FISME Urges SIAM For Faster Payments, Price Revisions For Auto MSMEs

New Delhi, May 18 (KNN) The Federation of Indian Micro and Small & Medium Enterprises (FISME) has urged the Society of Indian Automobile Manufacturers (SIAM) to ensure equitable sharing of rising input costs being borne by MSME auto component suppliers amid sharp increases in wages, energy prices and raw material costs triggered by the West Asia crisis.
 
In a representation addressed to SIAM President Shailesh Chandra, FISME Secretary General Anil Bhardwaj called on automakers and their member original equipment manufacturers (OEMs) to introduce temporary cost-sharing arrangements to absorb part of the exceptional rise in wages and energy costs faced by MSME suppliers.
 
Faster Price Revisions and Quicker Payments Through TReDS 
 
FISME also sought faster approval and implementation of price revision requests in cases where extraordinary cost increases can be demonstrated, reported Business Standard.
 
It further urged OEMs to expedite payments to MSME vendors by registering on the Trade Receivables Discounting System (TReDS) platform and enabling suppliers to discount their receivables.
 
Proposal For Structured OEM-MSME Dialogue 
 
The industry body also proposed a structured dialogue mechanism between OEMs and MSMEs to address supply chain stress before it becomes disruptive. 
 
It said automakers should adopt long-term vendor sustainability frameworks instead of relying on purely transactional procurement models.
 
Global Competition Pressures and West Asia Crisis 
 
According to FISME, while vehicle manufacturers operate in a relatively protected tariff environment and benefit from structured market conditions, MSME component makers face intense competition from suppliers in countries such as China, Thailand, Vietnam, Malaysia and Taiwan. 
 
It said these smaller firms have limited pricing power, thin margins and face increasing bargaining pressure within supply chains.
FISME said recent geopolitical disruptions in West Asia have worsened the situation by driving up energy costs, disrupting logistics and increasing household expenses. 
 
It noted that labour unrest across several industrial clusters forced many MSMEs to agree to wage hikes averaging around 20 percent in Uttarakhand and 35 percent in Haryana.
 
FISME Warns Of Supply Chain Risks 
 
The association added that costs of consumable oils, tools, power and raw materials have risen by more than 35 percent since March 26, putting severe pressure on small manufacturers locked into annual rate contracts and delayed price revision cycles.
 
Calling the situation an ‘existential squeeze,’ FISME warned that rising costs are eroding working capital, increasing debt and threatening production continuity. 
 
It stressed that the long-term resilience of India’s automobile sector depends not just on large manufacturers, but also on the sustainability of thousands of Tier-II and Tier-III MSMEs operating across industrial clusters nationwide.
 
(KNN Bureau)