Global autos drive into local foundries in outsourcing gear

India seems to have caught up with another outsourcing opportunity, this time for the foundry industry. Global automobile manufacturers are now sourcing their component requirements from the Indian foundries.

According to S R V Ramanan, the president of The Institute of Indian Foundrymen, automobile majors like Ford and Hyundai have recently started outsourcing some of their component requirements to the south-based foundries. Ford has recently given a $35-million supply order to Ricoh Foundry, he said.

"All the medium-sized and large foundries are at present working at full capacity utilisation. Small foundries, however, are facing the threat of closure because of the steep and frequent price increases of the raw materials "" the pig iron and scrap," he said.

The buyers' insistence on long-term supply contracts without any escalation clause and shortage of working capital too are playing havoc with the small foundries, he added.

The government needs to come to the rescue of small companies by reducing the customs duty on raw material imports to zero per cent from the existing 10 per cent, Ramanan demanded, admitting that the recent abolition of four per cent special additional duty and reduction in the customs duty to 10 per cent from 15 per cent were helpful for the industry, especially the small players.