Coimbatore MSMEs Appeal to Government Against Proposed Steel Import Duty Hike

Industries in the Coimbatore region are raising concerns about the steel ministry’s recent proposal to increase the import duty on steel products, a measure aimed at protecting the domestic steel industry. The Federation of Coimbatore Industrial Associations (FOCIA), which represents 23 industrial associations, has sent a letter to Union Minister of Steel and Heavy Industries H D Kumaraswamy, urging the government to reconsider this proposal.

FOCIA emphasized that MSMEs are major purchasers of raw materials, particularly steel, which they convert into components for large industries. Over the past four years, especially after the Covid-19 pandemic, steel prices have been highly volatile. In April 2022, steel prices nearly doubled compared to pre-pandemic levels. This volatility severely affected micro and small industries, which had already taken orders from public sector units (PSUs) and corporates at pre-pandemic prices, leading to significant financial losses.

While steel plants enjoyed substantial profit margins during the price surge, current steel prices have dropped to more manageable levels for MSMEs. This reduction has allowed foundries and component suppliers to secure export orders. However, FOCIA pointed out that any increase in the import duty could severely impact these industries, especially those that have accepted orders based on the current pricing structure.

According to FOCIA, PSUs like the Indian Railways issue annual tenders during the first and second quarters, and an import duty hike could make it difficult for small industries to fulfill these orders. Textile component suppliers are also hoping for a resurgence in demand due to the current reduction in steel prices. However, any increase in duty would undermine this recovery and create further struggles for micro and small enterprises, potentially threatening their survival.

FOCIA has urged the Union Minister to refrain from increasing the import duty at this critical juncture. In addition, it proposed that the government introduce a maximum selling price for basic metals like steel, aluminium, and copper, fixed for one year, to safeguard MSMEs from price volatility. The association also called for the establishment of a price monitoring committee, with appropriate representation from the MSME sector, a long-standing demand to ensure fair pricing practices.

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