The Indian forging industry is poised to grow and see major investments for capacity expansion in the coming years. The Prime Minister?s ?Make in India? vision will be added fillip to the industry?s plans to diversify its focus into non-automotive and industrial segments apart from automotive sector.
The forging industry has emerged as a major contributor to the manufacturing sector of the Indian economy. The industry was earlier more labour intensive, but now with increasing globalisation it is becoming more capital intensive. While the automotive industry is the main customer for forgings, the industry?s continuous efforts in upgrading technologies and diversifying product range have enabled it to expand its base of customers to non-automotive and foreign markets.

A recent survey conducted by the Association of Indian Forging Industry (AIFI) observed that there are 419 active forging units in the country (2013). Of these, 23 units have installed capacity of more than 30,000 metric tonne (mt) (large), 32 units have installed capacity between 12,500 mt and 30,000 mt (medium size), while 364 units had installed capacity of less than 12,500 mt (small).

With size defined in terms of the installed capacity as shown above, contributions to the total forging production of India by the large, medium and small sized units are, 44 per cent (large), 17 per cent (medium) and 39 per cent (small). Looking at the spread of the forging industry it is found that the western region of India accounts for about 40 per cent of the installed capacity, followed by the northern region 36 per cent, southern region 16 per cent and the eastern region 8 per cent.

Capacity
Amitabh Chandra, Secretary General, AIFI, says, ?The installed capacity of the Indian forging industry during 2012-13 was 3.8 million mt against which total production was 2.1 million mt. With no change in the installed capacity during the next two years, production fell to 2 million mt in 2013-14 and is expected to increase marginally to 2.3 million mt during the current year.? As is the case with other forging nations, the Indian forging industry is heavily dependent on the automobile industry with the latter consuming about 61 per cent of the total domestic sales of forging. Of the total sales by the Indian forging companies, about 20-25 per cent is accounted for by exports. According to Jayanti Sanghvi, Managing Director, Sanghvi Forging and Engineering, Indian market size for forging is approximately Rs 10,000 crore for various sectors.

Technology trends
Technology plays a major role in forging. If we have to get to the next level of capability of forging and manufacturing in India, we have to upgrade our technology. Since the forging industry comprises majority of small and medium companies, government support is necessary to upgrade technology in this industry. So a fund like technology upgradation fund (TUF) for textile machinery would definitely be a good starting point to make technology more easily available to smaller companies as well as entrepreneurs. Smaller players definitely want to see more incentives coming in for manufacturing in general.

According to Sanghvi, some of the recent technology trends are:

• To manufacturer forging to near net shape.
• To impress steel mill to develop ingot design having L/D ration less than 2:1.
• To manufacture forging giving at least one upsetting to get isotropic properties as desired for forging.
• To increase capacity for heavy forging.

Chandra observes that technological shifts have been slow in the Indian forging industry. Further, it is not evenly spread across the industry. He adds, ?Technological improvements are visible in the shift from conventional oil-fired furnaces to energy-efficient electrical induction furnace for forging heating. In some cases, there have been shifts from furnace oil and light diesel oil to natural gas. There has also been a shift from forging hammers to forging presses, the latter being more precise. A few units have moved over to semi-mechanised methods while some are changing over to more automated methods of forging.?

Another technology trend is cold forging, which is a relatively new forging technology. It has practically zero material waste which is a major advantage. Especially, major forging companies are really leading on this front and they have increased their sales from cold forging as compared to the previous year. Also, there are some healthy growth visible in the cold forging business. Overall, there is a more focus on value addition and precision components in the forging industry. However, a part of the industry is unorganised and needs to be modernised.

Challenges and opportunities
According to Chandra, major areas of concern of the Indian forging industry are: cost of raw material (steel) and energy (power and fuel), upgradation of technology, and availability of skilled manpower.

Sanghvi says, ?Rising steel prices has hit forging units. The uncontrolled steel prices are affecting the competitiveness of Indian automotive component industry, which relies on forging industry. The rising prices directly impact auto components, infrastructure, construction and other sectors linked with forging.?

Another challenge is in taxation front. Sanghvi observes, ?Organisations face a number of statutory formalities and obligation to meet which is not cost-effective. There are various types of Acts to follow as applicable to different states with their own rules and procedures during interstate transactions. Statutory authorities have different interpretation of laws due to unclear language/object in the Act or Rules.? There are several countries like Malaysia, Thailand, Singapore etc which have much lower corporate taxes. Sixty years ago they were also a poor countries like India. But today they have gone much ahead of us. Corporate tax is just one part of doing business. The ease of doing business in India ranks pretty low. That?s something we have to prioritise so that doing business in India becomes easy.

Though the industry is facing such challenges mentioned above, opportunities lie ahead. Chandra says, ?The ?Make in India? vision of the Prime Minister is a welcome starting point. So is the government?s emphasis on infrastructure. Sooner the real action starts on these fronts, the better it is for the Indian forging industry.?

Sanghvi says, ?The new government brings in various new policies and liberalisation for better development of economy and industries. There are huge opportunity available for development, diversification and expansions in oil and gas, power and steel sectors due to boom in the markets. All that shows the boost in demand for forging products and overall growth of the industry.?

Looking ahead
Forging industry is a basic industry and such industries tend to grow in a country as per the rate of growth of its GDP. ?Since the forging industry is largely dependent on the automotive sector, it will also continue to grow and do well. An increasing number of companies from all over the world are coming to India to procure components and products. Many companies are working hard to capitalise on this. Hence there is optimism that the forging industry will continue to grow and do well in the immediate future,? says Sanghvi. According to him, Indian forging industry is hoping for a revival in demand over the next two years after a prolonged slowdown in the market. The industry is expecting sales to increase by 15-20 per cent for FY15. Demand from exports and diversification into sectors such as oil and gas, defence and railways will drive sales.

Chandra sums it up, ?We are optimistic about the future of the forging industry. Of course, our optimism is dependent on the slow but sure revival of the Indian economy, and more particularly the automotive sector.? - Sudheer Vathiyath

ASSOCIATION OF INDIAN FORGING INDUSTRY (AIFI)
AIFI provides a platform to the Indian forging units at regional, national and international levels. Periodic meetings and conferences enable the units to keep themselves abreast with the time. AIFI has taken up seriously the need to upgrade skill at all levels within the industry. Training programmes and seminars are arranged for the junior, middle and senior tiers of management, while some workshops are planned for the Chairmen and Managing Directors of the companies. AIFI interacts with the Government of India on issues concerning the industry. It also interacts with other national level associations.

Indian forging industry is hoping for a revival in demand over the next two years.