Special Correspondent

Rise in the prices of raw materials has affected the industries

Supply raw materials at controlled prices, Government urged

Prices of iron and steel have gone up by

23 per cent in last three months

SHIMOGA: Auto engineering and foundry industries in Shimoga district, some of which enjoy export potential, are passing through a critical phase following the steep rise in the prices of raw materials.

Industrialists have threatened to protest if their demands are not conceded by the Union and the State governments.

Industrialists of some of the foundries engaged in the manufacture of automobile components said that it would be difficult for them to sustain unless the prices of raw materials particularly of iron and steel, which have registered nearly 50 per cent rise in the last one year, were restored to the last year’s level.

120 foundries

There are nearly 120 foundries in the industrial estates in Shimoga and Bhadravati. The future of over 1,300 workers, who are directly employed by them, would be at stake unless remedial measures were taken immediately, they said.

President of the Shimoga Industrial Estate Industrialists’ Association Umesh said that the prices of iron and steel had gone up by nearly 23 per cent in the last three months, making it impossible for the industrialists to bear its impact.


He said that the benefit extended by the Union Government by way concessions in the Central Excise Duty on imported raw materials was not passed on to manufacturers.

The other factor that had dampened the enthusiasm of the local industrialists was the cascading effect of the recession in the U.S. economy as it had led to the appreciation of the rupee value against the U.S. dollar, Mr. Umesh said.

“Though this development is considered a positive sign for the economic development, it has indirectly affected the prospects of the industries engaged in the manufacture of export items as it is difficult to face the stiff global competition in maintaining the price level,” he said.


B.C. Nanjunda Shetty, partner of the Perfect Alloy Components, one of the leading industrial units in Shimoga, said that introduction of the Value Added Tax (VAT) in Karnataka had increased the prices of the industrial components manufactured in the State at least by five per cent compared to those available in Tamil Nadu and Maharashtra.


Mr. Shetty appealed to the Union and the State governments to bail out the foundry industries from the critical financial phase.

He suggested that the Union Government should supply raw materials at controlled prices apart from reducing the Central Sales Tax if it could not be abolished.

There was a need to streamline the system to pay subsidy to small industries, he said. He also suggested that the iron and steel be brought under the purview of the Essential Commodities Act.


President of the Shimoga District Industrial Association K.S. Ananthramaiah said that the price fixed at Rs. 25 lakh for an acre in the proposed Special Economic Zone (SEZ) coming up near Machenahalli was unscientific and exorbitant. “The local industrialists cannot afford to own a land in the SEZ unless the price is reduced to Rs. 8 lakh an acre,” he said.

He said that a delegation of the local industrialists presented a memorandum to Governor Rameshwar Thakur through the district administration here on Tuesday urging him to supply industrial raw materials at reasonable prices and reduce the tax for industrial products.