Gujarat Exclusive > National-World > Reeling under steep price rise of raw material, foundries seek Centre’s support

Reeling under steep price rise of raw material, foundries seek Centre’s support

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  • Indian Institute of Foundrymen demands revoking of import duty on key materials, policy support to help foundries tide over crisis

 

Ahmedabad: Unable to bear the steep rise in cost of raw material, foundries producing metal castings are being forced to either curtail production or shut it down entirely, according to the Institute of Indian Foundrymen (IIF). It has urged the Centre to revoke import duty on key raw materials used in casting production to help the sector tide over the crisis.

Thanks to costlier raw material, the production cost at foundries has gone up by at least 25 per cent over the last two months. With fading margins and shrinking working capital, foundries across India are forced to temporarily shut down production for at least a fortnight or more, as per IIF. Several small units are on the verge of closure, it added.

Devendra Jain, president of IIF, said, “Most raw materials are imported and therefore, cutting down the import duty will help bring down cost of production. The government should encourage manufacturing of ferro-alloys and various chemicals used in casting production in India through policy support.”

Foundry owners and allied industries from countries like China, Korea, Japan, Taiwan, Vietnam and Malaysia, among others, too expressed concerns over the unprecedented price rise during a detailed discourse at the recently concluded Asia Foundry Forum.

“The automobile and agriculture-vehicle manufacturing industry here is supported by various factors such as availability of skilled labour at low cost, robust R&D centres, and low-cost steel production. However, the surge in price of metal castings will be an added blow for auto makers at a time when they are already reeling under semi-conductor shortage. In the longer run, this will become a major roadblock in India’s journey of becoming a world leader in automobile manufacturing,” said Jain.

The price of pig iron – a key raw material has jumped by nearly 45% whereas coal prices have more than doubled in last two months. Since most foundry units are dependent on coal for manufacturing processes, the input costs have dramatically shot up because of which, manufacturers are compelled to curtail production or else increase the cost of the castings.

“Due to unprecedented rise in the costs of raw materials, power, labour, container crisis and multi fold rise in shipment costs, the foundry units in India are badly affected and hence impacting their competitiveness in domestic and well as in the export market,” he further added.

According to IIF, raw material price surge is slowly becoming a bane for industries, making manufacturing and doing business unviable, especially for Micro Small and Medium Enterprises (MSMEs), due to inflated working capital requirements. The phenomenon has an adverse cascading effect on other sectors as well.

‘Restrict iron ore export, open reserve zones of silica sand’

IIF has also sought relief measures to ease manufacturers’ cost pressure. Some of the recommendations include restriction in export of iron ore to encourage use of iron ore for domestic consumption; opening up reserve zones of silica sand to ensure good availability for casting production; allowing industries to draw power through open access and subsidies for captive solar plants installation.

“Monthly pricing index can be a solution till normalcy is restored. This will be helpful to the castings buyers as well as suppliers,” said Jain.

 

 

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