Batala foundries, machine tool units in dire straits

Once famous for foundries and machine tool manufacturing, the town of Batala in Punjab is slowly losing its identity, as less than 15-20 per cent of its units are operational today. Most units have shut operations while the others have migrated to states such as Gujarat and Andhra Pradesh in search of greener pastures.

Lack of resources, lack of government support and low returns on investment are among the major reasons why so many units have closed.

In the 1970s, the city was well-known as one of the biggest centres of cast iron and machine tool manufacturing, with about 800 cast iron and 1,500 machine tool manufacturing units.

Industry executives said that the apathy of the state and Central governments and militancy in the 1980s were the main reasons for this downward trend. At the peak of the militancy, they said, the area was almost inaccessible to traders and customers from others parts of India, and business migrated to other centres.

One industrialist, on condition of anonymity, said: "Overall development in general and industrial development in particular came to a grinding halt during that period. As a result, industrialists and traders siphoned off their surplus money to other parts of the country, with the result that Ludhiana, Faridabad and Agra and far-off places such as Secunderabad flourished at the cost of Batala."

Rakesh Goel, president of the Association of Batala Small Industries, told Business Standard, "Lack of resources, government support and the slowdown were the main reason behind the closure of the units. Very few units are operational and capacity utilisation is less than 50 per cent. So the situation is very worrisome."

Also, the Foundry and Machine Tool Cluster at Batala, approved by the government of India in 2009, is yet to see the light of day and so the units are struggling. The total cost of cluster development was estimated at Rs 80 crore, of which Rs 50 crore was to be disbursed by the Centre while the remainder was to be contributed by local industrialists.

The aim of the cluster development programme is to enhance the productivity and competitiveness of micro and small enterprises (MSEs). Creation of clusters also yields economies of scale.

"The government must intervene to revive the industry and work in tandem with local industrialists so that they can upgrade technology. Besides simplification of procedures, we want the state government to abolish advance tax on raw material like iron, steel and coal, as our precious working capital is blocked, besides leading to increase in input costs. Banks should come up with a special scheme for MSMEs, as they are the backbone of the economy. There should be some scheme for the MSME sector where the interest rate is nominal or should not exceed seven per cent per annum," Goel said.