FOCIA said MSMEs were the major purchasers of raw materials, which were then converted into components to be supplied to large industries. In the past four years following Covid-19 and the subsequent lockdowns, the price of steel has been highly volatile. In April 2022, steel price had almost doubled from the pre-Covid levels, it noted.
Micro and small Industries, which have taken orders from the public sector units (PSUs) or corporates at pre-Covid prices, have suffered significant losses because of the price volatility. On the other hand, steel plants have enjoyed substantial margins during the period, it said.
Currently, steel prices have decreased to a level that could be considered ‘comfortable’ for MSMEs, although not necessarily a ‘throwaway price’ for steel plants. This reduction in prices has enabled foundries and component suppliers to secure some export orders, according to FOCIA.
PSUs like the railways usually float tenders for their annual requirements in the first quarter and finalize orders in the second quarter of every year. “If the import duty is hiked, small industries that have accepted orders based on the current steel price will face difficulties in executing the orders,” FOCIA said.
Textile component suppliers are also hoping for a revival in orders, thanks to the reduction in steel prices. However, an increase in import duty could make the survival of all micro and small industries difficult, it said.
FOCIA urged the Union minister to refrain from increasing the import duty on steel at this critical time. It also requested the Centre to fix a ‘maximum selling price’ yearly for every basic metal like steel, aluminium and copper to protect MSMEs from price volatility. FOCIA also stressed on its long-pending demand for a ‘price monitoring committee’ with proper representation from the MSME sector.
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