Mandi Gobindgarh’s steel business faces slow death

Sanjay Bumbroo

Tribune News Service

Mandi Gobindgarh, August 30

More than 30 per cent steel and furnace industries in the steel town of Mandi Gobindgarh have closed down as the state government has failed to introduce a favourable industrial policy. 

Out of the total 450 steel and furnace units, nearly 160 units have already shut down or shifted to some other states during the past eight years. The imposition of 2.5 per cent import duty on steel scrap has sounded the death knell for the steel manufacturing units in the steel town of the state. 

Unable to bear the heavy losses, about 15 to 20 per cent manufacturers have already put their furnaces up for sale but have failed to find any buyers. The ones that are still operating have decided to cut down their production by 50 per cent to minimise their losses.

Mining ban to blame

The ban on mining and shortage of scrap supply have pushed the steel furnace industry to the brink of closure as the demand for the steel has gone down by 50 per cent. Almost all the industrial units are operating only one shift a day, forcing the labourers to sit idle or move out to industrial towns in neighbouring states in search of a job.

According to estimates, more than 50,000 workers in more than 500 furnaces will be rendered jobless if the industrial units close down their operations.

E-billing adds to woes

The big and the small re-rolling and furnace industries in Mandi Gobindgarh, Amloh and Khanna are facing shortage of steel scrap as the scrap dealers from other states had stopped the supply after the introduction of e-billing by the Punjab Government. Industry owners had been opposing the move tooth and nail on the plea that this would force industrialists to shift their units to the neighbouring Himachal Pradesh.

The nearly 400 rolling mills here are serving 20 per cent of the secondary steel market of the country. There are about 160-180 induction furnaces producing raw material for the rolling mills. There are about 25-40 forging units catering to the needs of the steel rolling mills, sugar and paper industry. There are 50 foundry units, 100 scrap cutting units and 15 oxygen plants catering to the requirements of the industry.

Power trouble

The failure of the Punjab State Power Corporation Limited (PSPCL) to provide uninterrupted power supply to the industrial sector is a big reason for the pitiable condition of the industry. 

The imposition of electricity duty of 5 per cent will prove the final nail in the coffin of the remaining small scale industries in the state. Despite depositing advance power consumption charges, consumers have not been able to get sufficient power to run their units uninterrupted. District Industries Officer Gurdas Singh said that at present, 245 steel re-rolling mills were running in the town while about 160 units have either closed down or shifted to J&K or Himachal. He said some manufacturers were running their units as and when demand for steel increases and engage labourers and technicians on contract basis. 

Dinesh Gupta, president, Patiala Chamber of Commerce, said that manufactures were unhappy over high power rates, lack of tax benefits and unfriendly attitude of the state government.