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IN - Union Budget 2017: Forging industry expects lower power tariff

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Electricity is a problem in many states; major power cuts are an issue industries face. Though national grid is now allowing buying and selling of power, yet widely differing tariff rates creates a problem.

Indian foundry sector, whose 30 percent supplies goes to automotive industries, expects favourable power and electricity tariffs from the upcoming Union Budget 2017 scheduled to be presented on February 1.

Talking to ETAuto, Anil Vaswani, President, The Institute of Indian Foundrymen (IIF), said “Power is one major challenge foundries are India are facing right now. So, rationalisation of power is very important. We are hoping for favourable electricity and power tariffs from Budget 2017.”

Electricity is a problem in many states; major power cuts are an issue industries face. Though national grid is now allowing buying and selling of power, yet widely differing tariff rates creates a problem.

It is also expecting major government investments in infrastructure sector; as such steps have a cascading effect on the whole economy, thus, eventually helping the foundries.

Speaking about the challenges, the sector is facing right now, Vaswani said, “Overall global demand in last 3-4 years has dropped; automotive was going through a tough phase in last couple of years; it has picked up again. However, demand is still low – lot of foundries is running at 50-70% less than full capacity.”

“Currently, the Indian foundry industry is the third largest in the world with 10.7 million tonnes castings produced annually.”

Another challenge is of financing. Banks are always cautious in giving loans, and even if they agree the process is in itself very tiresome. So, it becomes difficult for people to finish their investment.

Foundry sector has high hopes from Goods and Services (Tax) also. “We want foundries should move from 18 percent slab to 12 percent slab because it’s a mother industry, it has lot of raw materials, heavy costs, and employs so many people. By lowering tax, you are making it more globally competitive by giving cost advantage.”

The apex national industry body for Indian foundry and metal castings industries thinks GST will certainly simply things a lot. For example, trucks won’t be stopped at every state borders for taxes, thereby simplifying shipping castings across the country.

However, Vaswani was quick to mention that “it is not that simple because you have central GST, state GST, etc. That means, if you are supplying to eight different states, you have to register for eight different GSTs. Anyways, we hope that foundries will be able to tackle this challenge.”

Currently, the Indian foundry industry is the third largest in the world with 10.7 million tonnes castings produced annually. China ranks number one with 45 million tonnes, and the United States stands at third position with 12-13 million tonnes of castings manufactured annually.

Source: Indiatimes.com

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