The rising inflation should be a concern to us all in India. The Indian economy has seen a turn-around last year after three years of an economic down-turn. The recent upward spiral of prices will, without doubt, dampen the current robust consumer demand for goods. Responsible corporates need to exercise moderation at all levels in an endeavour to hold the price line. Failure to do this could conceivably push the economy into another demand down-turn.
Global steel prices have increased significantly over the past two years, converting the industry from a "sunset" industry to an industry attracting investment in new capacity. Steel price increases have been driven mainly by the phenomenal demand for steel from China which is investing substantially in its infrastructure and in its preparation for the next Olympic Games, as also some input cost increases. Indian steel prices have tracked these increases, although having remained below international levels. These increases, however, have had a cascading effect on the prices of most domestic manufactured products in the engineering, consumer durables and automobile segments.
Tata Steel has endeavoured to hold prices during the year for its direct customers through long-term contracts and these prevailing prices have remained below those of its major competitors. However, there is a need to do even more. Therefore, to take the initiative in displaying its corporate responsibility at this critical time, Tata Steel will reduce the prices of its main products to all its direct and bonafide customers in the industry by Rs 2,000 per tonne with effect from midnight tonight. It is expected that this price reduction by Tata Steel will, in turn, contribute in arresting or moderating the pressures on price increases by major users on their products. It is sincerely hoped that other steel manufacturers and members of the steel trade will also display a sense of responsibility by rolling back their steel prices in the interest of curbing inflationary trends.
It should be remembered that all sectors of Indian industry turn to the government when they feel threatened by various external factors and seek protection through duties, imposts and even blocking entry from global sources. It is at times such as this that Indian industry must stand together and display moderation, and desist from making exploitive profits, in order to arrest the scourge of inflation which could negatively impact the current growth rate of the Indian economy.