MSME

Unabated hike in steel price has put MSMEs in a quandary

LN Revathy Coimbatore | Updated on November 22, 2020 Published on November 22, 2020

Steep hike in raw material prices along with the impact of Covid-19 has hit the MSMEs hard.

While the onset of the festival season, supportive governmental announcements to aid growth and falling incidence of corona cases seemed as if things were moving in the right direction, spiralling and unjustified spurt in the price of steel and other allied materials started to hit the Micro, Small and Medium-scale enterprises (MSMEs) hard.

Industry insiders say that the price of steel, copper, zinc and brass has shot up 30-35 per cent between August and now, and is expected to move further north in the coming weeks.

“MSMEs will cease to exist if the steep hike in the price of materials is left unchecked. We are already facing huge cash crunch, are unable to execute the pending orders due to rising cost of inputs notwithstanding order cancellations and uncertainty. Securing fresh orders is another arduous task and most MSMEs do not have the wherewithal,” said Codissia President R Ramamurthy.

The association has drawn the attention of the powers that be for necessary corrective check on the steep increase in the price of raw materials.

“The industries here have been impacted very badly, considering that Coimbatore is home to manufacture of pumps, motors, compressors, wet grinders and various other products besides being engaged in supply of valves and auto components. The prices of steel and other allied foundry items like coke, pig iron, cast iron, steel scrap, CI Boring, HR and CR Sheet, copper and aluminum have increased by 30–35 per cent since April. Market sources have hinted about a further rise in the price of steel (from around ₹47,000/- at present) to around ₹60,000/tonne soon,” the Codissia president said.

‘Re-open the SAIL yard’

The association has appealed to the government to allow import of metals and minerals to ease shortage and ensure smooth flow, fix an MRP for such raw materials and reopen the SAIL yard in Coimbatore.

The SAIL yard in Coimbatore was closed in 2015 as the construction of a railway over-bridge was taken up. This project was completed in 2017, but the SAIL yard has remained defunct.

This has forced the MSMEs to source their requirements from private operators and traders, making the rates uncompetitive in the market.

The association has requested the government to reintroduce the system of allocation of raw materials to MSMEs at subsidized price as was done earlier, via SAIL, VIZAG, NSIC, SIDCO and other Nodal State Government Distribution Systems.

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Published on November 22, 2020
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