Six years on, over 150 MSME units shut shop in ‘iron town’ Mandi Gobindgarh

PATIALA: A decade ago, Mandi Gobindgarh was a thriving town, with a flourishing small-scale industry that earned the town its adage, Asia’s leading iron and steel town. These days, the town, also known as Loha-Mandi, is slowly losing out its edge with many micro small and medium enterprises (MSME) being forced to shut down.
According to Dinesh Gupta, the chapter chairman of Confederation of Indian Industries Mandi Gobindgarh, over 150 units of MSME have shut down in the last six to seven years.The implementation of recent policies of both the Centre and the state government had directly and indirectly left an impact on the industry in this town, say the industrialists. The town has more than 1,000 large- and small-scale industries doing with iron and steel related businesses.
“The wrong policies of incumbent state government, especially the policy of Rs 5 per unit of electricity and the fixed minimum charges, had affected the industry. For instance, a small unit would consume less electricity, but the owner would have to pay fixed minimum consumption charges. This meant that the MSME faced more loss than when SAD-BJP had charged Rs 7.5 per unit flat. There are around 300 big units and over 600 small units in Mandi Gobindgarh. The large-scale industry benefited from the electricity policy, but for small-scale units, there was a jump of around 30% in the electricity bills,” said Gupta.
Not long ago, Anil Aggrawal said he was running four small-scale units, but the huge losses had forced him to wind up all four of this businesses.
“There was a time when over 500 employees had worked in my rolling mill, forging unit and furnace. As the businesses flourished, I expanded their scope by making further investments in terms of real estate and machinery. But losses overpowered me to such an extent that I had to wind up all my four industries. The major reason for my failures are the policies made by the government at Centre as well in the state that favoured only the big industrialists. I have been making rounds to the banks for financial assistance but nothing came out of it despite the fact that I have land and own a good reputation in the market and among the bankers. There is a number of small industrialist like me who are all reduced to begging banks for help.”
Many industry unions also claimed that there was a need to form and implement the MSME-friendly licensing policy, as around 90% of furnace industry did not have a licence to produce over 30,000 tonnes.
Said Rajan Garg, vice-president, Steel Roller Association Mandi Gobindgarh: “The industry needs the permission of Central government to use underground water, whereas it should be under state authority like in many other states. The CNG should be VAT free for industrial consumption. The power tariff should be capped as MSME is facing huge losses and big industrialists are getting 90% share of the cake.”
Pointing out that with much fanfare the state government had rolled out Investment Punjab and New industrial policy 2017, promising many incentives for the industry, the union members said that they were only on paper and was not implemented. After increasing power tariff, the government had also promised to put a cap at Rs 8.5 per unit. But this too was never put into force, they claimed.
K K Jindal, general secretary Steel Chamber of Commerce and Industry (SCCI), said, “The fixed electricity charges should come to an end. The furnace industry is also suffering from the rising cost of scrap, which is its primary raw material. The scrap should be made GST-free. The rolling mills and pipe plants have been facing huge losses due to wrong policies of the state government. There’s a need to put a cap on the Chinese furnished products. The GST laws are complicated and need to be simplified. With the implementation of GST, the entire business community initially had faced difficulty but it was quite helpful and was also a long pending demand of the industry.”