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Despite the inadequate supply of steel and its higher prices, the domestic forging industry expects to record decent growth, possibly in low double digits, in the near term in view of bright growth prospects in the auto sector.
In 2017-18, the domestic forging industry’s turnover has grown by about 12 per cent at about ₹35,000 crore when compared with ₹31,200 crore in 2016-17.
The total production of the domestic forging industry increased to 25.24 lakh tonnes (lt) in 2017-18 against 23.98 lt in the previous fiscal.
“The growth in FY18 was mainly aided by surge in sales of automobiles across categories. This momentum is continuing and the forging industry is likely to report a growth of about 10 per cent during the current fiscal too. The outlook for the auto sector till 2020 is bright,” said S Muralishankar, President, Association of Indian Forging Industry (AIFI).
During the current fiscal, the total consumption is estimated at more than 30 lt.
The industry has opened FY18 on a robust note.
Compared to usual trend of low production during April-May in a fiscal year, this time it has witnessed a higher demand in the first quarter too.
The surge in auto sales, especially the commercial vehicle and tractor, has resulted in an improved demand for the industry.
Vidyashankar Krishnan, a board member of AIFI, and Managing Director, MM Forgings, pointed out that inadequate supply of steel and its higher prices were the barriers for the domestic players to grow their exports.
The steel prices have gone up by about 26 per cent to ₹47,740 per tonne in the last one year.
EV threat
Though steel prices went up across the globe, the hike in India was steeper, which was weakening the export competitiveness of the domestic players, he added.
AIFI members also raised concerns over future of forging industry in the context of increasing government push towards electric vehicles.
The introduction of EVs will have an adverse impact on forging industry as 60 per cent units will face threat to their survival.
AIFI members also reiterated their request for government support for the smaller players in the domestic forging industry.
A technology upgradation fund or an interest subvention scheme would be of great help to these SMEs to modernise their operations.
AIFI will organise 7th Asia Forge Meet 2019, Asia’s biggest forging congress, during January 18-22, 2019 in Chennai.
More than 750 delegates from India, China, Japan, South Korea and Taiwan are expected to participate in the event.
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