So far dependent on imports for turning & milling operations, cutting tools players are now taking advantage of India’s favourable business climate to invest in local manufacturing.
by Mitalee Kurdekar
The Indian cutting tools industry has seen a gradual, but important transformation over the past few years. Traditionally, the industry was dubbed as an import-dependent one, but it has now started attracting the attention of global technology partners/ manufacturers, which should work to its advantage, especially as India is on its way to becoming one of the top three countries in terms of manufacturing. Currently, the cutting tools industry in India hardly contributes around 1% of global output with more than half of its requirements of its cutting tools being imported. Even neighbouring countries like China, Japan, Korea and Taiwan have a much better contribution to global output. While a pessimist may look at this statistic as a major concern, industry players remain optimistic in viewing this as a high-growth prospect for the future, wherein the industry will strive to reduce the dependence on imports and prepare to support India in its journey to becoming a manufacturing giant by 2030.
In terms of consumption, India’s demand for cutting tools is significant when compared with global demand, and this continues to rise northwards year after year. With so much focus on key segments – like defence, railways, aerospace, shipbuilding, medical equipment etc. – within the Indian economy, and growing demand in traditional user industries like automotive, the cutting tools industry in India is looking at sunny days ahead. Sensing this opportunity in India and recognising the low-cost manufacturing potential the country offers, along with a penchant for quality and skills, many global players from Europe and the US are putting up their facilities in India in an effort to take advantage of the conducive business climate. On the other hand, manufacturers from China, Korea, Taiwan, etc. find that their proximity to India works to their benefit and are continuing to serve the Indian market with cost-effective imports, while taking advantage of the mass production possible in their own countries. This mixed model of technology adaptation coupled with imports is beneficial to the Indian customer, who does not currently receive a complete range of tools from one source.
Making the Cut
Commenting on the changing scenario in cutting tools manufacturing within India, L Krishnan, MD, TaeguTec India, feels the dependency is more at the raw materials stage and at highly specialised but low-volume tools. He explains, “Today, at the raw material level, for tungsten carbide, CBN, PCD-based tools, India is dependent on imports. As the volumes scale up in the country with increased manufacturing activities, the same can be made in India. For the rest of the categories of raw materials for cutting tools, raw materials are locally available. However, you would always find a certain volume of low-usage tools with high sophistication that will be imported for a long time to come, due to uneconomical volume for local production. We are quite small compared to larger economies like China, Germany and Japan. As our volumes increase and we become comparable to larger manufacturing economies, our production base for cutting tools will increase and we can hope to become net exporters.”
Of course, there is a long way to go. Vivek Kumthekar, GM & business head (milling & threading), LMT Tools India, opines, “The Indian economy needs to grow much more before it becomes really attractive for the cutting tool manufacturers to make in India, and to sell in and from India.”
Expressing similar views, Jay Shah, MD, Tungaloy India, states, “We have been seeing many cutting tool companies investing in India over the last 10 years. However, these investments are mainly to cater to the growing Indian market and keep the price competitive. The production at these facilities is still not geared to the need of the domestic market, and the Indian industry still depends on imports of high-end cutting tools.”
A few global players have latched onto the opportunity presented by an open Indian market to have cross-border exchanges within their subsidiaries. Rajesh Gupta, deputy GM, milling & advance materials, Seco Tools India, outlines his company’s philosophy in this context. “India has now become a key player in the cutting tool manufacturing industry and has developed the key skills, wherein it is now competing in the global markets with its innovations and developments. Due to technology transformations and cutting down the cross-border barrier, learning has become much faster and more efficient, thus helping to develop India as a base for manufacturing and exporting on a global level.”
He explains. “At Seco, we have seen those changes happen very fast. India has become the global R&D hub, from where we support the rest of the world with solutions. A very dedicated team of R&D experts works at and supports Seco with unique and high-productive solutions.”
Changing Customer Outlook
The Indian customers’ basic business requirements are much the same as others. Anil Kumar, director & COO, CERATIZIT India Round Tool Solutions, says, “Traditionally, the automotive industry has always been our key demand area to cater to, and it continues to be so. Along with that, the other major industries have been steel, general engineering, railways and power. Our customer requirements are rapidly shifting towards three transitional phases: cost reduction, cycle-time reduction and process optimisation. Our customer is well-informed and knows what he wants. Together, we work with the customer for new projects, value engineering or for process re-engineering.”
