Rising steel prices deal blow to MSMEs: Codissia

Micro, small and medium enterprises (MSME) here are struggling due to rising steel prices, from Rs 36,000 a tonne to Rs 47,000 over the last six months, the Coimbatore District Small Scale Industries Association (Codissia) said in a letter to Union minister for petroleum & natural gas and steel Dharmendra Pradhan, MSME minister Nitin Gadkari and finance minister Nirmala Sitharaman on Saturday.

MSMEs are not able to execute orders accepted based on earlier prices, the letter said. “MSME industries will cease to exist if increasing prices of raw materials and other allied materials are not corrected. The additional 20% loan to MSMEs through banks under emergency credit line scheme has been completely absorbed by the price increase,” Codissia president R Ramamurthy said.

“Coimbatore is a manufacturing hub producing pumps, motors, compressors, valves and automobile spare parts. Even as businesses are returning to normalcy, prices of allied foundry items like coke, pig iron, cast iron, steel scrap, copper and aluminum have increased by 30% to 35% post lockdown,” said Ramamurthy.

“Besides the price increase, there is also a shortage of raw materials, especially of steel, copper, zinc and brass. Zinc prices have risen from Rs 170/kg to Rs 220/kg from August, resulting in hike in prices of engineering goods, which in turn is affecting export of the same,” he said.

The association requested allocation of steel and other allied materials to MSMEs at a subsidized rate. The Steel Authority of India Limited (Sail) yard in Coimbatore, which was functioning till 2015, should be reopened, it said.

“As the Sail yard remains closed, MSMEs depend on private traders for raw materials, who charge a premium price for steel,” said the letter.