President of Institute of Indian Foundrymen calls for import of key raw materials to be duty-free for foundry sector

In an interview with Indian newspaper Business Standard Anil Vaswani, President of the Institute of Indian Foundrymen has called for the import of key raw materials to be duty-free for foundry sector.

“The Indian foundry sector is the feeder industry to the manufacturing sector as it supports sectors like auto, auto components, railways, electric, cement and others that are the major contributors to India’s GDP.”

“The Indian foundry industry is third largest globally with revenue at US $18 billion and exports of approximately US $2.7 billion. It employs directly and indirectly two million. Over the last few years the Indian foundry industry has gradually risen from the fifth to the second largest producer of castings globally.”

“The Government of India is taking several steps to promote Make in India, skill development and ease of doing business. To support Make in India, the foundry sector will need to grow at least three fold in next 10 years. Although, the auto and capital goods sectors have already drawn very ambitious mission plans but, that cannot be realised in full measure without corresponding growth of foundry sector.”

“The auto sector has envisaged to grow to US $300 billion by 2026 under the New Automotive Mission plan and the Capital Goods Policy envisages the sector to grow from US $35 billion to US $115 billion by 2025 providing new job opportunities to about 22 million. Even if these goals are achieved partly, it will augur well for the foundry sector and will drive demand for castings.”

Hurdles up ahead
“There are however many challenges that the foundry industry faces. The sector faces the shortage of good training facilities, as there is only one national level institute, i.e. NIFFT Ranchi (National Institute of Foundry and Forge Technology) that was established in 1966. During the last five decades there have been revolutionary changes in technologies therefore there is the need to upgrade the NIFFT. Government also needs to consider the requirements of the industry and should establish at least two modern institutes. Similarly polytechnics and ITI near major foundry clusters need modernisation to meet future skilling needs.”

“Environment costs are increasing day by day. There is a need to promote recycling and efficient use of resources and energy for climate change mitigation. However, the Government needs to augment and support the industry willing to invest in more environment friendly technology and equipment, energy efficient equipment and recycling.”

“Lack of new technology is another major challenge faced by the industry. While some units are world-class, many need to invest in new technology to become globally competitive. New technologies such as 3D printing, robotics, automation, increased use of IT in design and manufacturing needs to be acknowledged. Government should establish a technology upgrade fund for the foundry sector to promote investments in new technologies.”

“Uninterrupted power supplied at a competitive price is also a big challenge. The industry is being made to pay for inefficient distribution system and for cross subsidies. As such the cost competitiveness of the foundries is eroded substantially and this makes the operation of foundries running at low margins unviable and makes it impossible to invest in new technologies.”

Import duties on key raw materials
“The import of key raw materials should be made duty free so that the impact of devaluation of the Indian Rupee is offset to some extent. In fact some of the raw materials such as metal scrap were allowed to be imported duty free. However, subsequently import duties were imposed on these and the falling Indian Rupee resulted in a further impact on the cost of imports of these raw materials. The average duties on raw materials for foundries in India are higher than those in competing countries, which results in a cost disadvantage to Indian foundries as compared to foundries in the competing countries effecting the global cost competitiveness of Indian foundries.”

Definition of MSMEs
“The definition of MSME was amended nine years back regarding the cap in investments in plant and machinery. The cost of equipment has gone up steeply over the last seven years and as such the limits in investment in plant and machinery for classification of units in micro, small and medium category has become obsolete and therefore need to be relooked.”

Technology upgrade fund for foundries
“The technology and processes in the foundry sector over the last few decades have changed radically and the technologies adopted today will become outdated in next 5-7 years. Moreover, the average production in the Indian foundry is smaller as compared to foundries in other countries (almost 1/7th of average of German Foundries). Therefore the foundries will have to not only upgrade periodically in various areas but also have to scale up production to achieve global competitiveness.”