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26/11/2020 03:41pm

MSMEs fear loss of business as steel prices rise

image MSMEs fear loss of business as steel prices rise

Bangalore, Nov 26 (KNN) As the sharp rise in steel prices are affecting Micro, Small and Medium Enterprises (MSMEs), the Karnataka Small Scale Industries Association (KASSIA) has urged the government to subsidise the steel prices or impose price control.

The price of steel has risen by 35-40 per cent in the last 3 months, along with zinc and aluminium, which puts the MSMEs in great jeopardy when they are barely able to recover from the impact of the pandemic.

''The touted recovery is in fact seriously impaired by this sudden development,'' KASSIA said on Thursday.

As though battling the COVID related disruptions was not enough, the MSMEs in the state face serious trouble with the rising steel prices, the basic raw material for many micro and small enterprises in the manufacturing sector.

‘'We, therefore, urge the government to intervene by subsidizing the prices or impose price control, in order to ensure prices are reigned in. This sudden spike in prices has made it impossible for MSMEs to meet confirmed orders and exports are in serious danger of loss of markets to competitors with long term negative consequences,'' the association added.

The government must step in to ensure steel is supplied at a competitive price to consuming small industries, it said.

KASSIA further said that India also needs to encourage production of steel alloys as there is a dearth of supply of these.

''Also, in spite of being the second largest steel producer, our per capita steel consumption is dismally low at 72 kgs as against a world average of 225 kgs and China with per capita consumption of 590 kgs,'' KASSIA asserted.

Notably, a few days back Coimbatore District Small Scale Industries Association (CODISSIA) had written a letter to the government expressing serious concern about rising steel prices.

''The MSME industries will cease to exist, if necessary corrective action is not directed from the Ministry on the increasing prices of raw materials and other allied materials. MSMEs have already suffered due to the impact of COVID-19 and in addition, a blow to MSMEs like heavy increase in prices of raw materials due to which MSMEs are facing with cancellation of orders, uncertainty of consumption in the market and declining of exports etc.,'' Codissia said in a letter to Dharmendra Pradhan, Minister for Petroleum and Natural Gas and Steel, Nitin Gadkari, Minister for MSMEs, Nirmala Sitharaman, Minister of Finance and Corporate Affairs and Office of the Prime Minister.

The Coimbatore industry body also said that their additional 20 per cent loan to MSMEs which was sanctioned by the Finance Minister through banks under the Guaranteed Emergency Credit Line Scheme under Aatma Nirbhar Bharat, was completely absorbed due to the steel price increase.

''Coimbatore is a manufacturing hub powered by MSMEs and caters to the manufacturing of pumps, motors, compressors and many other products in addition to being in the valves and automobiles sector. The prices of steel and other allied foundry items like Coke, Pig Iron, cast iron, steel Scrap, CI Boring, HR Sheet, CR Sheet, Copper and Aluminium, have increased by 30 per cent to 35 per cent post lock down due to COVID-19,'' said Codissia president R Ramamurthy.

Besides price there is also a shortage of raw materials such as steel, copper, Zinc and brass. Zinc prices have risen from Rs 170 a kg to Rs 220 a kg, resulting into the hike in prices of end products, due to which exports of engineering goods are facing severe headwind, he added.

''When the import of raw materials like steel, wire rods etc. were allowed, the prices were very competitive. 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,'' Codissia said.

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