Forging industry feels the heat as auto sales decline

By: |
November 16, 2021 1:30 AM

The automotive industry accounts for 60-70% of forging production, and with the auto sector witnessing a slowdown, the forging industry has seen an average decrease of 50% of the total capacity.

The forging industry in India comprises 85% of the MSME sector, According to AIFI. The Indian forging industry is the second largest in the world, next only to China. It has been identified by the EEPC as a key sector for export growth.

Encountering a ripple effect from declining automobile sales, the forging industry in the country is facing a sharp decline in demand, resulting in substantial production cuts.

The automotive industry accounts for 60-70% of forging production, and with the auto sector witnessing a slowdown, the forging industry has seen an average decrease of 50% of the total capacity.

Vikas Bajaj, president, Association of Indian Forging Industry (AIFI), said, “The industry is currently concerned about the lack of semi-conductor chips. It has an indirect impact on India’s forging sector. Furthermore, the rise in steel prices has harmed the forging industry. The basic requirement in the forging industry is steel, and the current price hike has disturbed the supply chain.”

The forging industry in India comprises 85% of the MSME sector, According to AIFI. The Indian forging industry is the second largest in the world, next only to China. It has been identified by the EEPC as a key sector for export growth.

With an annual output of about 20 lakh metric tonne (FY 20-21), the industry includes 400 forging units, of which 80 to 82% can broadly be categorised as tiny and small enterprises. While 10% are medium sized, the remaining are large scale.

While SMEs contribute 30% of forging production, the medium and large scale units contribute 70%. With a total production worth Rs 45,000-50,000 crore the industry provides direct employment to more than three lakh people, along with an additional 60,000 contract labourers, according to AIFI.

Yash Jinendra Munot, vice president, AIFI, said, “The government must take a comprehensive approach to revive the forging sector. The introduction of electric vehicles will have a direct impact on the forging industry, reducing demand for moveable parts used in vehicles, which will result in major unutilised forging capacities. As a result, it is time for the forging industry to expand into non-automotive domains such as infrastructure, defence, healthcare, and railways where the current government is also investing heavily.”

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