State Of The Economy 2020

Foundries in Coimbatore | State of the Economy

Foundries, the backbone of industry in Coimbatore, have a tradition of keeping pace with change. But GST has tripped them up

RA Chandroo

Roquefort in southwest France finds the expression of its soul in blue-veined cheese, Georgia in rich, tannic wines and Coimbatore in wet grinders. Not very romantic, but this appliance (with its Geographical Indication or GI tag) captures the engineering spirit of Kovai, which gave birth to this invention in 1955. Today, the city has grown to be a manufacturing hub with 12,873 registered micro, small and medium enterprises (MSMEs). 

Coimbatore’s industrial history goes back to 1920s, with the opening of textile mills. These require machines, which require engineering skills. G Ezhil, chairman of The Institute of Indian Foundrymen, says that, even in the ’70s, three of Tamil Nadu’s seven engineering institutes were here. With skills covered, the locals decided to build their own foundries. “Earlier, we built brass lamps and Gods. Now, we make tools,” he chuckles. 

Foundries are central to the city’s economy but, for the past decade, they have been dealing with one spanner thrown in after another. Earlier, it was the power cuts and shortages, then came a crackdown by the state pollution control board and then a new taxation system. Ezhil says that the first is a thing of the past and the second has largely been dealt with, but the third — Goods and Services Tax — remains heavily taxing. On one hand, GST has driven up prices of inputs and their products. On the other, their client companies in automotive and engineering industries have also seen a slowdown as they bear the brunt of higher taxes. A double whammy! There has been a dip in sales by 30-50% across foundries.

The taxation policy has businesses tangled up in red tape. Senthil Kumar, founder of Bluemount Castings, says compliance requirements have pushed companies, especially the MSMEs to the brink. “I’m a mechanical engineer, but operate like a chartered accountant. I’m constantly wondering which returns to pay on which day, and in the process, get little time to help my company innovate,”

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