New Delhi, Jul 30 (IANS): The disruption caused by coronavirus has impacted India's automotive industry, as well as the automotive component and forging sector. While the industry has been reviving from the second wave of the pandemic, the rapid increase in steel prices has hammered the forging sector.
The Association of Indian Forging Industry (AIFI) has written to Prime Minister Narendra Modi, expressing their concern about the high steel prices by the Indian steel industry, and sought his immediate intervention for withdrawal on the high prices in order to save the Indian forging and auto component industries from a major crisis.
The forging industry in India comprises 85 per cent of the MSME sector. Over 3 lakh people are employed directly in the industry, with an equal number employed indirectly. The second largest in the world, next only to China, the forging sector has been identified by EEPC as one of the key sectors for export growth.
AIFI President Vikas Bajaj said: "After the impact of Covid-19 pandemic, the forging industry is gradually returning to normalcy, owing to increased domestic demand from the auto industry as well as a favorable export opportunity. Due to the Chinese factor, there are currently a large number of new inquiries from both North America and Europe.
"Unless and until the government intervenes to stop this disproportionate and unreasonable steel increase, the entire Indian automobile, auto component, and forging industry would become uncompetitive on a global stage."
He also said that steel price increases have been reported to have an impact on the Consumer Inflation Index (CII).
In the last year, the price of steel has moved steeply upwards by Rs 16,950 per ton. Apart from this, the steel industry has now demanded a further increase from July 2021 to the tune of Rs 6,000 per metric ton, taking the total to Rs 22,450 per ton. For the same period, the prices of steel in the US increased by $175 (Rs 12,800) while in Europe, the steel price increase was to the tune of Euros 150 (Rs 12,900).
"Currently, the industry is still going through a difficult period and is unable to absorb losses. We have written to the Honorable Prime Minister requesting their intervention in this matter and demanding that the unjustified price rise imposed by the Indian steel industry be withdrawn immediately. We are hoping for positive responses and action from the government," Bajaj said.
Based on the most recent biennial survey conducted by AIFI in March 2020, the Indian forging industry has an estimated turnover of Rs 40,000 crores, of which exports contribute Rs 14000 crore. For fiscal year 2021-22, forging production in India is expected to grow at a CAGR of more than 10 per cent between 2021 and 2024.