Lack of investment, low utilisation of capacity hurting foundry sector

Our Bureau Coimbatore | Updated on January 22, 2018

The Indian foundry industry foresees huge potential for growth, both in the domestic and export fronts. But what ails the sector is investment, say industry experts.

Conceding that the Centre’s thrust on the manufacturing sector coupled with the ‘Make in India’ drive could give the required growth momentum, K Samaraj, President of the Institute of Indian Foundrymen, said: “The sector is utilising only about 65 per cent of capacity. The industry requires investment to the tune of at least $3 billion to meet the increasing demand for castings, estimated at 25 to 30 million tonnes in 10 years.” The annual production of castings (both – ferrous and non ferrous) is 10 million tonnes and turnover around $18 billion at current production rates. This is only 10 per cent of global production by weight, Samaraj told reporters here.

The sector could play a crucial role, particularly in view of the new manufacturing policy and need for castings across industries. This could increase the share of manufacturing in the GDP to 25 per cent from 15 per cent.

Stating that the industry has risen gradually to emerge as the third largest producer of castings, he said the Indian casting industry has grown by over 43 per cent since 2008.

Notwithstanding investment in capacity building, the sector should strive to become energy efficient. Its energy requirement for the current production level is 1.75 trillion units.

Going forward, it will need at least five trillion units to utilise full capacity and meet the rising demand for castings. Studies show that Indian foundries consumed 20 per cent more power than global industries. “We therefore have to strive to become more energy efficient,” said Nithyanandan Deveraj, Chairman of the Southern Region of the Institute.

On demand and potential, Samraj said at the present annual growth rate of 7 per cent, a major chunk of the business (90 per cent) is domestic. This trend is expected to continue in the coming years, as procurement by the defence sector increases.

Published on November 22, 2015

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