Railway Equipment Suppliers Association Calls for Urgent Relief for MSMEs in Coimbatore
The Railway Equipment Suppliers Association, based in Coimbatore, has made an urgent appeal to the Union Ministry of Railways, requesting immediate relief measures for Micro, Small, and Medium Enterprise (MSME) suppliers. These businesses are struggling with significant increases in raw material prices over the past six months, which threaten their operational viability and ability to meet supply commitments.
Sharp Price Hikes in Key Materials
According to S Surulivel, the association's president, prices of essential metals have surged dramatically. Copper prices have risen by 80%, aluminium by 60%, and steel by 30%. Additionally, the ongoing conflict in West Asia has led to a 100% increase in costs for polymer and plastic raw materials. These escalations are placing immense pressure on small-scale manufacturers, who are finding it challenging to absorb such unprecedented cost burdens.
Impact on Supply Commitments and Financial Penalties
Many MSME suppliers had secured purchase orders from the railways at lower rates before these price hikes. Now, they are facing difficulties in fulfilling these orders, resulting in delays or complete inability to supply. Under existing railway procurement rules, this has led to penalties, including:
- Liquidated damages of 0.25% per week, amounting to 1% per month for delayed supplies.
- General damages for non-supply, further exacerbating financial distress.
Industry representatives have highlighted that the absence of a price variation clause for final products has caused significant losses, as suppliers cannot pass on increased costs to the railways.
Proposed Relief Measures and Requests
In a formal representation to the railway minister, the association has proposed several key measures to alleviate the crisis:
- Invocation of Force Majeure Clause: This should apply to all MSME purchase orders, especially for copper- and aluminium-intensive products, with delivery schedules extending beyond September 1, 2025.
- Waiver of Penalties: The association seeks a waiver of penalties for delayed or failed supplies and a refund of penalties already collected after the specified date.
- Structured Relief Scheme: They suggest modeling the relief on the "Vivad se Vishwas" scheme, a dispute resolution initiative introduced during the Covid-19 pandemic to reduce litigation and provide financial relief.
The association emphasizes that these measures are crucial for the survival of MSME units, which are severely impacted by volatile input costs. Without immediate intervention, many suppliers risk financial collapse, potentially disrupting railway supply chains and broader industrial operations in Coimbatore and beyond.
