Budget 2020

For Kolhapur’s SME belt, tax saved is investment made

Rahul WadkeKolhapur/MumbaiFebruary 1 Kolhapur/Mumbai | Updated on February 01, 2018 Published on February 01, 2018

A worker processing metal at the Caspro Group’s foundry in Kolhapur   -  RAHUL WADKE

 

At the Caspro Group’s foundry in Kolhapur, a factory worker is looking very intently at a crucible holding molten steel. He deftly manoeuvres the flaming vessel towards moulds, which soon take the shape of machine parts. Some of these parts will be used by automobile makers for their latest cars and trucks, other parts will be used for the braking system of InterCity Express trains in Germany.

The high-speed train, travelling at 300 km per hour, connects all major cities in Germany. These sturdy parts, passing German quality standards, are made at Caspro’s Kolhapur foundry.

Positive move

Thursday’s budgetary announcement of lowering corporate tax from 30 per cent to 25 per cent for companies with a turnover of up to ₹250 crore is seen by foundries such as Caspro and other MSMEs in Kolhapur as a positive move that will help then plough back the surplus for business expansion.

Kolhapur, a well-known town in Western Maharashtra, is not only famous for its sugar mills, chillies and wrestlers, it is also home to over 425 foundry units, providing direct employment to over 90,000 workers.

The foundry business is spread around Kolhapur city and rural areas at five locations. Casting and machining of components required for railways, automobile and various industrial plants is donein the foundries. The exports from Kolhapur are about ₹350 crore.

Opportunity to grow

Sachin Patil, Chairman of the Kolhapur Foundry and Engineering Cluster, says that all developed countries have stopped producing metal castings due to various economic reasons, so Indian companies have an opportunity to grow. Some of the foundries in Kolhapur are providing castings to Eurorail in Europe, which proves it has world-class skills in foundry technology.

The foundry industry in Kolhapur was traditionally used for supplying parts to oil engine makers. These engines were used for sugarcane processing but over the years foundries have supplied its products to a variety of industries. The total production of the Kolhapur foundry industry is estimated to be 7 lakh tonnes per annum, accounting for about 8 per cent of the country’s casting production.

Prakash Rathod, Chairman and Managing Director of the Caspro Group, said that the decision of reducing corporate tax will benefit about 50 to 60 per cent of the foundries in Kolhapur.

The surplus revenue will be used to acquire new technologies and machines for the industry from developed countries, he said.

A matter of concern

Abhijeet Naik, Executive Secretary to the Institute of Indian Foundrymen (Kolhapur Chapter), says that the government’s policy of introducing Electric Vehicles (EVs) in the country is a matter of worry for foundries.

Electric vehicles require far fewer moving parts than fuel-based vehicle engines, and Naik felt some preventive measure could have been taken in the Budget to help the industry cope with the disruptive change that will come about with the shift to EVs.

Published on February 01, 2018

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