Though technology gaps ail the machine tools industry, the appreciation of the rupee will spur its growth |
India boasts of having the third largest buying power after US and China, which makes it highly imperative for all the manufacturing companies to set up their base in India to cater to his growing demand. Therefore, we see an upward spike in the number of leading global automotive giants starting their manufacturing base in India. Some of them have even made India their global hub for small cars.
Agreeing Sreekanteswar S, president, United Grinding India, says, “India is a unique market; there are companies which aspire to be the best in the class, and we can proudly say that we are the only country to have received the most number of Deming awards, outside of Japan. At the same time, our manufacturers are striving to be the low cost producer in the world. This puts tremendous pressure on our manufacturers to produce the highest quality possible at the lowest possible cost. One of the key ingredients to achieve this is the availability of world class solutions at a very competitive price in India.”
While manufacturers strive for low cost, the technology gaps that appear in the industry are quite glaring. India is still competing with China in terms of cost and price rather than on technology. “It is not that the industry is not techology intensive but there are gaps vis-a-vis the global counterparts,” avers TK Ramesh, CEO, Micromatic Machine Tools.
Explaining why these gaps exist, he states, “In the machine tools industry, the latest technology is guarded. Also, manufactures are Image courtesy: Haas Automation Inc. not buying enough technology because the volume of low technology in India is high and most people are looking at relatively lesser technology but larger volumes.” He compares the issue of technology and product gap to largely a ‘catch 22’ or the ‘chicken and egg situation’. “Technology cannot be affordable unless large numbers are made and large numbers cannot be made till the technology is used and hence the gap continues to exist even today.”
As seen, India lags behind other countries when it comes to technology and product gaps. In addition to this, “we also do not have many component manufacturers located in India so we are forced to depend on foreign suppliers for key components like ball lead screw, LM guideways, high speed spindles, high precision rotary and index tables, etc. All this creates a disadvantage to the Indian machine tool industry as they are completely dependent on foreign sources for their own technology development,” avows Sreekanteswar.
Furthermore, unlike Europe where there are several institutes that do pioneering work in fundamental research and technology development and its application in machine tools, there are no such similar institutes present in India. This puts an additional burden on Indian machine tool manufacturers to source these technologies from European institutes. “This is the main area for the lack of product depth in the Indian machine tool industry and the key reason why the imports constitute more than 70% of the total machine tool consumption here in India,” adds Sreekanteswar.
Ramesh opines that the fact that two-thirds of the machine tools in the country are imported is quite a cliché. “There are two ways to look at this,” explains Ramesh. “One is to look at it in terms of value the other is to look at it in terms of quantity. If we look at it in terms of quantity – approximately 40% by numbers would be imports and 60% would come from the domestic market. If we are to consider this in terms of value then probably a little more than two-thirds would be imports and a little more than one third would be domestic.”
The machine tools industry forms the backbone of the manufacturing industry and the automotive being in a slump has had an effect on the industry. Echoing the same, Terrence Miranda, MD, Haas Automation India Pvt Ltd, ascertains, “The slow pace of growth of the automotive industry in the last few years has definitely affected CNC machine tool sales in India. A stable Indian Rupee at present augurs well for the country as a whole and we look to see consolidation on this front. The outcome of our national elections will also play a decisive role in propelling demand across the Indian industry as a whole, the effects of which would play out in the machine tool industry as well over the next few months.”
Sreekanteswar also affirms that the demand for machine tools industry has hit a downward slope along with others like the capital goods sector. “The last few months have shown a continuous decline in the Indian industrial production and the first to be affected by this dip is the capital goods industry. Virtually, the demand for new machines has completely dried up. Still, many production units are not working to their full capacity in their existing production centres. The message across the sector is that the worst is over and in the near future, the revival will begin.”
Revival will also come from the global counterparts. The face of the Indian machine tools manufacturing has been changing for quite some time and today our engineering strengths, white collar productivity and costs are extremely better than the global standards. Testifying the same, Yoji Ishimaru, president, Japan Machine Tool Builders’ Association says, “India and Japan have been enjoying a long history of mutual exchange in various fields. In recent years, visits of leaders of both countries have been activated, and the Emperor of Japan also visited India in November last year. The friendly relations between our two countries have been deepening further. On the economic front, we expect the direct investment and trade between the two countries to increase more and more in the near future.”
Machining and turning Centers are becoming faster, more accurate and capable of more complex machining tasks every day. Customers worldwide are looking at ways to improve productivity substantially without dramatically increasing capital investment. This gives India another advantage on the global front because of its availability of manpower at low costs.
“Because of our skills the Indian machine tool industry is being noticed by the global machine tool fraternity and they are now open to collaborations and productive partnerships. For example, companies today are looking at opening tech centres here which further facilitates transfer of technology albeit in an indirect manner,” avers Ramesh.
Miranda is very optimistic about the Indian machine tool industry. “Manufacturing is growing across sectors in India and its importance in the India growth story has been acknowledged and supported significantly in recent times. Indian CNC machine shops today compete with the best worldwide and to do this they need reliable, efficient CNC machine tools that meet their accuracy, productivity and automation requirements. We are confident that this demand for quality CNC machine tools will drive the next wave of growth and consolidation in the Indian machine tool industry,” asserts Miranda.
What would further be the key to the success of the CNC machine tool industry in India would be the government focus and policy initiatives. Suggesting his recommendations to the government, Sreekanteswar says, “Two critical needs of the Indian industry could be implemented by the government which will tremendously benefit Indian customers, advancing their technology and production capability.”
“First: The government should provide investment subsidies for companies who want to invest on improving their technological capabilities to meet the challenging needs of today’s global technology. Second: Stop India from becoming the back-yard for global junk and old technologies which come into the country through the large scale import of very old and out-dated second hand machine tools. By taking the above two steps, the Indian government would enable induction of new technology in the Indian industries and make them globally competitive.”
Miranda says that there should be policy initiatives and government programs to support the small scale manufacturing sector in India as well. “Focus projects in specific industrial areas and availability of a bouquet of financing options would be most helpful. Policies designed to focus and support exports would help the Indian manufacturing industry grow globally and this in turn would propel CNC machine tool sales in India.”