Make import of key raw materials duty-free for foundry sector

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

Hurdles on the are road

There are many challenges before the foundry industry. The sector faces the shortage of good training facilities as there is only one national level institute, ie NIFFT Ranchi, which was established in 19196. During last five decades, here have been revolutionary changes in technologies therefore there is need to upgrade NIFFT. Government also needs to consider this requirements of the industry and should establish at least two modern institutes. Similarly polytechnics & ITI near major foundry clusters need modernization 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 & 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 & manufacturing needs to be acknowledged. Government should establish technology upgradation fund for foundry sector to promote investments in new technologies.

The quality power at competitive price is a big challenge. The industry is being made to pay for inefficient distribution system & for cross subsidies. As such the cost competitiveness of the foundries is eroded substantially this makes the operation of foundries running at low margins unviable & makes it impossible to invest in new technologies. Given below are few budget proposals to the Finance Ministry.

Import duties on key raw materials 

The import of key raw materials should be made duty free so that the impact of devaluation of 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 INR resulted in further impact on 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 cost disadvantage to Indian foundries as compared to foundries in the competing countries affecting the global cost competitiveness of Indian foundries.

Definition of MSMEs 

The definition of MSME was amended 9 years back regarding the cap in investments in plant & machinery .The cost of equipment has gone up steeply over these seven years & as such the limits in investment in plant & machinery for classification of units in micro, small & medium category has become obsolete & therefore need to be relooked.

Technology upgradation fund for foundries 

The technology & processes in 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 Indian foundry is very less 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 such as mentioned below but also have to scale up production to achieve global competitiveness.

It is proposed that a revolving technology upgradation fund of Rs 1000 crore may be set up for investments in greener & productive technology in line with textile TUF.
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Anil Vaswani is the president of the Institute of Indian Foundrymen (IIF)