Small grinder manufacturers in Coimbatore, one of India’s largest grinder manufacturing hubs, are feeling discriminated against, because the AIADMK government’s tender specifications for sourcing 2.5 million grinders for its free distribution scheme disqualifies them from participating.
The manufacturers have alleged that Chinese products will enter the market if the state government does not relax the qualification norm for domestic manufacturers.
As part of its campaign in the recent Assembly elections in Tamil Nadu, the AIADMK government had promised lots of freebies. One of them is that grinders would be distributed to families eligible to draw rice from the public distribution system (PDS).
O Panneerselvam, the state’s minister for finance, said in his interim budget speech that the government will procure and distribute electric fans, mixers and grinders to women, as promised in the party’s election manifesto.
This scheme will commence from 15 September, on the occasion of the birthday celebrations of C N Annadurai, the first DMK chief minister of the state. A total of 18.3 million women beneficiaries holding family cards, who are eligible to get rice from the PDS, will get this benefit in a phased manner.
In 2011-12, about 25 lakh families will be covered. A sum of Rs 1,250 crore has been provided for this purpose in the revised Budget estimates, he said. The state government has estimated a total cost of Rs 600 crore for the purchase of 2.5 million grinders.
Initially, this was good news for the manufacturers, but the government’s tender states that the annual turnover of a bidder should be at least Rs 1.25 crore. This has hit the industry, said D Krishnamoorthy, secretary, Coimbatore Wet Grinders and Accessories Manufacturers’ Association (COWMA).
The industry, which is valued at Rs 200-250 crore in Coimbatore, has already witnessed a 60 per cent drop in business, since consumers have stopped buying grinders, thinking that they will get them free from the state government, he said.
“We thought that this will be offset by the state government, but the tender condition came has a shock,” added Krishnamoorthy.
Initially, the state government stipulated a turnover of Rs 2.5 crore, but later brought this down to Rs 1.25 crore. “We have now asked the government to keep the eligibility criterion at Rs 50 lakh,” he said.
A few manufactures formed consortia for bidding, but this did not lead anywhere, because the price offered by the government was not viable. Of the 19 consortia, 10 were selected.
In the case of a consortium with three members, the lead member alone needs to meet at least 50 per cent of the turnover requirement, and each of the other two members must meet at least 25 per cent of the turnover requirement. The total turnover of all three members in any one year has to be not less than Rs 5 crore.
In the case of a two-member consortium, the lead member should have a turnover of Rs 2.5 crore and the other member at least Rs 1.25 crore, while the total turnover of the consortium needs to be Rs 5 crore in any one year.
“The minimum turnover condition would disqualify many individual grinder manufacturers in Coimbatore and would favour major corporates,” said one manufacturer.
“Even as a consortium, we would not be able to meet the qualifying criteria. The majority of grinder makers in the Coimbatore belt have an annual turnover of less than Rs 1 crore,” he added.
Located around 500 km from Chennai, Coimbatore is a hub of grinder makers. Grinders are essential for making the batter (of rice and urad dal) needed to prepare dosas, idlis and vadas.
There are about 200 units in Coimbatore producing some three lakh grinders per month, and 450-500 units supplying components to grinder-makers. The industry has a direct workforce of around 35,000.
The state government had also received bids from other states, including Karnataka and Gujarat. The production capacity of the factories in Coimbatore is 1,000-1,250 units a day. Bidders from other states are ready to supply 7-10 lakh units in 180 days.
“We suspect that they will purchase wet grinders from China without the grinding stone and assemble it here with the stone,” one local manufacturer said.
“If the government can offer subsidies, we can definitely ensure supply and match the price,’’ said V Kumar, another manufacturer. Many manufacturers are now discussing the concept of clusters to meet the demand. “Clusters can turn into co-operatives and they can accept government tenders,” he said.