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Pune: Tepid manufacturing sector awaits Jaitley’s Budget for turnaround

The industry has witnessed a downturn and many hope that the upcoming Budget will give the boost.

Written by Partha Sarathi Biswas | Pune |
February 23, 2016 9:38:25 am
Data from the department of industries shows that Pune district houses 642 large and 27,683 micro, small and medium scale enterprises. Express Data from the department of industries shows that Pune district houses 642 large and 27,683 micro, small and medium scale enterprises. Express Photo

THERE IS very little action in this small machining unit in Pimpri Chinchwad. Earlier, while owner Sachin Pawar used to hear the constant hum of the machinery and labour staff working round-the-clock, over the last two years his little factory sees a lull.

“My unit used to get contracts from bigger manufacturing units in the region. However, over the last two years, the number of orders have been declining steadily, making it difficult for us to make ends meet,” he said.

Pawar, like the 1.252 billion people of this country, is looking forward to the Union Budget 2016-17 scheduled to be unveiled by Finance Minister Arun Jaitley on February 29 and hopes that his tepid business will finally take off. “If this scenario continues, I will have to shut shop and look for new ways to earn money,” he said.

If Information Technology (IT) and Information Technology-Enabled Services (ITES) have given Pune the growth spurt in the recent past, it was the presence of manufacturing and capital goods industries that had ensured the city’s growth back in the 1960s. Companies like Thermax, Sandvik, Atlas Copco and others have long been present in Pune providing employment to many and contributing substantially to the state coffers.

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Along with the big industries, small and medium industries have also flourished in the region, creating a perfect ecosystem for the sector. Data from the department of industries show that Pune district houses 642 large and 27,683 micro, small and medium scale (MSME) enterprises. However, over the last few years, both the large and MSME are facing the effects of the downturn, which has made survival a test for many.

The third quarter result of the financial year 2015-16 for the energy and environment company, Thermax, had seen the firm registering an 8 per cent lower operating revenue as compared to the same period last year. While the operating revenue of third quarter of 2015-16 was Rs 1,039 crore, it was Rs 1,125 crore for the corresponding period last year.

Both profit before tax and profit after tax for the company for the last quarter was lower as compared to the same the same period last year. A clear indication of the delay in revival of the core sector, the company’s result also finds an echo in the dip in the Index of Industrial Production (IIP) reported by the Reserve Bank of India (RBI) for the last quarter.

The RBI has shown that the IIP(which is the measure of factory output) had contracted by 3.2 per cent in November with the manufacturing sector recording a contraction of 4.4 per cent across the country. As Jaitley presents his third budget on Monday, the sector hopes he will address the issues faced by the sector in the recent times.

Pradeep Bhargava, director Cummins India and vice president of the Mahratta Chamber of Commerce Industries and Agriculture (MCCIA), said he hoped the Budget would announce increased spending by the government on infrastructure – both rural and urban. “Spending on infrastructure like roads is the best way to help the manufacturing sector,” he said.

Bhargava also said the sector on its own has to streamline the ‘on-hold’ projects and ensure they are more competitive and smart. “The government has started the initiative of ease of business and many state governments have taken steps to welcome investment,” he said.

Tulsi Tanti, chairman and managing director of Suzlon Group said the Budget needs to address looming global slowdown and make adequate provisions to protect the economy. “The Budget should provide manufacturing sector the support by facilitating innovative financing, increasing capabilities, facilitating job creation and meeting the Make in India initiative,” he said.

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