Industrialists rue hike in steel prices

Claiming that the engineering industry of the state was virtually struggling for its survival due to daily price rise in steel, chemicals and other input materials, Punjab Chamber of Small Exporters today sought intervention of the Union government to extend helping hand to the industrialists.

Prices of steel have gone up by more than 35 per cent during the third quarter of the current financial year and due to this small & medium enterprises (SMEs) and the exporters were the worst sufferers.

The unexpected and unjustified rise in the prices of steel, pig iron, coal, coke, transportation, electricity and fuel has hit them hard.

AK Kohli, vice-president of the chamber added that industrial units were unable to fulfill their commitments and supply the goods to their Original Equipment Manufacturers (OEM) and foreign buyers.

The worst hit industrial and export units were in the light engineering sector such as diesel engine pump sets used in the agriculture irrigation, hand tools, bicycle and parts and nut-bolts, fasteners, machinery parts, agricultural equipment, he said.

The border state of Punjab, located at a geographically disadvantageous place "" far away from source of raw materials and sea ports "" is getting step-motherly treatment when the neighbouring states like Himachal Pradesh, Jammu and Kashmir and Uttarakhand were already enjoying tax benefits, cheaper transportation cost as well as surplus and cheaper electricity power, he said adding that in Punjab the SME units were paying approximately Rs 5,000 per metric tonne additionally for getting raw materials, chemicals, coal, coke etc from other states. He also added that the exporters had to pay additional freight to the tune of Rs 48,000 per container carrying about 20 metric tonne of exportable goods when sent to sea ports of India.

Although the government has reduced the Excise duty from 16 per cent to 14 per cent and Customs duty on iron & steel scrape from 5 per cent to 0 per cent, the steel producers have observed such benefits themselves without passing on to the industry, he said adding that the demand of steel is growing at the rate of 13 per cent due to the infrastructure development in the country while the steel production has grown to approximately 6 per cent.

Therefore, to save the industry and exporters from huge losses followed by unwanted unemployment, the government should immediately impose 25 per cent import duty on the export of iron ore, sponge iron and similar products so that the steel prices in the country are brought down to their original level of Rs 30,000 per metric tonne, against the prevailing price of Rs 50,000 per metric tonne.

The export from the country, or else, would further go down in the engineering sector followed by huge unemployment, bankruptcy and many other problems.

The Punjab Chamber of Small Exporters appealed to the Union government to intervene and save the SME and exporters, especially of this region, by the way of bringing down steel prices to Rs 30,000 per metric tonne, providing 50 per cent concession in railway freight for transportation of exportable goods to sea ports from the northern states and reducing bank interest for SMEs to 9 per cent maximum.

For export units, the bank interest on export credit in rupee term should not be more than 5 per cent and full income tax exemption to rupee-hit exporters for the year 2007-2011 under Section 80 HHC especially for the engineering sector, which is providing huge employment but now struggling for survival, chamber demanded.