Indian foundry exports are going through a lean phase since the US, which is the largest importer of Indian foundry products, is facing an economic recession. The foundry market in India has declined by 50%, which accounts for its exports, said RP Sehgal, president of Institute of Indian Foundrymen.
?Not only the US, but due to rise in the costs of input materials like pig iron, met coke and steel scrap, rise in global crude prices and spiraling inflation, Indian foundries is witnessing a sharp decline in their imports from 20% to 10% now,? he told FE. Sehgal was speaking on the occasion of the 57th annual general meeting of the institute.
Over the last one year, prices of these materials have shot up by 70-80%. So a demand-supply gap has been created. There is a fall in demand for the passenger and commercial vehicles owing to inflation, which has consequently, pulled down the demand on castings supplied by the foundries.
In fact, the US, a major auto castings export market, has also lesser demands now for the financial crisis the nation is going through, he said.
The total volume of production of the foundries in India is around 7 million tonne and the total market price is around $7-8 billion, out of which $1 billion is exported. When asked about the contribution of the eastern region in the total market, that it is merely 18%, he said.
?The eastern region, unlike the rest of the country, is lacking in the auto and farming sectors where foundries can supply castings and farming equipment and tractors,? he added. If more automobile companies come to West Bengal, it will help in the modernisation and growth of the foundries in the state. However, the region is witnessing a steady growth in railway castings and machinery, which is about 10% year-on-year.
But with the Singur cloud hanging motionless, further development or the future of the foundries in this state is quite bleak. As an effect of the Nano-project imbroglio, about three to four and 10 foundries would be affected directly and indirectly, respectively, Sehgal told FE.
Around 40% of the foundry output goes to the automobiles sector nationally and the rest goes to farming, railways, machinery, construction, pipes and fittings, said V Mahadevan, managing director of Chennai-based Hinduja Foundries. The foundry clusters in India are located around Pune, Coimbatore, Howrah, Punjab, Baroda and Chennai, he added.
About the Howrah Foundry Park coming up on 300 acre at Ranihati with an investment of Rs 200 crore, Sehgal said construction would begin this November and production would commence in a full swing in two years. About 25-30% of the investment is going to be borne by the central government and the rest by the owners setting up units in the park. ?The state government is supporting the park by giving tax relief on the land, widening the road to the park and developing the sewerage system of the area,? Sehgal said.
The foundries in Howrah are going to be shifted to Delhi or Bombay highway by 2010 as per the order of West Bengal Pollution Control Board, he said.