Bhopal: No relief to MSMEs as prices of raw materials skyrocket

Bhopal (Madhya Pradesh): The Micro, Small and Medium Enterprises in Madhya Pradesh are facing shortage of raw materials owing to global inflation. The costs of raw materials are on a record high and the supply chain has been compromised due to rising fuel prices.

At the backdrop of Russia-Ukraine war, the skyrocketing global commodity and oil prices, unavailability of freight containers and spiked freight charges have become a huge challenge for MSMEs, said chairman of MP PHD Chamber of Commerce and Industry, Sanjeev Agrawal.

Prices of steel, nickel and aluminum have risen by Rs 22,000 a ton touching Rs 65,000 per ton since January. As a result, MSMEs are not in a position to compete with global buyers.

The president of MP Small Scale Industries Association (MPSSIA), Vipin Kumar Jain, said, Russia and Ukraine are net exporters of steel. Geo-political disturbance has increased cost of metals by more than 50%.

Semiconductors are imported from Taiwan, which is stuck in a bottleneck due to supply crunch, thereby affecting margins of MSMEs in defence, automobile and engineering sectors, he added.

Jain said polypropylene, a synthetic resin used in industries including automotive, used to cost Rs 80 - Rs 100 a kg. Now it costs Rs 130 ñ Rs 136 per kg (excluding 18% GST).

Textile-based MSMEs have been hit hard as production has affected severely leading to delays in shipment and movement of assignments, said Akhilesh Rathi, the chief of Textiles Mills Association.

Rathi added, Industry was already facing pressure due to rising prices of raw materials - both natural and synthetic fibres, and colour chemicals. Shooting fuel cost has come as a double whammy, dampening the margins further.

Ex-MPSSIA chief Arun Jain said, ìMadhya Pradesh has 27 lakh MSMEs that account for 4% share in total MSMEs of India. Picture will remain gloomy if the government fails to remove bottlenecks in the way.î It is important to make MSMEs competent with improved export logistics, infrastructure at ports, he suggested.

Issue not raised

Secretary of MSME department, P Narhari, said, The associations have not raised the issue in front of us as of now. The only problem we know about is the shortage of coal and we are working on it. We hold weekly meetings with them and will discuss the shortage if it continues.