such as middle steel plate, aluminium alloy, copper, CRCA sheet, pig iron, MS scrap, Kraft paper and engineering plastic among others have increased in the range of 37-155 per cent in October 2021 as compared to the levels in April 2020. Prices of aluminium alloy, copper and kraft paper have increased 155 per cent, 119 per cent and 110 per cent respectively during this period.

Also read: Steel producers may offer volume discounts to MSMEs, exporters

Meanwhile, AICA has also proposed some measures as possible solutions to overcome the present crisis. Firstly, AICA has requested the government to help reduce the prices to April 2020 level and fix MRP (maximum retail price) for all raw materials. They have requested protection against escalation for a year.

“National Small Industries Corporation (NSIC) should act as a consolidation agency and it should be in a position to consolidate and hedge the overall steel quantity in the marketplace. This kind of hedging should be possible for a period of one year (as rate contract extends for a year) and NSIC could make bulk bookings of steel at a price with the option of taking deliveries within 12 months as fixed,” AICA said.

SAIL and others must publish steel prices of long and flat products and HRC coils on a quarterly basis. The price should be maintained firm for a period of a minimum of three months at a stretch.

Given their vital role in the recovery of various production sectors in the post-pandemic era, MSMEs should be given priority for the supply of materials and PSUs like SAIL and Vizag steel should do this for MSMEs. Also, all steel industries should allocate at least 40 per cent of their production for Indian MSMEs, the association stated.

Also read: Tamil Nadu’s recent measures give a fillip to MSMEs: Minister

AICA has also requested the government to allow the import of all steel materials based on cost and quality requirements at a nil import duty (no anti-dumping) and also ban the export of iron ore and steel products. “It may be noted that better GDP growth can be realised if value-added products are exported rather than raw materials. This will generate employment too,” it said.

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