Ludhiana Inc seeks Centre’s intervention over hiked raw material rates

Disconcerted by the steep hike in price of raw material amid the pandemic, the industrialists here have urged the Centre to step in to bring some relief otherwise nearly half of the micro, small and medium enterprises (MSME) sector would face closure.

Under the banner of Chamber of Industrial and Commercial Undertakings (CICU), the industrialists on Saturday stated that their working conditions were turning unviable and they were not able to meet even the previously made commitments and contracts on low rates. Production has already decreased and the hike in raw material rates could increase the price of finished products, they rued.

According to a survey conducted by the industrialists in the last five months, the price of stainless steel has increased by 32 percent ( ₹200/kg hike), aluminium by 26 percent ( ₹210/kg hike), and natural rubber by 52 percent ( ₹156/kg hike). Rates of copper, which is a key component for the MSME sector, has witnessed a hike of ₹600/kg, which comes to around 77 percent hike. The rate of steel at present is highest in the last 12 years.

Stating that large quantities of steel is being exported by India, the industrialists demanded that the Union government should suspend the export for at least six months and no duty should be imposed on import. They also asked for tightening the noose around cartelisation by the big players, which is one of the major reasons behind the price hike.

Industrialist Avtar Singh Bhogal said, “The frequent fluctuations in the prices are taking a toll on the industry. If we book an order and the rates of raw material witness a steep hike, we land in trouble and are forced to bear losses on our previous commitments.”

“Steel rates have gone up across the world because the iron ore mines remained closed due to lockdown. However, the hike is 25 percent in other countries, while in India, the rates of different types of steel have been increased by around 45 percent. The demand of steel products is high but we are forced to bring down production due to the hike in raw material rates,” said Hand Tools Association president SC Ralhan.

The industrialists said if the conditions prevail for some more time, 50 percent of the MSME sector will face closure, which will push around 5 crore staff/labourers towards unemployment.

CICU president Upkar Singh Ahuja and general secretary Pankaj Sharma said that the industry is already struggling due to the ongoing pandemic and the hike in raw material rates has added to their woes.

Sharma stated that Union minister Nitin Gadkari had also raised concern over the issue in the recent past, while Ahuja said, “We will take up the matter with the Union government and ministry of steel in the coming days. The government needs to stop export of steel for a certain period to save the local industry.”

‘Make in India campaign ignored’

The industrialists also slammed the Centre for allegedly ignoring the Make in India campaign by allowing huge steel exports to China even when the local industry is in dire need.

CICU publicity secretary JS Bhogal said, “Large quantities of steel is being exported to China, which is a major competitor for bicycle parts, hardware, auto component, hand tools and sewing machine industry in the international market. The cost of final products being exported from India is increasing due to the hike in raw material prices, but China is not hiking the rates, which makes it difficult for us to survive globally. Even when we are not in good terms with China, we are benefitting China through exports.”

Form price control panel: FICO

Federation of Industrial and Commercial Organisation (FICO) also warned that the MSME sector will collapse if the central government failed to intervene and ban steel export. FICO members demanded that the Union government should constitute a price monitoring committee to control the rates of essential raw material like steel.

FICO president Gurmeet Singh Kular said, “Ludhiana is a manufacturing hub of bicycle, its components and engineering products. The steep hike in raw material prices in the pandemic has hit the industry hard. The price of steel, copper, CRCA steel, craft paper, zinc and brass has increased by 40-50 percent since August and it is expected to rise further in the coming weeks. The MSME sector will not be able to survive and will be forced to shut down. The government should constitute a monitoring committee to control the hike in prices.”