The good news is that the customers’ approach has undergone a sea change. As Shah confirms, “Customers are willing to wait for return on investment, and are looking forward to working with cutting tool partners, who can give them optimum solutions. This is a great change in the industry mind-set, which is helping us win good business. Customers look for innovativeness on the part of the tooling engineer interacting with them. They are willing to take chances with good, convincing solutions.”
Kumthekar echoes the view, saying, “Most of the customers expect reduction in cost per component. There are, of course, a few customers who only look at price and not the indirect benefits, but their proportion is not significant.”
Krishnan states, “The customer requirements for turning, milling, grooving and drilling are changing. Customer demands are for modern tools with potential for higher productivity, multi-functional capabilities, consistency and reliability. TaeguTec and the cutting tool industry are constantly innovating to meet the newer expectations of customers.”
In this context, Gupta suggests, “Due to high competitiveness, every customer wants to produce the product in lesser time, meeting the quality demands and lesser rejection rates. They want solutions which are innovative, reliable and meet their objectives.” He further states that, “High-production volumes, complexity of the work piece and the consequent need to improve productivity and quality, means that the importance of custom-made solutions are increasing. Indian tool manufacturers have the complete know-how of the process, to develop customised solutions for these specific requirements.”
Customer Engagement is Key
Often, the customers seek help from cutting tool manufacturers to customise the tool and, therefore, make it complex and less vulnerable to copying. But at the same time, there is no relaxation on the basic objectives of overall cycle-time reduction and cost per component improvement. Thus, the challenges put forth to cutting tool manufacturers are always on the rise. How do they cope with this? The answer lies in close coordination with customers regarding their business requirements and constant engagement.
Regarding their approach on the matter, Gupta explains, “Seco has a highly experienced, dedicated team for developing the latest, innovative, customised concepts to meet our customer objectives of being productive and competitive. We provide and take complete ownership of the projects. With no cross-border barrier, as and when required, we not hesitate to take the proven concept from different subsidiaries. The complete R&D set-up is in place to support our customer requirements.”
Krishnan suggests, “TaeguTec has, over the years, built a very skilled and competent team of design and application professionals, who help our customers with new ideas to enhance productivity and reduce cost.”
In fact, many large-sized companies, and those with a global presence, export good quality tools. It is clear that they get in touch with prospective clients, interacting with them through video conferencing and other means to establish a concept of collaborative development. The process ensures that they not only consider the current needs of their customers, but also co-ordinate with them about future requirements. Shah feels that, “The Indian customer is challenging the cutting tool industry, and nothing seems impossible for him. With the availability of multi-axis machines, skilled tool engineering personnel and designers, the cutting tool industry in India, today, is able to engage with customers to develop complex custom-made tools.”
Partnering with the Government
There are useful initiatives and programmes started by the Indian Government, which are seen to be benefitting the Indian cutting tools industry. Though the industry is small in size in comparison to global standards, its future potential has been recognised by the Government in terms of meeting the demand from other sectors of the economy, as also from the viewpoint of creating and saving valuable foreign exchange by reducing imports and increasing exports, as well as by creating employment opportunities.
Krishnan professes, “The cutting tool industry is a small component of the manufacturing sector, albeit of high strategic importance. Only a strong domestic cutting tool industry will enable competitive manufacturing in the long-run. We do see the Make in India efforts of the Government gaining momentum. The Government of India needs to recognise the cutting tool industry – despite its small size – for its strategic ability to grow competitive manufacturing. Government recognition as a strategic industry will also enable competitive recycling of used tools, which in turn will reduce import dependence of raw materials.”
Shah seeks Government support for the industry by suggesting, “We expect a supportive environment for the machine tool industry, which is the mother of all manufacturing industries. Investments in machine tool R&D and making it robust in terms of meeting all the needs of the Indian metal-cutting industries would be a welcome move. A public-private partnership for developing cutting-edge technology in machine tools and cutting tools, would be a great advantage to the growing industries like aerospace and defence.” He adds, “GST has been a big boon for the industry at large. The downward revision of pricing has definitely been an advantage to the customers.”
The industry, on its part, needs to make use of all Government schemes and programmes to enhance technology levels and increase competitiveness. Judging by the way things currently stand, it knows just how to do that.