PUNJAB hand tools industry is in the doldrums.With growth slipping last fiscal, the industry is saddled with high input costs as prices of iron and steel have sky rocketed and export returns are declining due to rising rupee. The industry has demanded ban on exports of iron and steel and also withdrawal of customs duty on scrap. The industry also demands that a sufficient quantity of billets and blooms be sent to Mandi Gobindgarh and Ludhiana in Punjab by main producers like SAIL and TISCO.
Sharad Aggarwal, convenor, hand tools panel, Engineering Export Promotion Councuil (EEPC), says the average growth in the last few years was nearly 20%. However, because of sharp increase in input costs especially of iron and steel, the growth has slowed down.
Mr. Aggarwal told ET on Monday that during 2006-07 the industry had exported hand tools worth $182.95 million as against $204.76 million in the previous year, indicating a fall of 10.90%. Hand tools exports during 2003-04 stood at $136.41 million which went up to $172.74 million the following year indicating an increase of 26% and during 2005-06, the growth was 18 %.
He said in the past few months, iron and steel prices have skyrocketed and this has affected the entire engineering industry which is a major user of iron and steel." In fact, iron and steel prices have been rising throughout the last year. However, the increase has been particularly more pronounced in the last one month."
He said last year steel prices ruled at Rs 26,000 per tonne and a month ago it went up by Rs 3,000 to Rs 29,000 per tonne and pig iron from Rs 20,000 per tonne to Rs 22,000 per tonne. Presently, iron prices, he said, were hovering around Rs 32,000 per tonne and pig iron Rs 26,000 per tonne. Similarly, he said, there has been an increase of 10% prices of steel items like flats and rounds adding to the woes of the industry.
Mr. Aggarwal said iron and steel form 60-65% of the total cost of production of the hand tools industry. Every 10% increase in iron and steel prices add nearly 6% to the cost of hand tools production.
Hand tools industry employs nearly 80,000-90,000 people all over India and consists of over 500 tiny and small scale units and produces tools worth Rs 1,000 crore annually.