Industry wants ‘essential commodity’ tag for steel

Virendra Singh Rawat

Lucknow / May 20, 2021

 

In the backdrop of rising domestic steel prices and recent diversion of oxygen from manufacturing towards the medical use, the micro, small and medium enterprises (MSME) sector has urged the Uttar Pradesh government to notify steel under the Essential Commodities Act.

 

In a memorandum sent to UP chief minister Yogi Adityanath, Indian Industries Association (IIA), an umbrella of nearly 5,000 MSMEs, said steel should be notified as an essential commodity in wake of the recent upsurge in prices and resultant impact on steel-based industries.

 

The prices of iron and steel, copper, aluminum, plastic and rubber have increased drastically in recent weeks as compared to last year, while the entrepreneurs are in dire need of additional capital to keep their businesses afloat following the Covid-19 induced lockdown matrix, the Association claimed.

 

“There is an urgent need for instituting a proper mechanism in relation to controlling the price increase. Due to the coronavirus crisis, there has been an unprecedented increase in the demand for oxygen in the health sector. While, IIA supports the diversion of the commodity for medical uses, the steel industry is affected by the reduction in production in the steel sector,” IIA underlined seeking relief.

 

Despite muted domestic demand owing to Covid-19 lockdown and restrictions on movement, the steel price hike is primarily a fall-out of the international price movement, which has been ticking northwards after China restricted its exports.

 

Meanwhile, industry has also sought relaxations with regards to the repayment of business loans due to the lack of industrial activities and demand slump since last year.

 

“The entrepreneurs are saddled with the lack of liquidity coupled with fixed regular expenses in the form of salary, tax liability, interest payments etc. In such a situation, an economic package is required from the banks, such as offering financial assistance at a lower rate of interest,” the memorandum mentioned.

 

Due to weak market demand, muted capital flow and lack of resources, the repayment of installment of old loans to entrepreneurs is outweighed. In such a situation, there is a need to provide special facilities to banks for MSMEs, IIA noted.

 

Nonetheless, the UP entrepreneurs have expressed keenness to foray into the segment of oxygen generating plants and other life saving devices such as oxygen concentrators etc.

 

“It is suggested that a guideline should be formulated early regarding administrative and technical approval and clearance in this respect. Regarding technical support and guidance to the entrepreneurs, efforts should be made by the government, urging reputed institutions like DRDO, IIT for research and development,” the IIA memorandum underlined.