Cycle makers want govt to put a brake on rising steel prices

Hit hard by rising input costs, cycle manufacturers in Ludhiana, which accounts for over 90% of country's bicycle and bicycle parts output, today demanded setting up of a regulator to monitor steel prices.

Lamenting that invasion of cheap Chinese bicycles has badly impacted the domestic industry, they also wanted creation of a fund to upgrade technology to compete better in export markets.

"There is an urgent need to constitute a regulatory commission to keep a tab on steel making companies for not unnecessarily raising prices by forming a cartel, as rising prices in a short span have rendered the bicycle sector uncompetitive," United Cycle & Parts Manufacturers Association President DS Chawla told PTI over the phone from Ludhiana.

Hero Cycles Director S K Rai said the "reckless" increase in input cost has posed a serious challenge before low-technology industries to survive.

Chawla said rates of key materials required for making bicycles such as steel pipe, HR coil, CRC sheet, wire rod have shot up to 35-48% in past five months.

"It is astonishing to learn that while ingot (raw material for steel products) rates increased by just 15%, rates of finished items like HR coils, CRC sheet have surged by over 35% in just a few months. It points out there is a some cartel which is artificially hiking the cost of steel at their whims," he said.

Apart from rising input costs, cheap Chinese bicycles eating away the domestic industry's market has also turned out to be a big cause of concern for the industry, with the country annually importing Rs 500 crore of bicycle and parts from China.

"There are certain items like steel balls and spoke, which earlier used to be manufactured here, are now being imported from China," Rai said.

Export of bicycles and parts has also declined to Rs 400 crore in 2010-11, against export of Rs 952 crore in 2007-08.

"We continue to make old heavy bicycle weighing 18-20 kg while in overseas market bicycles weighing 5-6 kg are available. Industry here has still not been able to develop new products like cycles incorporating aluminium, fiber and carbon made accessories and parts. The new fund will help in bridging the technology gap," he said.

Ludhiana has over 4,000 small and medium bicycle units and it houses prominent bicycle brands such as Hero Cycles, Avon Cycles, Hi-Bird, etc.