The automotive industry in India employs nearly 3.7 crore people directly and indirectly. The slowdown that hit the automotive sector in the last quarter of 2018, has gradually led to a significant drop in the sales of new cars there by severely impacting the production. As a result, thousands of people have lost their jobs. Several factors led to the slowdown ranging from no liquidity in the market to low consumer sentiment, the hopes of full recovery in the near future are glim. Besides the government seems to be in a limbo and scrambling to find solutions to secure jobs for thousands of people. Not only the automotive industry, but other industries which play an important role in supplying for the automotive sector, are also suffering equally.
In Tamil Nadu and Maharashtra, specifically Coimbatore, Chennai, and Pune, where many factories that supplied auto components and metal castings etc. to the automotive industry, have had to fire their employees to control the production and demand losses. These employees who had migrated from various parts of the country in order to make a living for themselves and their families are now forced to find menial jobs in order to survive. If we look at the state of the foundry market in India, we will see how the growth has slipped from the anticipated rate because of the slowdown experienced in the automotive sector.
One of the largest consumers of metal castings in India has been the automotive industry. In the overall construct of the foundry market in India, major consumers are Automobile, Sanitary Ware, Pipes and Fittings, Agricultural Machinery and others, in which the automotive industry consumed nearly 40% of the castings produced. Up until 2017, aluminum casting contributed to around 15% of total castings produced in India and given the demand at that point, the rate of production was likely to increase until 2020. The sudden disruption that has comes due to slowdown in the automotive sector will drastically impact the metal castings production and many more are likely to lose their livelihood over this.
As of now the government has not come-up with any significant initiative to control the cascading effect of the slow down in automotive industry effecting the foundry market in India. The last significant move from the government for the development of foundry market was the vision 2020 initiative by Institute of Indian Foundry Men (IIF) to recommend reforms needed in order to grow and increase production as well as become the leading supplier of castings in the global market. But with more and more factories pulling their shutters down, production will be hit which is likely to de-wheel the Vision 2020 by at least a few more years.
The current situation demands for some strict actions from the government and industry bodies to meet the short-term needs of the Foundrymen as well as save this whole market from going down further in the future. Besides bringing reforms that will help the foundry market in India to grow in the long run.