Battered by slump in exports, dip in commercial vehicle segment (CV) and high cost of input steel, the Association of Indian Forging Industry (AIFI) has pleaded the government to undertake relief measures like reining in steel prices in domestic market and declare the year 2008-09 as a holiday for any computation relating to export performances. In a media release, AIFI has said that steel prices in India still remain out of sync with international prices and are
priced about Rs 5,000 above ex-factory prices when compared to pricing of other countries.
Even though the international prices for scrap, coke and iron ore have plunged by around 50%, price of steel in India has not had a corresponding drop, making the Indian forging companies uncompetitive in both the national and international market, adds the AIFI release. Making the demand for export relief, AIFI argues that due to poor market conditions and the resultant drastic decrease in export performance of around 50% to 60%, companies could not maintain the average export levels stipulated for EPCG (export promotion credit guarantee) licence.
In addition to this, AIFI points out that forging industry was heavily impacted due to the nosediving of demand in CV segment especially heavy commercial vehicle and medium commercial vehicle. It adds that import of cheap forgings from other countries for this segment has heavily burdened Indian forging companies.
Speaking to media regarding AIFI turnaround agenda, president of the association Vidyashankar Krishnan said, though price of a tonne steel since April has dropped from Rs 34,000 to Rs 24,000 the price in the local market is found to be Rs 5,000 high a tonne at the ex-factory gate. The domestic steel prices should be at par with international pricing, he added.
Out of the total 60 million metric tonne per annum domestic steel consumption by various industries like construction, Railways and automobiles, the forging industry consumes around 2.4 mm tonne, he said.
Clamouring for imposing a safeguard duty on autocomponent OEM?s forging import, Krishnan said every year about Rs 1,500 crore worth of forged autocomponent is being imported by major OEM players reducing the domestic business scope in local forging units.
Speaking about the revival of demand from CV segment, he said: ??In the last fiscal, the growth of the HCV(heavy commercial vehicle)/MCV (medium commercial vehicle) sector was negative. However, considering the large outlay provided for infrastructure projects in the Union budget 2009-10, this segment can be expected to show a growth of up to even 30% with a good monsoon??.