The global downturn in the automobile sector has reportedly left more than 50,000 people jobless within the forging sector across India. In a bid to make the government listen to their demand to help this sector, more than 161 forging units have launched a signature campaign in three cities, namely, Pune, Chennai and Ludhiana.
The forging industry has been experiencing the heat of the global slowdown over the last four to five months. Profits have declined, first due to heavy inflation, and later, due to shrinking demand. The members of the Association of Indian Forging Industry (AIFI) are protesting against adverse government policies that have affected the progress of small and medium scale forging units in India.
There are around 7,000 small and medium scale forging units across the country and most of them are located in Pune, Chennai and Ludhiana. These units jointly employ some two lakh people at various levels and used to post revenues worth $470 million annually. However, the slowdown has ensured heavy job cuts and the permanent shut-down of five units.
Says AIFI western India chairman AK Kapoor, “The government needs to take the issues related to duties and taxes in case of forging units on priority grounds. Forging units are finding it difficult to sustain themselves, as profit margins have gone down due to the economic slump.” He adds, “We want to mobilise support for people from the forging industry who have lost jobs and ensure that their problems reach the government. A wall-signature campaign is one such activity.”
While the industry has already seen job losses of more than 50,000, conditions are deteriorating fast. Estimates suggest that exports of forgings might fall to $350 million this year (2009-10), from about $470 million reported during the just concluded financial year.
“In early 2008, it was the spiraling costs of steel which left the industry reeling. Even as the industry was coming to terms with the effects of the steel price spiral, it again received a blow due to the effects of relentless demand slump caused by the economic crisis,” says AIFI secretary S R Somvanshi.
AIFI has sought various measures from the central and state governments, which would help save the industry. These include more aggressive initiatives to boost demand in the infrastructure and auto sector, softer financing from the banking industry and increase in export benefits, mainly DEPB benefits for forged components, Somvanshi added.
AIFI president Vidyashankar Krishnan adds, “As per our estimates, most working units are producing at 20-30 per cent of their capacity. Several mid-sized companies have shut one or more units. The worst hit are the hundreds of small units that have quietly closed down, leaving their workers jobless.” AIFI now plans to present its appeal, strengthened by the voices of the forging industry’s workforce, to key policymakers in Gujarat, Karnataka, Maharashtra, Punjab and Tamil Nadu.
