Contrary to the state government’s claim that there would not much adverse impact on the industry of Punjab due to ensuing global economic meltdown. Association of Indian Forging Industry (AIFI) on Friday announced that the meltdown has brought the forging industry on the verge of its closure.

“Already many forging units on the verge of closure as majority have downed their shutters totally or partially working three or four days a week only and if the center does not interfere to sail their boat out, most of the forging units will be forced to close their shutter” Ranbir Singh, Chairman of AIFI said.

Engineering units in Punjab solely contribute 35% to the national exports market and have substantial share in the domestic market too, he said claiming that more than 25000 workers under engineering, manufacturing have been laid off by the manufacturers of Punjab due to meltdown and majority of the small producers were waiting for the positive turn in the market, otherwise, thousands and producers would be forced to quite their jobs.

Giving details about the Association’s demand, he said that the Center should stop taking service tax from the industry, export credits should be limited to 5% only, which was presently 11%, 50% fright concession should be offered to the industry as industry was bearing Rs.70000 extra cost per container than others and most importantly steel prices should be immediately reduced to 30% along with the increase in DEPB rates to make Indian product more competitive in global market.

Singh further demanded that government should extend loans to forging industry at the interest rate of 6% for technological improvement, Export Import (EXIM) policy should be revived again, toll tax should be totally avoided and interest free loan scheme for all producers should be provided. “The age-old debate regarding steel prices still exists with the steel mills changing their stand continently from markets to government intervention as they are now refusing to play along with the market mechanism and reduce the steel prices of proportionate the reduction of their inputs prices” he added.

He revealed that the iron ore prices have reduced by over Rs.2500 per tonne, coke reduced from $750 to $450 per tonne, scrape reduced from $750 to $325 per tonne and 30% of steel based on scrape route and balance 70% based iron ore and coke route and despite the above the reduction offered by steel mills to OEMs was only 15% against total impact of 40%.

Published in Financial Express dt.13.12.2008