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Steep hike in raw material prices leading to negative impact, says industry body

Covai Post Network


COIMBATORE: Due to sudden increase in the basic price of raw materials such as steel, wire rods, the manufacturing activities in the Small and Medium enterprises (MSE) in the region is badly affected, leaving industrial units at great risk of becoming sick, subsequently rendering thousands of workers jobless.

This week alone, many medium and small industries were compelled to stop production due to the prevailing situation, which is likely to escalate in the near future, leading to closure of the units owing to frequent increase in the price of raw materials, a release from Coimbatore District Small Industries Association CODISSIA), said on Wednesday.

“Moreover, industries are unable to increase the price of their products as that would render them less competitive in the world market and thus the price increase of steel has directly affected the export activities in the small scale sector,” it said.

Stating that the prices were very competitive when the import of raw materials were allowed, CODISSIA said that but with import duty being increased and with the local manufacturers not being able to supply raw materials at competitive prices, the MSMEs are getting crippled.

“It has come to know that the steel manufacturing sector would take a few more months to stabilise and prices are likely to go up until such time, which can be physically verified with the defunct sale yard of SAIL which remains non-functional for the past two years, which is directly impacting the MSMEs in Coimbatore. If the same situation continues, it is very imminent that industries will face huge recession, leading to joblessness and closure of units, impacting the socio-economic status of our nation.”

In view of this, CODISSIA request SAIL to open the sale yard immediately at Coimbatore to tide over the crisis of shortage of raw materials and also called upon the Central and State Governments to intervene on a war footing, to save the MSME sector by allowing import of metals and minerals and ease out the shortage.

CODISSIA also requested all the major steel manufacturers in India to immediately withdraw the price hike of steel materials and allow the pre GST prices to continue without any change
Hike in prices of Steel and other allied Foundry items like Coke, Pig Iron, Scrap, CI Boring, HR Sheet, CR Sheet, Copper and Aluminium, compared to July 2017 to March 2018 is between 30 per cent and 35 per cent.

The price increase of Steel before GST and now is about Rs.10,000 per metric tonne, which has affected all the MSMEs and those which operate under Annual Rate Contract, to complete their orders.

Thousands of Small and Medium industries engaged in manufacturing activities using steel and allied raw materials, are badly affected, and not being able to keep up their commitments or to secure fresh orders for manufacture and supply.

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