Ludhiana: A sudden spike in steel prices over the last quarter has pushed Ludhiana’s micro, small, and medium enterprises (MSMEs) to a breaking point, with industry leaders warning that the price volatility is eroding the competitiveness of India’s manufacturing heartland.Despite encouraging demand in both domestic and overseas markets, local manufacturers say a 15% jump in raw material costs has dismantled their financial calculations and threatened long-term export contracts.
A ‘Scarcity by Design’Badish Jindal, president of the World MSME Forum, claimed that the price for each tonne of steel had surged from about Rs 48,000 to Rs 56,000 in just three months. Jindal alleged that primary steel producers have created an artificial scarcity in the domestic market to prioritise high-value exports.National steel exports have reportedly increased by 36% year-on-year. A simultaneous shortage of industrial scrap has left small units with no affordable alternatives. Even at elevated prices, MSMEs (micro, small, and medium entreprises) report that material availability remains inconsistent, stalling production lines.Trapped by Fixed ContractsThe “drastic” nature of the increase has shaken the entire manufacturing chain, particularly for those supplying Original Equipment Manufacturers (OEMs). Pankaj Sharma, president of the Association of Trade and Industrial Undertakings (ATIU), has noted that small manufacturers are caught in a procedural trap. “We can only revise our rates with OEMs in the next quarter,” Sharma explained. “However, suppliers are increasing raw material prices frequently, leaving us with no room to adjust. We are effectively absorbing the losses.”The Export GambleFor Ludhiana’s famed bicycle and auto-parts exporters, the crisis is compounded by currency instability. “Manufacturers are stuck between an unstable dollar and rising domestic input costs,” Sharma added. Unlike large corporations, these small units lack the working capital reserves to weather prolonged periods of negative margins.Harsimerjit Singh Lucky, president of the United Cycle and Parts Manufacturers Association (UCPMA), warned that the continuous cost creep is pricing Indian goods out of price-sensitive international markets. Without a concrete federal policy on steel pricing, leaders fear the “War Against Drugs” and other social initiatives will be overshadowed by an industrial slowdown.
