Indian foundries in Coimbatore area protest against rising raw material costs

400 foundries shut for two days say reports.

If companies manufacturing pumps, wet grinders and engineering components were the driving force behind the thriving manufacturing sector in Coimbatore, 600 odd foundries were the backbone of all these companies. But they are facing a bleak future and the employees there are uncertain about their fate.

Seeking a remedy of their problems like increased raw material prices and the refund of GST, nearly 400 foundries in the area closed for two days demanding the government address their needs as they are unable to bear the price rise and mounting debts.

The sharp increase in raw material costs and pending GST refunds are weighing heavily on the foundries. The prices of raw materials like pig iron and chemicals have gone up by 40% to 100% in the past three months.

While more than 200 000 workers in the foundries would lose their wages for two days, most of the manufacturing companies of pumps, wet grinders and textile machinery, where more than 500 000 people work, are likely to take a hit as they cannot function without the castings supplied by foundries.

“We have been requesting both the state and central governments for months, but they are not heeding our demands,” said A Siva Shanmugakumar, president of Coimbatore small and medium foundry owners’ association.

The prices of raw materials, especially pig iron, scrap and coke (a solid carbonaceous material derived from coal), have been steadily increasing since the implementation of GST. In the past three months alone the prices have shot up by 20%. Shutting down iron ore quarries in Goa is cited as the prime reason.

As coke that is produced in India is not fit to use in foundries, it is being imported from China and Australia, and the imports have reduced after the coal mines there were shut to control pollution, Siva said.

To make the most out of the situation, middlemen have hiked the price of these materials.

“Before the implementation of GST, the foundries which had less than Rs1.5 crore (US$235 000) as their annual turnover had to pay only 5% as Value Added Tax (VAT) and were exempted from paying 12.5% excise duty. But the exemption was removed post GST and the foundry units, without any difference, have to pay 18% as tax,” said a small-scale foundry owner.