COIMBATORE: A sharp and sustained spike in raw material prices, particularly copper, aluminium and steel, has pushed Coimbatore's once-thriving pump manufacturers into deep distress.
Manufacturers rue that copper prices have nearly doubled within six months, rising from Rs 850 per kg to Rs 1,500 per kg, while aluminium has reached Rs 300 per kg from Rs 220, and steel by 15 per cent.
Industry representatives allege that suppliers, mostly from north India, form syndicates to artificially inflate prices during summer, when pump sets are in high demand and see peak sales. While large corporate manufacturers can cushion themselves against volatility by stocking raw materials in bulk, the micro, small and medium enterprises (MSMEs) operate on need-based purchase. As a result, frequent price hikes significantly inflate production costs after orders are confirmed, pushing smaller manufacturers into losses.
"There should be at least a 40 per cent price difference between pumps sold by corporates and those produced by cottage units. But with raw material costs fluctuating unpredictably, this gap has narrowed. Dealers now prefer sourcing from larger firms rather than MSME units," said K Maniraj, president of Kovai Power Driven Pumps and Spares Manufacturers Association (KOPMA).
The consequences have been stark. From around 3,500 pump manufacturers a decade ago, the number in Coimbatore has shrunk to roughly 1,500. Daily production has fallen from 25,000 pump sets to about 10,000. A HP borewell pump that once retailed for Rs 6,000 now costs nearly ₹9,000. Employment has also taken a hit. The industry, which once directly and indirectly supported nearly 1.5 lakh workers, now sustains only around 25,000.
Manufacturers say Coimbatore, long regarded as South India's pump hub, has steadily lost ground to competitors in Gujarat, where production costs are lower due to cheaper labour, reduced electricity tariffs and relatively stable raw material pricing. "Pumps manufactured in Gujarat have begun to flood the Coimbatore market at lower prices," said C Siva Kumar, president of Coimbatore Tirupur District Micro and Cottage Entrepreneurs Association (COTMA).
A decade ago, Coimbatore-based manufacturers commanded nearly 90 per cent of the Karnataka market. That share has now dropped to around 40 per cent. Supplies to Andhra Pradesh, Kerala, Puducherry, West Bengal and Madhya Pradesh have also declined.
Despite these setbacks, industry leaders maintain that pumps made in Coimbatore stand out for superior quality and finish. They have urged government departments, particularly the Water Resources Department, to prioritise procurement from local manufacturers instead of large corporate firms.
Manufacturers reiterate their long-standing demand to reduce GST on pumps from 18 per cent to 5 per cent, arguing that lower taxation would provide much-needed relief to struggling units. They have also raised concerns over a 12 per cent import duty on steel and other critical raw materials. Industry representatives contend that lifting or rationalising this duty could help ease input costs, especially when the sector is already reeling under mounting financial pressure.
M Karthikeyan, president of Coimbatore District Small Industries Association (CODISSIA), pointed out that while aluminium and copper prices generally track international commodity trends and have fluctuated globally by no more than 15 per cent, the Coimbatore market has seen hikes of up to 40 per cent.
"This is an abnormal increase. There are even variations between Mumbai and Coimbatore," he said, noting that MSMEs lack the capacity to procure materials from distant markets in small quantities. Representations have been made to the union government to regulate abnormal price spikes and ensure transparency in distribution.
The reopening of a Steel Authority of India Limited (SAIL) yard in Coimbatore was initially welcomed as a potential solution. However, manufacturers say only select variants of steel are available there, forcing continued dependence on private traders.
Questions have also been raised over the availability of steel in the open market despite its absence in SAIL godowns. "How is steel unavailable at the godown but easily available in the local market?" Karthikeyan asked. Further, SAIL's proposal to sign Memoranda of Understanding (MoUs) for assured steel supply has drawn criticism. The minimum annual procurement requirement has reportedly been increased from 500 tonnes to 1,200 tonnes, volumes that micro industries cannot afford to commit to due to financial constraints.
Manufacturers have urged authorities to introduce quarterly price fixation for steel based on financial year trends, instead of allowing multiple hikes within short spans. Such predictability, they argue, would enable MSMEs to provide stable quotations to dealers without incurring unforeseen losses.
With the summer season underway, traditionally the peak period for pump sales, industry leaders warn that without swift policy intervention to stabilise raw material prices and reduce input costs, Coimbatore's pump manufacturing ecosystem may face further contraction.