MSME's profit decline due to price hike in steel and petrol-diesel

Urge the government to intervene in the matter of rising fuel prices

MUMBAI: Micro, Small and Medium Enterprises (MSMEs), the backbone of the economy, have been hit hard by inflation. MSME organizations across the country have expressed concern over the ever-rising prices of steel and petrol and diesel and urged the government to intervene.

Ramamurthy, a member of the All India Council of the country's 180 MSMEs, says steel accounts for 40 per cent of the total production cost of MSMEs. Its price has gone up by Rs 2,000 per tonne in the last one year. In September last month, prices rose sharply by Rs 2,000 per tonne. It has a direct impact on the production costs of MSMEs and all businesses.

Despite these price hikes, small units are not able to supply products to the market at high prices. They fear that raising the price will cause them to lose their customers forever. In such a situation most of the companies in the sector are forced to sell products on very low rates.

Lack of capital but not a loan option

The working capital of MSMEs is also declining due to rising costs. Small-medium enterprises facing the Corona epidemic and lockdown pressures are now finding it difficult to survive in the market.

Badish Jindal, president of the Association of 5,000 Small Enterprises in Punjab, said the working capital of the units was going to buy expensive raw materials. The government is distributing loans instead of helping directly, which is not the right solution to the problem. The scale of MSMEs has already come down significantly.