Rising steel prices pinch small hand tool manufacturers

Consequently, export revenue has fallen 10.9 per cent in 2007.

Perturbed over the steep rise in prices of steel and iron, the Hand Tool Panel of Engineering Export Promotion Council demanded intervention of the centre and the Punjab government to check the prices in order to save Punjab's hand tool Industry which contributes 80 to 85 per cent of the total exports.

In an interaction with Business Standard, convener of the panel, Sharad Aggarwal said, "In the last few months, price of iron and steel have gone up substantially. This has affected the entire engineering industry which is a major user of iron and steel. In fact, iron and steel prices have been rising throughout the last year. However, the increase has been particularly sharp in the last one month."

He said that last year the price of steel was Rs 26,000 per tonne, while this year, it is priced at Rs 33,000 per tonne. Further, the price of steel has gone up from Rs 29,000 per tonne to Rs 33,000 per tonne in the last month.

Similarly, pig iron was priced at Rs 20,000 per tonne last year, now it is priced at Rs 26,000 per tonne. Further, in the last one month the price of pig iron has gone up from Rs 22,000 per tonne to Rs 26,000 per tonne, which is an increase of nearly 20 per cent. Moreover, an increase of 10 per cent has taken place in steel items like Flats, Rounds etc.

He added that iron and steel constitutes 60 to 65 per cent of the total cost of production of the hand tools. Every 10 per cent increase in iron and steel prices adds nearly 6 per cent to the cost of the hand tools.

It is worth noting that the hand tool industry employs nearly 60,000 people in Punjab and consists of about 400 tiny and small scale units.

Because of a sharp increase in input costs, specially iron and steel, the growth of the industry has become negative. In 2005-2006, the total exports was to the tune of $204.76 million and registered a growth of 18 per cent over the corresponding period last year, whereas in 2006-2007, the export declined and touched $ 182.95 million thus witnessing a decline of 10.9 per cent.

Commenting upon the preventive measures he said, " The export of iron and steel, which have been growing rapidly (a growth of 49.13 per cent in 2006-2007, as compared to corresponding period last year) should be stopped immediately. Further, in the last budget, import custom duty on scrap was levied at 5 per cent. It is requested that this import duty be scrapped immediately"

"In fact, the price of iron and steel have gone up in Punjab much more than they have gone up in the country. Though main producers like TATA Steel have increased prices by Rs 500 to Rs 1000 per tonne in the last month, domestic prices have gone up by nearly Rs 3000 per tonne in Punjab. It appears that there is a cartel working for increasing the prices through speculation and hoarding," he added.