Steel Price Surge Pushes Ludhiana MSMEs to Breaking Point, Threatens Exports
A sudden and dramatic spike in steel prices over the last quarter has pushed Ludhiana's micro, small, and medium enterprises (MSMEs) to a critical breaking point. Industry leaders are issuing urgent warnings that this severe price volatility is actively eroding the competitiveness of India's renowned manufacturing heartland.
Manufacturers Face Financial Ruin Despite Strong Demand
Despite encountering encouraging demand in both domestic and overseas markets, local manufacturers report that a staggering 15% jump in raw material costs has completely dismantled their financial calculations. This unforeseen increase now directly threatens the viability of long-term export contracts that many businesses depend on for survival.
Allegations of 'Scarcity by Design'
Badish Jindal, president of the World MSME Forum, has made serious allegations regarding the crisis. He claims the price for each tonne of steel has surged from approximately Rs 48,000 to Rs 56,000 in just three months. Jindal asserts that primary steel producers have deliberately created an artificial scarcity in the domestic market to prioritize more lucrative, high-value exports.
This strategy appears supported by data, as national steel exports have reportedly increased by a significant 36% year-on-year. Compounding the problem, a simultaneous shortage of affordable industrial scrap has left small manufacturing units with no viable, low-cost alternatives. Even at these elevated prices, MSMEs report that material availability remains frustratingly inconsistent, leading to frequent and costly production line stalls.
MSMEs Trapped by Fixed Contracts and Procedural Delays
The "drastic" nature of the price increase has sent shockwaves through the entire manufacturing supply chain. This is particularly devastating for smaller firms supplying Original Equipment Manufacturers (OEMs). Pankaj Sharma, president of the Association of Trade and Industrial Undertakings (ATIU), explains that small manufacturers are caught in a severe procedural trap.
"We can only formally revise our supply rates with OEMs at the start of the next financial quarter," Sharma detailed. "However, our raw material suppliers are increasing prices frequently and without warning. This leaves us with absolutely no room to adjust our own pricing in real-time. We are effectively being forced to absorb these massive losses, which is unsustainable."
The High-Stakes Export Gamble and Currency Woes
For Ludhiana's world-famous bicycle and auto-parts exporters, the raw material crisis is dangerously compounded by international currency instability. "Our manufacturers are now stuck in a perfect storm between an unstable US dollar and relentlessly rising domestic input costs," Sharma added. Unlike large multinational corporations, these small and medium units lack the substantial working capital reserves needed to weather prolonged periods of negative profit margins.
Harsimerjit Singh Lucky, president of the United Cycle and Parts Manufacturers Association (UCPMA), issued a stark warning. He stated that the continuous cost creep is systematically pricing Indian manufactured goods out of highly competitive, price-sensitive international markets. Industry leaders now express a grave fear: without immediate and concrete federal policy intervention to stabilize steel pricing, critical social initiatives could be overshadowed by a severe industrial slowdown crippling the nation's manufacturing backbone.
