The Indian forging industry saw a drop in capacity utilisation in FY13 to 57% because of a decline in demand from the automotive industry, which accounts for 61% of the total production. Capacity utilisation in the previous year (2011-12) was 65%.

According to the ?Status Report on the Indian Forging Industry?, brought out by the Association of Indian Forging Industry (AIFI), the industry has also been hit by rising industrial fuel and steel prices, resulting in rising input costs and shrinking margins, with a rise in cheap imports from China becoming a concern.

The installed capacity of the forging industry in FY13 was estimated to be around 3.7 million tonne while total production was about 2.1 million tonne. The estimated turnover of the 419 entities in FY13 was R19,500 crore, and it provided direct and indirect employment to 93,400 people. AIFI, a forging industry organization with more than 250 members across India, it commissioned the industry survey among 500 identified members and non-members and 419 entities participated. There are only eight very large units in India and 15 large units, and they account for a mere 5% of production. Around 32% of the units are small- and medium-sized while 63% are very small.

According to the survey, there is also an increase in cheap imports from China as the Chinese government offers 15% subsidy to its export projects. As a result, Chinese suppliers are able to supply in India at 20% lower prices, says

the report.

There is also a difference of R5,000 per metric tonne of steel in China and India. Trends also indicate rising aesthetic imports from Japan, Korea, Taiwan, Europe and Germany for components such as axle assemblies, power steering assemblies, transmission gear boxes, crank shaft,connecting rods and gear change finger.

There is also an increase in demand for ready to fit components/sub-assemblies and customers are demanding for just-in- time supplies of forgings to reduce costs associated with inventory. The demand for precision-forging components was mainly to reduce cost along the production chain, the report says.

The report identifies unfavourable government policies, a lack of infrastructure for small and tiny forging units, inadequate power supply, rise in power tariff and inputs costs, and rising Chinese imports as problem areas for the forging industry.

India?s major forging clusters are in Maharashtra, Punjab, Gujarat, Tamil Nadu, Haryana, Delhi, Karnataka, Jharkhand, West Bengal and Andhra Pradesh. The western region accounts for 40% of the production with 159 units, followed by the North with 36% production and 157 units. The Southern region has 81 units with 16% production while the Eastern region had 22 units and accounted for 8% of installed capacity.