Steel price hike: Gadkari fumes, writes to PM Modi

Concerned over the steep hikes at the prices of steel and cement, both inputs for construction, the minister for Ministry of micro, small and medium enterprises (MSME) and highways Nitin Gadkari has written a letter to Prime Minister Narendra Modi seeking his intervention to arrest the trend.

“Steel companies have raised the rates by 55% in the last six months. I have written to the Prime Minister and have suggested that the issue should be discussed at the highest level. Some decision has to be taken. This (the price hike) is not good. (It has to be known) if the hike is commensurate with the increased cost of labour, power and raw materials. Lowering the productivity and increasing the rate is not a good strategy,” Gadkari said at an Assocham event.

The minister also took a jibe at the cement industry, saying this (relentless price increases) also holds for the cement sector.

“At a time when we are trying to create so much infrastructure, this kind of policy approach from their (cement and steel companies) side would not do any good for them in the long-term. This is also not good for the country. We need to create a long term-policy for the steel and cement sectors,” Gadkari said.

The minister said if the prices of steel and cement companies stick to their present policy of jacking up prices, infrastructure projects would become economically unviable and might force the government to change its (procurement/usage) policy.

Just a couple of days back, Gadkari accused cement units of forming cartels to raise the prices of the building material, even as the construction industry is struggling to recover after being hit hard by the pandemic and the lockdown.

“I decided to make all roads concrete. I wanted to encourage the cement industry. But they are only taking (unfair) advantage of the situation and making cartels. So, I am now allowing bitumen (for road construction),” Gadkari had said at a Ficci event.

In a recent report, ICICI Securities said cement’s industry average operating margin grew 25% Y-o-Y in FY’20 and further rose 20% Y-o-Y to over Rs 1,250/tonne in the first half of the current fiscal.

Steel prices also are ruling at least 12-year high. Cashing in on higher demand amidst subdued production and limited imports, domestic steelmakers have hiked prices thrice in as many weeks in the current month, taking the benchmark hot-rolled coil prices in the wholesale market (ex-Mumbai) to Rs 52,000 per tonne from just `36,500 a tonne in July, a 43 %hike.

Separately, the minister said that the government has finalised GPS-based (Global Positioning System) technology toll collection to ensure seamless movement of vehicles across the country. He said this will ensure India becomes ‘toll-free’ in the next two years. He expressed hope that the toll collections may reach Rs 34,000 crore by March 2021 and by using the GPS-enabled technology for toll collection, it would touch Rs 1,34,000 crore in the next five years.