The increase of domestic demand in the automotive, power, textiles and electrical sectors has led to the rapid growth of the Indian foundry industry. Since 2002, the casting capacity has doubled to 7 million MT, making India the fourth largest producer of casting components. The industry which is fragmented with more than 5,000 players provides employment to than 500,000 persons, and indirectly employs more than 1.5 million people in India. The casting hotspots are concentrated in five geographic clusters of India namely Batala/Jalandhar, Coimbatore, Kolhapur, Rajkot and Belgaum. Almost 32% of the castings components are used in the auto industry, and the rest are used in the electrical and engineering sectors, both of which comprises of a large number of small players.
The surge in the automotive industry and other manufacturing activities has led majority of the players to expand their manufacturing capabilities. State-of-the-art machines, new technology and automation of processes have been the current focus of majority of the companies. Indian auto industry is seventh largest in the world and fourth largest exporter in Asia. India’s strong engineering base added with its expertise in manufacturing small, fuel efficient and low cost cars have attracted global brands. India’s auto component export has already reached an estimated US$5 billion worth, and is expected to touch an estimated US$30bn by 2020.
Premium car companies such as Audi, Bentley, BMW, Chevrolet, Lamborghini, Mercedes, Rolls Royce, and Volkswagen have all set their manufacturing bases in India. The country’s ability to offer several operational advantages to casting and component manufacturing companies has led these companies to consolidate their operations and vendor base. Recently, Ford announced setting up of a plant with an annual capacity of 250,000 with an investment of estimated US$ 500 million.
India’s low labor cost acts as a boon to the labor intensive foundry industry. Companies can hire a fresh engineering graduate from a tier 1 or tier 2 institute by shelling out just US$6,000 or a mere US$100 per month for a semi skilled/unskilled labor. The tooling costs and the costs of dies are much lower than the developed countries. Hi-tech foreign players relish the chance to collaborate with the local manufacturers due to the opportunity in the domestic as well as the export market. By the end of the year 2012, the casting production capacity is expected to touch 10 million MT as per the industry associations. This offers vast opportunities for both the Indian castings and the foundry industry, and also the international presence investing in India.