The Indian foundry industry has sought government intervention to more than double its exports in the next five years. The domestic foundry sector is the second largest globally in terms of production, and believes it has huge advantages over others, including the market leader China, in terms of labour and manufacturing costs.
India and China together account for over 55 per cent of total global production. India’s share is 12.24 per cent, while China’s is 43.7 per cent. China’s casting exports aggregate to US$18 billion, while India exports about $3.5 billion worth of castings annually.
“Our current exports can easily be increased to US$7-8 billion in the next five years and to US$15 billion in 10 years to achieve a share of 10 per cent in global imports if there are concerted efforts from the government,” Sanjay Shroff, President, The Institute of Indian Foundrymen told BusinessLine. The efforts include a technology upgrade fund to modernise and upgrade the MSME units.
“Lot of SMEs are technically competent to produce engineered value-added castings, but need to improve their global competitiveness to become export worthy,” he said.
The foundry industry will approach the Union Commerce and MSME Ministries to seek a technology fund.
It also claims to be in a good position because Indian manufacturing still has labour arbitrage advantages. Even if MSME units automate and bring in new technology, it will still be cheaper in labour and production costs compared to other countries.
Shroff stated that despite improvements in ease of doing business, there are a lot of gaps in terms of customs clearances and bureaucratic hurdles for exporters. The government needs to realise that there can’t be a better geopolitical shake-up (China under stress and foundry capacities not coming up in western nations due to pollution concerns) for India to take advantage and this window is very short, he felt.
In the western world, tougher environment norms and climate change issues lead to the closure of foundries. No new foundries are coming up in those markets. In India, still, greenfield foundries are being set up. As the cost of environmental compliance and project implementation in India is still lower, creating capacity won’t be an issue and the government could open up in terms of allowing capital goods imports at lower costs.
Another major area is skilling. The industry urges the government to drive PPP model for skilling the workforce required for the manufacturing sector. A data-driven strategy with private sector participation would augur well for meeting the objectives of both job creation and skilling.
Several emerging markets remain untapped by India. The CAGR growth of castings imports from 2007-2018 by some countries in Africa and others are in double digits and they continue to grow, he added.