Ludhiana Bicycle Industry Hit by Rising Steel Prices

LUDHIANA, India (Dec 1) - Bicycle units in Ludhiana are facing a tough time. Fluctuations in steel prices and the duty drawback scheme are considered to be two major reasons for declining production and exports. Exports have declined from 2002, largely owing to the fact that steel prices have almost doubled in the past three years. Steel prices, which used to be Rs 13,000 (€ 2900.) per metric tonne in 2002; now stand at Rs 27,000 (€ 4980.) per metric tonne. The rise in prices has forced companies to import steel from overseas. Analysts feel that the industry has been declining at a rate of 15 % over the past three years. Workers, most of who are from UP and Bihar, are losing employment rapidly. India is the second-largest bicycle producer in the world, next only to China. 90 % of the nation’s bicycle production takes place in Ludhiana. Speaking about the current scenario in the bicycle industry, United Cycle & Parts Manufacturers Association General Secretary Varinder Kapoor said, “Twenty-five percent of the units have closed shop, and 25 % have defaulted in loan repayment. Steel prices have doubled in the past three years. Our bank borrowing limits have not been enhanced. Hero Cycles used to manufacture 18,000 cycles per day; and now they are producing 6,000 cycles only. Similarly A-One Cycles has reduced production from 7,000 to 4,000 cycles per day. Now we do not have even the duty drawback of 16-17 %. Under this situation exports are bound to decline further.”