A meeting of major industrial associations of Nagpur under the Joint Coordination Committee was held recently to discuss the astronomical raw material price increase. Joint Coordination Committee consisting of Vidarbha Industries Association (VIA) represented by its President Suresh Rathi and IPP Atul Pande, MIDC Industries Association (MIA) Hingna represented by its President C.G. Shegaonkar; Butibori Manufacturers Association (BMA) represented by its President Pradeep Khandelwal and IPP Nitin Lonkar, Confederation of Indian Industry (CII) represented by its Nagpur Chapter Chairman – Rahul Dixit; Laghu Udyog Bharati (LUB) represented by its Nagpur Vibhag President – – Shrikant Dhondrikar and Nagpur IKAI President – Udayan Shrouti, Dalit Indian Chamber of Commerce & Industry (DICCI) Vidarbha Chapter represented by its West India Mentor – Nishchay Shelke and President, Vidarbha Chapter – Gopal Wasnik and KIA.
The discussion was mainly centered regarding the abnormal price increase of raw materials especially steel and other allied materials with a heavy impact on MSME industries for their survival. This does not encourage the Prime Minister’s vision calling for ‘Atma-Nirbhar Bharat’ – Self Reliant India Movement.
MSMEs have already been suﬀering 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, the uncertainty of consumption in the market and declining of exports etc. The Micro, Small and Medium 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. Our MSME Minister Shri Nitinji Gadkari has already written to the Prime Minister cautioning against profiteering by steel makers.
Vidarbha is a manufacturing hub powered by MSMEs and caters to the manufacturing of products across various sectors like engineering, plastic, chemical, pharmaceutical etc. The growth ofMSME sector is hindered by various factors in Finance, Marketing, Technology, Infrastructure, lack of skilled man power, and Government Policies.
It maybe seen that steel prices have increased from Rs. 37,000 per tonne to Rs. 54,000per tonne in the past six months and the trend seems to be increasing continuously for items like for example- Iron Ore which has seen an increase from Rs. 3000 per tonne to Rs. 6000 per tonne, Copper from Rs. 4,50,000 per tonne to Rs. 6,80,000 per tonne, PVC Resin from Rs. 60,000 to Rs. 1,40,000 per tonne, Nitric Acid from Rs. 9000 per tonne to Rs. 20,600 per tonne.
Severe shortage of these materials too is witnessed, particularly Electrical Steels, PVC resin, Iron ore and steel scrap. The shortages are providing an opportunity for the middlemen to raise the costs even further. The working capital requirement is shooting up and still 40% more capital is now required to cope up the situation. Emergency Working capital limit provided under ECGLS scheme is fully utilized by MSMEs.
This has aﬀected all the MSMEs that manufacture end products and those which operate under Annual Rate Contract, to complete their orders. Thousands of Micro, Small and Medium industries engaged in manufacturing activities using steel and allied raw materials, are badly aﬀected, in not being able to keep up their commitments or to secure fresh orders for manufacture and supply.
With the prices of raw material spiraling high, MSMEs are faced with severe cash crunch, resulting in erosion of working capital to most of them. The trend of raw material prices going up, unabated till now. 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. Therefore we request for reducing the import duty and allowing imports of steel materials to India for smooth supply of steel items, which is a primary source of manufacturing activity.
Raw materials are being sold at a premium rates and we request the Government to ﬁx the MRP price as the selling rate for raw materials. Plastic Manufacturers and processors are also hit by a sharp increase in the price of raw materials such as PVC, ABS, Polypropylene, PC, PFT by 20 to 140% over the last ﬁve months. The Government should stop imposing barriers such as anti-dumping duty and mandatory BIS standards as demand for several polymers exceed domestic production. An immediate Ban on the export of raw material is required to ease domestic supply and to check the price rise.
Nitric acid is the basic raw material for a number of chemicals. In India, weak nitric acid is manufactured by RCF, Deepak Fertilizer and GNFC. Nitric acid was available to MSME units at Rs.9000/- pmt in the month of December 2019. The basic raw material for the manufacture of Nitric acid is Ammonia. This has now increased to Rs.20600/- pmt even though there is no substantial increase in the price of ammonia. RCF, Deepak, and GNFC have formed a cartel and hiked the price of Nitric acid to Rs. 20600/- pmt, making all MSME units unviable.
The Government of India and various State Governments had supported Industries during the lockdown. We request the governments to step in and to control the price rise.