Forging industry to gain most from fuel cost rebates

THE nine-lakh tonne forging industry, which also includes those in the automotive components sector, will benefit the maximum from the proposal to offer rebates on fuel costs for all export products. The Exim Policy has suggested the fuel rebate under the Standard Input Output Norms to enable cost competitiveness of export products. The fuel value will be permitted as a percentage of the FoB value of exports. The highest rebate of 7 per cent is for refractory items, ferrous engineering products manufactured through forging and casting process. Incidentally, there is not much import here as only 5 per cent of forging requirements are needed from abroad. Apart from cutting costs, as fuel accounts for more than 6 per cent of the production cost here, the proposal will also give a fillip to increase exports. The forging industry has recorded exports of about Rs 500 crore last year as against only Rs 80 crore in ‘95. The companies here include Bharat Forge, Kalyani Forge, R K Forge, Western India and others. Forging units make products for the automotive, construction and oil sectors. Forging process includes those in automotive firms and in passenger car companies who are reportedly planning to export components and sub-assemblies to satisfy export obligation under MoUs signed with the government. The direction of such exports is also slowly shifting from Africa and South East Asia to Europe and the US. Demand for forging products is the maximum from the automobile sector which makes up 65 per cent of the total consumption of forgings consumption, while the remaining part is in other industries like general engineering, capital equipment.