The Union Steel Ministry’s recent plan to raise import duties on steel products, aimed at safeguarding the indigenous steel industry, has raised concerns among the district’s MSMEs. The Union steel and heavy industries minister has received a letter from the Federation of Coimbatore Industrial Associations (FOCIA), a common entity that represents 23 industrial associations, requesting a reconsideration of the proposal.
According to FOCIA, MSMEs were the primary buyers of raw materials, which were subsequently transformed into components and delivered to big businesses. Since COVID-19 and the lockdowns that followed, the price of steel has fluctuated greatly over the last four years. It stated that by April 2022, the price of steel had nearly doubled from pre-Covid levels.
The price volatility has resulted in severe losses for micro and small industries that accepted orders at pre-Covid prices from public sector units (PSUs) or corporates. However, it stated that steel factories had significant profit margins during that time.
The price of steel has now dropped to a point where MSMEs may find it “comfortable,” but steel factories may not necessarily view it as a “throwaway price.” FOCIA claims that some export orders have been secured by foundries and component suppliers because of these price reductions.
PSUs that handle yearly requirements, such as the railways, often issue tenders in the first quarter and complete orders in the second quarter of each year. FOCIA stated that small firms that took orders based on the price of steel at the time would find it difficult to fulfill them if the import duty is increased.
With steel costs down, suppliers of textile components are also anticipating a spike in orders. It did note, however, that an increase in import duties may make it more difficult for any micro and small business to survive.
FOCIA asked the union minister to hold off on raising steel import duties at this crucial period. To shield MSMEs from price volatility, it also asked the Center to set an annual “maximum selling price” for each basic metal, including copper, aluminum, and steel. FOCIA emphasized its long-standing request for a “price monitoring committee” that is appropriately represented by the MSME sector.
