Ludhiana: The fastener industry of Ludhiana is the lifeline for several other sectors, where the products manufactured by thousands of fastener factories of the city are used either in finished goods or for self consumption. Besides this, various original equipment manufacturers (OEM) and automobile manufacturing companies too are highly dependant on the city’s fastener units.
But during the last few years, fastener manufacturers have been suffering huge losses on account of drop in sales and dip in profit margins. According to the industrialists, 2020 has by far proved to be the worst year for them, but they are still hopeful about recovery and are pinning their hopes on the Union Budget, which will be announced on February 1.
Speaking to TOI, Narinder Bhamra, president of Fastener Manufacturers Association of India, said, “We are hoping that this Budget will definitely be a good one for the manufacturing industry and the finance minister will bring special financial schemes for the micro small and medium enterprises (MSME) units, which will address multiple problems being faced by us. However, the biggest problem being faced by our industry right now is the huge fluctuation in the rates of steel raw material produced by the primary steel manufacturers due to which our businesses have been jeopardised. Be it private or government company producing steel, all are adopting unfair practices just to make more profits and they do it without even caring about the hardships which we may face due to the rate change.”
He added that, “Due to this unethical practice, hundreds of micro, small and medium enterprises (MSME) units engaged in manufacturing of fasteners have already become bankrupt and have closed down or are slowly heading towards this situation. We have recently sent several suggestions for the Budget 2021 to the finance minister. We have demanded that in order to combat this situation of price rise a steel rate regulator must be set up in India but on the patterns of TRAI (Telecom Regulatory Authority of India) whose permission should be necessary before hiking even a single rupee in the rates.”
According to Kuldeep Singh, general secretary of FMAI, “Considering the fact that a huge setback has been caused by the coronavirus to the industry and trade and the profits have taken a huge dip while expenses have shot up considerably. It is the need of the hour that the central government enhances the limit of income tax exemption up to Rs 5 lakh and there should be unconditional zero tax till this threshold. In addition to this, the rate of tax should be fixed slab-wise and for income in the slab of more than Rs 5 lakh, but up to Rs 10 lakh tax should be charged at 20% and over this limit tax should be 30%. It’s high time that all surcharges are abolished from the India and only one kind of charge as ‘income tax’ should be applicable on us. If these changes are made in the income tax system, then it will give a big push to the businesses amid this crisis.”
According to Atul Sethi, another fastener manufacturer and vice-president of FMAI, “A lot of changes need to be done in the tax deducted at source (TDS) and tax collected at source (TCS) in India. One of the major changes required is that in case of delay in the payment of TDS, TCS or other direct tax an assessee should be liable to pay only interest and no penalty should be charged for late filing. Under Section 68, 69 read coupled with Section 115, BBE, the tax rate is 78%, which is totally unjustified. It should be brought down to 30% at least.”
Box – 5k-plus fastener manufacturing units in city
Ludhiana is one of the biggest hub of fasteners and major products being manufactured here include nuts, bolts, studs, washers, screws and rivets, which are supplied to automotive, hardware, aeronautics and several other sectors. According to the FMAI, there are more than 5,000 units dealing in direct and on contract manufacturing and supply of fasteners to Indian and overseas companies. A huge supply of products is made to several big automotive companies, including Maruti, Tata, Mahindra, Ashoka Leyland, etc. In addition to the manufacturing units in organised sector, there are hundreds of tiny units as well, which still operate inside the houses of the owners of these units.