MSMEs in TN worried over rising raw material costs

CHENNAI: The rise in prices of steel, iron ore, aluminum, copper, plastics, paper and other raw materials has sparked concern among the MSME sector as they have sought the intervention of Prime Minister Narendra Modi.

All India Council of Association of MSMEs, created by around 170 MSME associations covering approximately 2,00,000 industries pan-India, stated in a release that steel and other base material manufacturers are declaring 10 to 20 times higher profit whereas MSMEs are on the verge of extinction. This clearly shows that corporate and public sector unit commodity companies are profiting at the expense of MSMEs. 

“This volatile situation is temporary in nature, however can cause permanent damage to the MSME sector. In spite of a drop in demand due to lockdown, prices are in upswing, particularly steel, pig iron and other raw materials too. It is obvious there is a cartel created by steel manufacturers, which include both private and public sector undertakings. Steel is an essential commodity for overall development of the country and exports should be as per availability of surplus,” said a release.

AICA has urged the Union government to allow National Small Industries Corporation Limited (NSIC) to hedge steel for all MSMEs. “They should be in a position to consolidate and hedge overall steel quantity in the market place. This kind of hedging should be possible for a period of one year (as rate contract extends for a year). NSIC should make bulk bookings of steel at a price with the option of taking deliveries within 12 months as fixed,” AICA said in a statement.

Similarly, public sector units like Steel Authority of India and Vizag Steel should focus on MSMEs for supply of materials on priority basis and all steel industries should allocate at least 40 per cent of their production for Indian MSMEs, the release added.