Association of Indian Forging Industry (AIFI) said it predicts an impressive growth for the forging industry in India and released figures of overall production of forgings which increased to about 2.3 million tonne in the current year from 1.8 million tonne in 2009-2010, registering a strong growth of about 35 per cent..
“Capacity utilisation has been growing considerably and production is expected to reach about 4 million tonnes by 2015. This was a result of several industry initiatives including capacity expansion, modernisation, cost rationalisation, coupled with a revival in demand from the automotive sector which recorded an excellent growth,” said Deven Doshi, president AIFI.
The robust growth of the forging industry is owing to the market potential of the automobile sector in the recent past and has provided a strong impetus to the forging industry.
The newer generation cars will require better quality forgings and the vehicle industry seems poised to maintain a remarkable growth rate of around 25 per cent. The association cited the continually rising industrial fuel prices and fluctuating steel prices as the key reasons for rising input prices and shrinking margins. “It is not possible for the forging industry to absorb such a high increase in energy costs. The Government should look at alternate subsidies or reduce taxes to bring down prices of industrial fuel products,” Doshi added.
Additionally, the association said it has been constantly plagued by margin shrinkages due to arbitrary, frequent and unilateral price increases by the steel industry. The ‘out of sync’ price escalations of fuel and forging quality steel could result in a drop in domestic demand as well as greatly reduced international orders.
Doshi also reiterated the need to bring transparency in steel pricing by aligning to a weighted index of prices of essential inputs for steel making, such as iron ore, coking coal, melting scrap and Ferro alloys and energy costs. This, according to him, will ensure that steel pricing in India is more cost-based rather than opportunistic.
There was also a mention of a lack of skilled manpower and heavy capital investment that the industry is facing. It requires low-priced labour and huge capacities in order to survive. Though labour cost plays a dominant role for the industry's survival, labour productivity rates have remained constant over the last 20 years. Hence, this scenario offers huge employment opportunities for skilled manpower.
Currently the industry provides employment to approximately 200,000 people.