A dip in domestic and international demand, thanks to global meltdown, has forced Rajkot-based diesel engine manufacturers to cut down production by almost 50 percent in last 3-4 months.
"We are passing through tough times in the second half of fiscal 2011-12 despite a very good first half in the fiscal. Orders from domestic and international markets have been dipping for diesel engines since last 3-4 months due to global economic slowdown. This has led to a cut in production by most of the manufacturers by 50 percent currently," says Atul Patel, partner of Power Engineering Corporation Private Limited.
According to industry sources Rajkot produces 42000-45000 diesel engines every month which has now declined to monthly 20000-210000 units since November 2011.
Add to that, the diesel engines which are used for farm purposes are witnessing strong competition from submersible pumps. "In agriculture, now farmers are increasingly preferring to buy submersible pumps as they tend to be cheaper than diesel engines," adds Patel.
The Rajkot Engineering Association (REA) also cites unstable fuel and raw material prices as evils troubling the diesel industry in the region. "Unstable fuel and raw materials prices also affect diesel industry in Rajkot. On the other hand, use of submersible pump is increasing in agriculture as it is much small in size than diesel engine," says Bhavesh Patel, president of Rajkot Engineering Association (REA).
According to Bhavesh Patel, some of diesel manufacturers have also shifted to pump manufacturing as pump industry is growing fast in past two years at Rajkot.
Apparently, a single unit of diesel engine is priced between Rs 15000 and Rs 20000 while a submersible pump is priced at around Rs 5000-6000.
"Rajkot exports about Rs 300 crore worth diesel engines every year but this year it is difficult to match this level as international demand is weak," Sunil Lakhani, former joint honorary Secretary of REA.
The region exports diesel engine to Gulf and African countries like Saudi Arabia, Nigeria, Egypt and Kenya.
Rajkot has about 50-55 units of diesel engine manufacturing which are produces small size of engine in the country. More than 80 percent productions of small size diesel engine have been made in Rajkot. The industry provides direct and indirect employment to more than 70000-75000 people and enjoys a total turnover of Rs 700-800 crore.