Challenges faced by CE industry due to abnormal increase in steel prices

10 May 2021

The CE industry was facing several issues/challenges because of the abnormal increase in steel prices since July 2020. ICEMA highlighted to the Government that abnormal and consistent rise/increase in domestic steel prices was adversely impacting the CE industry in India given that steel forms a key input/raw material. ICEMA submitted that any increase in the steel price was detrimental to the growth of India’s Construction Equipment sector and the impact was much higher at a time when the industry was already facing challenges (incl. labour shortage) triggered by the second wave of COVID-19 in the country.

ICEMA submitted that the CE Industry is the key enabler for infrastructure development in the country, a major focus area of the Government in achieving a USD 5 trillion economy. ICEMA further submitted that the disruptions in supply chains due to abnormally high steel prices and issues/challenges of non-availability of domestically produced steel were expected to impact the progress of existing and planned infrastructure construction projects (roads, railways, ports, real estate, etc.) within the country. ICEMA submitted that the restrictive measures (such as ADD, Safeguard Duties, Min. Import price) imposed on the import of steel into India from major steel producing countries such as China and Korea had further exacerbated the challenge. In view of the shortage in domestic availability of steel, the construction equipment industry had no choice but to import steel to meet demand, resulting in higher input costs and disruption of supply chain cost efficiencies.

ICEMA suggested that the anti-dumping duty on imported steel be removed with immediate effect at least for one year to help curtail the unprecedented increase in prices and improve steel availability in India. ICEMA also submitted that MSME buyers were being forced to buy steel in the spot market at a very high price. The very survival of MSMEs was in question because of their inability to pass on the total cost increase to end users/OEMs resulting from frequent steel price increases and a tight financing scenario.