On December 20, about 7,000 engineering goods manufacturers in Ahmedabad will keep their factories shut. Ahmedabad Engineering Goods Manufacturers’ Association (AEGMA) has expressed its support for the AICA’s (All India Council of Associations of MSMEs) statewide call for a closure of Micro Small and Medium Enterprises (MSMEs) to protest the extraordinary rise in raw material costs.
Manufacturers have claimed that a sharp increase in the pricing of pig iron, iron ore, steel, and other metals has impacted production. Even production lines have come out in favour of the shutdown.
Ahmedabad is home to around 7,000 engineering goods manufacturing firms, as well as 1,500 foundries.
AEGMA president Ashok Patel expressed his support for the statewide strike, saying, “Over the last six months, raw material prices have practically doubled. Pig iron, iron ore, steel, and even coal, which is commonly employed by engineering goods makers, are among them. This has increased our production costs by at least 40% “”Recent.”
“Previously, we were able to obtain raw materials on a 45-day credit basis. However, if we need to obtain raw materials and pay a greater price, we are now expected to make prompt payments. As a result, industry’s working capital is rapidly depleting, further impacting production “Patel stated.
Even foundries are reeling under similar difficulties as manufacturing cost of metal castings has dramatically increased. “Most foundry units are MSMEs and do not have deeper pockets and therefore, don’t have adequate working capital to procure raw materials at a higher cost. Moreover, with freight costs going through the roof and payment cycles getting stretched, the realisation on fulfilled orders is slow. Consequently, foundries too are operating at 50% or even lesser capacity utilisation,” said Subodh Panchal, former president of Institute of Indian Foundrymen (IIF).
Industry associations have sought for credit availability for the industries to sustain increased input costs.