Today India is the third largest producer of castings in the world with approximately 5,000 facilities spread across the country and a production of around 9.5 million tons per year. Here Dr Pravin Bhagwati of Bhagwati Spherocast Pvt Ltd, in Ahmedabad, gives an insight into the current trading situation for the Indian foundry industry.
The Indian foundry industry generates revenue of about $12 billion, with exports worth about $2 billion. The Government of India has outlined a ‘manufacturing policy’ recognising the importance of manufacturing in the growth of the Indian economy with a target to increase the share of manufacturing in GDP from 17 to 25 per cent and the simultaneous creation of millions of jobs. This will necessitate a strong foundation for the foundry sector which is one of the most vital feeder industries to support the manufacturing sector.
Based on past trends and future projections, the Indian foundry industry needs to grow by at least three times the current capacity within the next ten years to meet the growing requirements of the domestic and future export markets. Also, globally India is becoming a more sought out destination for future foreign investment, alliances and joint ventures especially the rapidly growing automobile sector with world renowned multi-national corporations like Ford, Nissan, Renault, Suzuki, Honda, to name just a few, setting up greenfield projects with a view to make India a hub for small passenger cars. The non-ferrous sector is also getting a boost because of the 2-wheeler industry going for new manufacturing facilities. Needless to say, all these units will not only source their total requirements of quality castings and machined components but will also start supplying to their principals worldwide.
A SWOT analysis of the foundry industry in India will reveal the following:
STRENGTH: India will have an inherent advantage in cost competitiveness due to the high level of intellectual, technical and engineering skills. The Indian innovators would be able to execute some of the technology modernisation by using less costly local materials and adopt low cost modernisation to suit medium size production units. Many of the medium-sized foundries are changing to high pressure moulding lines to produce high quality castings using reduced labour. Almost all international (off-shore) brand named foundry equipment suppliers are now manufacturing in India thus lowering the costs and providing excellent service support. We find that today there is a very strong modernisation trend in SME foundries which are the backbone of the Indian foundry industry.
WEAKNESS: There is a difficulty in modernisation due to the heavy costs of funding, especially for the small and medium sized foundries. However, a cluster approach is being investigated to help reduce costs in collective areas such as material, testing, dissemination, technology up-gradation schemes to reduce the operational costs and maintain quality standards required by customers.
The Institute of Indian Foundrymen (IIF) is also proposing to the Ministry of Industries, Govt of India to create a foundry up-grade fund which will enable SMEs to procure the equipment for modernisation on lower credit terms.
Availability of skilled workforce
The foundry industry is still regarded as a dirty industry with a lack of commensurate returns which deters the youth from joining the industry.
It is important that the existing perception of the foundry industry as representing by the three d’s - dark, dirty and dangerous - is changed through intensive engagement with students of engineering academic institutions, through foundry-related courses for engineering students and providing internship opportunities and career growth prospects.
It is essential that we have more and more vocational training institutes (government and private run industrial training institutes) offering foundry trade courses with syllabi suggested by industry and co-sponsored by the neighbouring foundry industry promising employment prospects. We require intensive re-training courses for the existing foundry workforce to expose them to the latest technology and also suitable courses for the supervisors. Today, some of the state governments like State of Gujarat are encouraging the growth of skill development centres through public / private partnership schemes where the state government contributes substantially to the setting up of the centre. The government is very anxious to train the youth who have no technical training and who are unable to be employed by industry and is funding such projects. Here an example can be adopted from the foundry school project started by HA, Germany whereby we can go to training institutes in remote areas and make them aware of the foundry industry and possible job options.
There is no major greenfield investment expected in the foundry sector, because of two main reasons. Firstly, the high cost of funding and secondly the shortage of power in almost all states. Therefore, the modernisation of the existing foundries as mentioned earlier is the way forward. One most important concern is energy efficiency in the melting shop. Here, many of the foundries have been able to improve by investing in more efficient furnaces and also adopting better melting processes. The cost of power in India is bound to increase because of thermal power plants and hence there has to be a concerted effort on the part of industry to increase the utilisation efficiency of the melting furnaces. The furnace manufacturers must be able to advise the most efficient utilisation by drawing on their international experiences.
Another hurdle which the foundry industry has to cross is the strict pollution controls being introduced in India. There are, however, some manufacturers of pollution control equipment designed for SMEs.
On cost competitiveness, it is evident that the industry has to work on issues such as: renewal of equipment, reduction in manual labour, the increase in labour productivity and improvement in quality related issues, plus the industry must adopt modern management techniques like Kaizen, 5S, TQM, TPM etc. This is where the industrial cluster and training institutes can make a significant contribution.
Review of the problems confronting the industry at present
The industry is facing supply related issues like rising energy costs, stringent environment and pollution control norms, lack of skilled human resources at affordable rates and challenge in attracting new talent, increasing raw material costs, high costs of technology implementation in the manufacturing process, sand availability and water management.
Some of the proposed initiatives include: awareness programmes in foundries at shop-floor level; working with the government to start a dedicated FUF (foundry up-grade fund) similar to the TUF (technology up-grade fund); working with the equipment manufacturers to offer affordable recycling solutions for scarce raw materials like sand; and encouraging young successors to form a task force and come up with specific recommendations as to how to add glamour to the foundry industry.
Further, more and more user-industries should be encouraged to adopt foundries - the ITI model. The government could also be persuaded to take part as a partner.
Foundries need to graduate from just producing castings to understanding customers’ requirements so as to ensure that the product range and mix are aligned to the market and they should identify their core competencies.
Some other solutions include: working with local industry and academia to ensure that they come up with affordable pollution control devices; encouraging foundries in clusters to pool resources for purchase of energy-efficient machines; forming quality circles in foundries with representation from the user industry and academia; and initiating dialogues with the government to ensure clear standards are devised for environment clearances, etc.
Newer areas of growth for foundry products in India will be from the defence, infrastructure, construction and agricultural equipment sectors.
Of the foundries in India, 80 per cent are SMEs. Complete automation is seen only in very large foundries. Semi-automation is gradually catching on in some of the foundries, but still a large number of foundries which are jobbing in nature need mechanisation and automation. One of the main hindrances is the cost of implementation of technology; hence it is imperative that more cost-effective solutions should be developed and made available by Indian equipment suppliers.
Contact: Dr P N Bhagwati, chairman, Bhagwati Spherocast Pvt Ltd, Ahmedabad, India. Tel: +79 22870402 3 4, email: [email protected] web: www.bhagwati.com