Follow Us
Vijay C Roy
Tribune News Service
Chandigarh, December 14
It’s a double whammy for utensil manufacturers in Jagadhri — a metal town in Haryana that is well-known for its stainless steel, aluminium, brass and copper products. The industry, a majority of them in micro, small and medium category, is not only facing stiff competition from units located in other states but inverted duty structure post GST implementation has eroded their margins. Inverted duty structure means incidence of levies where tax on input is more than the tax on finished product.
Veterans of the industry said a few decades ago Jagadhri was the sole hub for utensil manufacturing. Its production was enough to meet 70-75% of domestic market demand. With other utensils hubs such as Jodhpur, Ahmedabad, Chennai, Maharashtra and Orissa having come up with their respective state government’s support over the years, its share has come down drastically.
“Many manufacturing units have closed in the past because of lack of support from the government. Currently, the city comprises around 1,000 units engaged in stainless steel, aluminium and brass and copper utensils manufacturing in the micro, small and medium enterprises (MSME) category. As there is no hand-holding from the state government like other states our share has come down drastically and now it is less than 15%,” Jagadhri Stainless Steel Re-Rollers Association president APS Bhatti said.
They said initially it was demonetisation which crippled the manufacturing units and later GST had a cascading effect on smaller units. “Our customers are small traders, which are not well versed with implications of the GST. So it took time to adhere to the new system,” the manufacturers said.
According to manufacturers, as the industry has a limited market access, it’s not expanding.
“The capital investment in this sector is almost stagnant for many years in Jagadhri as the market is not growing in accordance with manufacturing capabilities. We pay 18% GST on raw material whereas we get only 12% on finished products. As a result, our precious capital is blocked in the form of input tax credit,” Federation of All India Aluminium Utensils Manufacturers former president Tarun Goyal said.
The MSMEs have a limited access to capital and since the working capital is blocked they are finding it difficult to sustain. The manufacturers said logistics cost makes them unviable to market their products in other parts of the country.
“Over the years, new units have been set up across the country giving stiff competition to us. We are restricted to North India only, especially Punjab, Haryana and Uttar Pradesh because the logistics costs make our products costlier than the products manufactured locally there,” Bhatti said.
The manufacturers said population density is very low in North as compared to other parts of the country and as a result they have a limited market access.
Made-in-Jagadhri utensils
3
4