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The continuous slowdown in the economy, including slump in demand from auto sector, has led to closure of 106 forging units out of 600 across the country in last one and half years, rendering thousands of people jobless, according to an assessment by industry body AIFI.
The finding of the an initial assessment carried out by Association of Indian Forging Industry (AIFI). The industry body is expecting to come up with a detailed study in next 45 days on its state of affairs, including closure of units and job losses, AIFI President Asheet Pasricha said.
"AIFI initiated an industries survey and during it, 106 units have been found to have shut down in last 18 odd months. 106 companies have ceased out of 600," he told PTI.
He further said that closure of units have been witnessed across the country but primarily it happened in the industrial belts of Western and Southern India as demand has been shrinking continuously in last two years.
Citing example of units dependent on manufacturing of commercial vehicles, he said that "in eastern and western zone, there is almost 35% employment redundancy in forging industry". He, however, did not give any particular number, saying final report of the survey is still awaited.
"It is probable that these units were tiny, small or some medium sized but they are also the ones who create employment. They are the ones who are more man dependent and have lower investments on automation and technology," he further said.
Indian forging industry, which employs about 3-4 lakh persons in the country, is expecting nearly 30% decline in its production this fiscal to about 2 million tonnes (MT) from its peak levels of about 2.8 MT of 2011-12.
Forging is a manufacturing process, through which components are created that are stronger than those manufactured by any other metalworking process. They are normally component parts, which are contained inside assembled items such as automobiles, air planes, ships, etc.
For Indian forging industry, automobile sector generates most of the demand as the country does not have large scale production of other related manufacturing industries.
According to Pasricha, there is a big squeeze in demand in most of the segments of the auto sector, including commercial vehicles, all segments of car manufacturing except the low-end ones and multi-utility vehicles.
He said that demand has hit rock bottom and he is not expecting any further decline. However, the situation is expected to continue at the same level in the short to medium term as there is no demand uptick either and long term demand would depend on policies of the next government at the Centre.
He also demanded some incentives to the industry like 7.5% incremental depreciation on investments in manufacturing, besides sorting out issues like availability of iron ore and coal for regenerating the demand.
