It’s a much smaller business than the industries that rely on it, but it is the role played by the machine tools industry that is critical for manufacturing. For the Make in India initiative of Prime Minister Narendra Modi to take root, the country’s machine tool business has to grow. While domestic manufacturing caters to 42% of the country’s needs, the industry is looking to meet 66% of the national needs over the next five years. V Anbu, director general & CEO of the Bengaluru-based Indian Machine Tool Manufacturers’ Association (IMTMA) spoke to Anup Jayaram on the way ahead and the challenges before the industry. Excerpts:
How strategic is the machine tool industry?
Machine tools are the core for manufacturing. Japan, Germany and South Korea are leaders in machine tool manufacturing. In the US where machine tool manufacturing had declined is trying to catch-up in high-tech areas. In India to get 25% of the GDP from manufacturing and generate over 100 million jobs we need fundamental strength in manufacturing technology. We cannot do it on imported technology, since no country will share advanced technology solutions relating to defence and aerospace. The ability in machine tools is closely linked to success in manufacturing.
Metal forming and metal cutting are the two primary areas in machine tools. The success of a car that uses components made using machine tools will depend on the manufacturing technology deployed. While the global machine tools business is about $ 85 billion, Toyota Motors alone is $ 240 billion – one automobile company is much bigger than the global machines tools business. Japan produces $ 12 billion of machine tools, Germany $ 15 billion and China’s around $ 25 billion.
Where does Indian machine tools business stand globally?
Our total production is below $1 billion. In 2015-16 we were Rs 4,500 crore and should be around Rs 5,500 crore this year. However, consumption of machine tools was Rs 10,500 crore last year since we produce only 42% of our needs. The balance is imported. India ranks 13th on production, but is the seventh largest market.
Indian machine tools in the mid-size, mid-accuracy range are equivalent to European and Japanese brands. That is the market where volumes have been large historically. In high accuracy tools we are not there. While Indian companies have not invested historically, that’s an area of focus now. What we have been telling government that we need to raise the share of domestic manufacturing from 42% to 66%. Our advice to the government and initiatives with industry is to achieve that over the next 5-6 years.
What is your take on the Make in India initiative?
Make in India has provided a broad direction for people to invest in India and convert the country into a manufacturing hub. With the PM driving it, it has got the maximum focus. We need to do several things for it to be truly successful. We need to do a lot on improving ease of doing business. SME projects happen at the state-level for which the process of clearance has to be simpler, efficient and easier. Add to that speed of implementation. The good thing is GST is happening, but it has its challenges. We also need a fair and efficient way of acquiring land. Do all this and Make in India will happen. The question is whether it will happen efficiently and in quick time.
What is the support that you are looking for from the government?
We have been engaging with government on certain policy measures. In the US and Europe, development contracts are used to achieve technology development. The industry is not taking all risks as government is financing it. Over a period, companies develop technology. We wanted to bring that culture here. So government can take a lead with defence and railways. All you need to do is allocate a small percentage – start with 3% and gradually raise it to 5% — of your budget for such contracts.
Second, we have seen that China buys machine tool companies when they are put on the block, especially in Germany. India should adopt the same strategy because you cannot develop everything on your own. For doing strategic acquisition, you need to have government backing. As a policy, India should go for acquiring technology in the manufacturing space. You get two things: access to technology and to markets. India private companies have done this in a limited way. We need to do that in a broader level. Government can help finance industry on a long-term basis at a lower interest rate. It can facilitate industry to go for these acquisitions.
What is the roadmap for the industry?
We have identified where we need to be in 10 years and the action for government and industry.
Are there enough trained people to fill in jobs at machine tool companies?
We do 150 training programmes at the mid-level each year. This includes production, design, maintenance, automation and metal forming. We have training schools in Bangalore and Pune and a design facility in Delhi. In Bangalore we have 35 machines donated by industry as part of the training programme. In a two-day programme, roughly 40% of the time would be hands-on. We also do a design programme – eight weeks for mechanical aspects and four weeks for electrical. In addition, there is a finishing school, where within one month an engineering graduate is ready for the shop-floor.
We do training programmes – 1-2 days, one week or one month. The content is not what you find regularly in academic institutions. The idea is to address the gap areas that industry faces. It is based on industry feed-back. In 2015-16, IMTMA conducted 15,000 mandays of training, with a target of 20,000 mandays of training this year.
What are the challenges that the industry faces?
Most companies in the Indian machine tools business are small. Out of 1,000 companies, 400 are OEMs. Of the 400, only 10 companies are over Rs 100 crore, next 15 would be between Rs 50-100 crore. There are only three companies in the Rs 400-500 crore range. Technology gap and supply chain are bottlenecks. Add to that the low base of exports. Since the domestic market is big, companies prefer to sell locally. Industry has to focus on exports. This where trade fairs like IMTEX can be leveraged to sell machine tools to a global market.
