Coimbatore Foundry Sector Implements 10% Price Increase to Combat Rising Costs
The Coimbatore Tiny and Small Foundry Owners Association has declared an immediate 10% rise in casting prices, a critical move aimed at mitigating the severe impact of escalating input expenses. This decisive action was finalized during an emergency consultative meeting convened by the association on Saturday, reflecting the urgent financial pressures facing the local industry.
Economic Significance of Coimbatore's Foundry Cluster
Association President A Sivashanmugakumar emphasized Coimbatore's pivotal role in the foundry industry's expansion over the past 45 years. The district hosts more than 400 tiny and small foundry units, which collectively provide direct employment to approximately two lakh workers. Furthermore, these operations support the livelihoods of nearly five lakh individuals indirectly, underscoring the sector's substantial socio-economic footprint.
According to Sivashanmugakumar, the foundry sector in Coimbatore generates an impressive annual business turnover exceeding Rs2,500 crore, highlighting its importance to the regional and national economy. This robust activity has positioned Coimbatore as a key hub for metal casting and manufacturing in India.
Drivers Behind the Price Surge in Raw Materials
The association president detailed the specific factors contributing to the cost escalation. Prices of essential raw materials, including pig iron and scrap, have surged by up to 20% in recent months. While 70% of the scrap is sourced domestically, the remaining 30% is imported, primarily from Australia and Europe. These imports have been adversely affected by disruptions linked to global geopolitical tensions, leading to increased costs and supply chain challenges.
Despite pig iron being produced within India, a significant production decline of 60% to 70% has further driven up expenses, exacerbating the financial strain on foundries. In addition, prices of allied materials such as petroleum-based products, oils, and paints have risen sharply by 20% to 40%, compounding the overall cost burden.
Financial Strain and Unanimous Decision for Price Adjustment
These escalating costs have placed immense financial pressure on the small and tiny foundries, pushing many towards unsustainable losses and operational difficulties. Sivashanmugakumar stated that the cumulative effect of these increases has made it challenging for businesses to maintain profitability and viability.
In response, the association unanimously agreed to implement a 10% price hike for casting products. "In order to sustain operations under these challenging conditions, we have unanimously decided to increase the price of casting products by 10%," Sivashanmugakumar explained, noting that the adjustment would be effective immediately to provide relief and ensure continuity in production.
Policy Recommendations to Support the Sector
Beyond the price increase, the association has called for governmental intervention to stabilize the industry. Key recommendations include:
- Establishing raw material banks in the Arasur and Manickampalayam foundry clusters to ensure a steady and affordable supply of essential inputs.
- Reducing the Goods and Services Tax (GST) rate on small foundries from the current 18% to 5% to alleviate tax burdens and enhance competitiveness.
These measures are seen as vital for safeguarding the long-term sustainability of Coimbatore's foundry sector, which plays a crucial role in employment and economic output. The association's proactive stance aims to balance immediate financial needs with strategic support for future growth.
