Tractor makers on Wednesday said they would increase prices as rising steel costs were putting tremendous pressure on margins.

Spiralling pig and alloy steel prices would force tractor makers to pass on the burden to farmers, Tractor Manufacturers Association president R C Jain said in a statement.

Pig iron prices had shot up by about 74 per cent in 2004, he said.

Pig iron and alloy steel constitute 67 per cent of the total material cost in manufacturing a tractor.

Such a steep increase in iron and steel inputs had pushed up the material costs for all tractor manufacturers by 10-15 per cent in the last one year. Inevitably, a significant part of the increase would be passed on to farmers, Jain said.

"While there has been a government intervention with members of the Indian Steel Alliance to check the rise in HR and cold-rolled steel inputs, there have been no similar attempts to persuade pig iron and alloy steel manufacturers to show restraint," he said.

The Indian Steel Alliance members have met the Society of Indian Automobile Manufacturers and Automotive Component Manufacturers Association and agreed on a five-pronged strategy to address the price issue and availability.

There had been no representation from alloy and pig iron manufacturers during the discussion with industry bodies.