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Metal foundries seek protection from Chinese aggression

Faced with an upsurge in imports of metal castings, particularly from China, the foundry industry has urged the government to double the tariff to protect domestic industry.

Most metal castings attract a basic Customs duty between 7.5 and 10 per cent. The Institute of Indian Foundrymen (IIF), representative body of about 5,000 casting producers, wants this raised to 20 per cent.

A foundry is a distinctive mould in which liquid metal (casting) is poured for cooling, which hardens the product for applications in automobiles, auto-components, railways, electric machinery and power generation, cement, textiles, sugar machinery, machine tools and a number of engineering and export sectors.

Ranked fourth in the world castings census, conducted by Modern Castings of the US, the Indian foundry industry produces seven million tonnes of castings a year, worth $12 billion (Rs 55,000 crore). The industry's export earnings are $1.5 billion (Rs 6,930 crore) a year.

In the backdrop of the ambitious automotive mission planned by the Union government, which envisages the auto industry to grow to a turnover of $134 billion by 2016, the foundry industry has to grow in tandem, notes IIF.

Indian imports of cheap casting material from China recorded growth between 100 and 2,000 per cent annually, depending on the item, in the past three years. The Chinese prices, say IIF, are well below the manufacturing costs in India. Since 90 per cent of foundry units are small ones, they do not have the benefit of economies of scale. The average foundry's installed capacity is less than 1,500 tonnes a month. IIF also demanded some other associated relief in refund of countervailing duties.

With the revival in demand from engineering and automobile sectors, foundry units across the country increased their production capacities to 55-60 per cent in June 2009 from around 40 per cent in December 2008.

Operating capacity hasn't improved after June 2009. Till global recession struck in September 2008, the industry was operating at an average capacity of 70 per cent. The economic crisis led to the closure of between 500 and 700 units..

According to an estimate, about 70 per cent of the small and medium-sized units contribute about 30 per cent of total output, while the other 30 per cent, large and medium sized, and technologically-upgraded units, make up 70 per cent of the output.

Source : Business Standard