CODISSIA report stated that MSMEs who are in the supply chain and annual rate contract by tender system, are unable to execute their orders with the respective agencies, especially PSUs and Government.
Coimbatore: CODISSIA submitted a representation on abnormal and continuous price increase of raw materials especially steel, copper, iron ore, aluminum, paper, plastics, PVC, cotton, chemicals etc. and other allied raw materials for the consideration of Narendra Modi, Prime Minister of India and requested his immediate intervention to seek remedial measures for MSME sector to control abnormal hike and to arrange an enhanced working capital limits at 40% of the turnover from the banking sector to tide over the present crisis faced due to the raw materials price increase.
The representation stated that MSMEs affected are
- The product manufacturers are unable to observe the cost of raw material and due to this, end product prices increase also not observed in the market. Hence, MSMEs have slowed down their production.
- The MSMEs who are in the supply chain and annual rate contract by tender system, are unable to execute their orders with the respective agencies, especially PSUs and Government.
- To implement the NIL rate of import duty and allow imports of raw materials to India for smooth supply of raw materials, which are the primary source of manufacturing activity.
- Raw materials are being sold at premium rates and we request the Government to fix the MRP price as the selling rate for raw materials, to have a constant price at least for three months.
- Immediate ban on export of iron ore and raw materials to ease domestic supply and check price rise.
- Protection against escalation for some period: Easy mechanism, to hedge steel for all MSMEs, NSIC should act as a consolidation agency. They should be in a position to consolidate and hedge overall steel quantity in the marketplace. This kind of hedging should be possible for a period of one year (as rate contract extends for a year) NSIC should make bulk bookings of steel at a price with the option of taking deliveries within 12 months as fixed.
- PSUs to accept cancellation of orders: Public Sector Enterprises must be instructed to accept cancellation of orders from MSMEs with no penalty / black listing as steel price increase is a Force Majeure event outside the control of the MSMEs.
- PSUs to revisit all orders to MSMEs: Government must ask all public sector and stock exchange listed industries / companies to revisit the steel orders.
- PSUs should accept fresh quotes: All MSMEs under government contract and suppliers to PSU, should be allowed to revise their price with fresh quotes. For all finalised government and PSU supplies, MSMEs should be allowed to invoke escalation clauses and re-quote.
- Quota for MSMEs at concessional price: PSUs like SAIL and VIZAG steel should focus on MSMEs for supply of materials on priority basis and all steel industries should allocate at least 50% of their production for Indian MSMEs.
- Reopening the SAIL yard in Coimbatore
- Reintroduce the system of allocation of raw materials to MSMEs at subsidized price as was done earlier, via SAIL, VIZAG, NSIC, SIDCO and other Nodal State Government Distribution Systems.
- GST based funding: GST based funding is needed for all MSMEs on a very low marginal rate. This will encourage MSMEs to purchase raw materials.
In a press release, the organization stated, "even though we have been continuously representing through various forums to find a solution, we requested the Prime Minister to kindly intervene in order to overcome the present situation. We look forward to his early favourable consideration in this matter to save MSMEs for their survival."