The exorbitant upsurge in raw material prices is hurting micro, small and medium enterprises (MSMEs) and the Centre needs to immediately intervene through policy decisions, said Goa State Industries Association (GSIA).
GSIA, along with 170 MSME associations across the country, have written to Prime Minister Narendra Modi, articulating concern over the “volatile situation” which can cause “permanent damage” to the MSME sector.
MSME bodies have informed the Centre that in spite of a drop in demand because of state-level lockdowns, prices of raw materials, particularly steel. Pig iron, aluminium, copper and cement are on the improvement. The industry bodies suspect that a cartel has been formed by steel
manufactures, which include both private and public segment units.
The 170 MSME associations have come together under the umbrella of the All India Council of Association of MSMEs (AICA) and have written to Modi seeking his involvement. Copies of the letter have also been given to finance and corporate affairs minister Nirmala Sitharaman, mSME minister Nitin Gadkari, minister for steel Dharmendra Pradhan and others.
“GSIA is joining hands with all other MSME associations across India requesting the government of India to intervene in this situation of price increase of basic raw materials,” GSIA president Damodar Kochkar stated.
GSIA said all steel companies need to meet the monthly requirements of the MSME sector. Another step suggested, that could provide relief to MSMEs, is the import of all steel materials with a norminal import duty being levied.
Kichkar said that the Centre should control the price of raw materials for a specific period of time and also that it needs to provide additional funds through a scheme to meet the working capital requiremnets of MSMEs.
“MSMEs are not able to execute orders taken at a much lower price. They face the uncertainty of getting black-listed by PSUs and large corporates if they don’t honour contracts,” stated the joint representation sent to the centre.