The forging industry is reeling under the impact of the prolonged slowdown in the automobile sector, with close to 45,000 permanent workers set to lose their jobs if the situation does not improve.

Already, 50 per cent of the forging industry’s casual workers have lost their jobs in the last 3-4 months, according to S Muralishankar, President, Association of Indian Forging Industry (AIFI).

If the downturn in the automobile sector continues for another six months, there is also a very high chance that close to 10 per cent of forging companies – around 20-30 companies – may shut down, Muralishankar told BusinessLine .

Seventy per cent of the forging industry’s production caters to the automobile sector. AIFI is the apex body of the forging industry in the country and there are close to 200 companies under the AIFI.

Slow production

On an average, production in the forging industry is down by 20-30 per cent during the June-November period this year compared with the corresponding period the previous year due to the slowdown in the auto sector, with the impact going up to as much as 50 per cent for those forging companies catering primarily to commercial vehicles, said Muralishankar. The piling up of inventory at dealerships, which the slowdown has triggered, has impacted the production of the forging industry.

Automobile manufacturers reporting a surge of 5-7 per cent in retail sales during this festival season also failed to translate into a positive for the forging industry, said Muralishankar. This is because the automobile manufacturers were liquidating their existing inventory by giving discounts, and the 5-7 per cent increase in sales that they posted came from this inventory and not because they produced 5-7 per cent more units, he explained.

Muralishankar said that unless the government takes measures like GST reduction and the introduction of a scrapping policy, this situation beleaguering the forging industry will continue.

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