The Indian machine tool industry is globally ranked 10th in production and 8th in consumption, according to Gardner’s world machine tool output survey 2018 for the year 2017. P. Ramadas, President, Indian Machine Tool Manufacturers' Association (IMTMA) at the recently held IMTEX exhibition said, “It is expected that machine tool production in 2018-19 would touch 1.36 billion dollars and consumption may reach 2.7 billion dollars. Both production and consumption are estimated to grow by 30 % and 29 % respectively in 2018-19. For the year 2019-20, production of the machine tool industry is estimated to grow by 25 % and consumption by 20 %.” These figures go on to show that the Indian machine tool industry is quite bullish.
India – the huge potential market
In 2017, India produced more than 900 million euros worth of machine tools, according to VDW world statistics. Dr. Wilfried Schäfer, Executive Director, VDW (German Machine Tool Builders' Association), Frankfurt am Main adds, “However, demand in the country is much higher. With a machine tool consumption of almost 2 billion euros, India represents the fourth largest Asian market.” He continues by stating that almost two thirds of the consumption is imported i.e. 2017 machines worth 1.25 billion euros. Production, consumption and imports have risen in recent years. This shows that Indian industry is investing and relying on production technology as a basic prerequisite for its competitiveness at home and on the world market.
India’s neighbouring country, China which is the biggest producer of machine tools in the world also views India as a prospective market. Wang Liming, Vice President, China Machine Tool & Tool Builders’ Association (CMTBA) explains, “With the development of the country’s GDP, India is nearly at the same situation as China was 10 years ago. China witnessed 10 years of high speed development and we predict the same for the Indian market. India is a huge potential market for us and Chinese manufacturers are paying close attention to it.”
Focus areas in the Indian manufacturing industry
Machine tools have always been popular with sectors such as automotive, aerospace, medical and construction. Arun Mahajan, General Manager – India Operations, Association for Manufacturing Technology (USA) mentions, “In the machine tool industry, over 70 % of the business comes from the automotive sector and that has always been the case. However, in India, the aerospace manufacturing sector is an upcoming sector that requires high accuracy as well as employs many of the advanced machining technologies. It is in this space that many of the American machine tool companies have an edge over their competition and hence they are actively focused on growing their presence in the market. Apart from the aerospace manufacturing domain there are several other sectors like medical devices, defence, power generation, off road equipment, electronic hardware, etc. where American machine tool companies could play an active role.”
For German companies, the automotive industry is the most important sector followed by mechanical engineering, manufacturers of metal products, aerospace and medical technology. Dr. Schäfer explains, “According to forecasts by our cooperation partner, the British economic research institute Oxford Economics, the most important customer industries in India will invest around 4.3 % more in 2019 than in the previous year.” He adds that the areas of precision engineering/optics including medical technology, the electrical industry, automotive engineering, the aircraft industry and other transport equipment such as rail transport and shipbuilding are showing particularly strong growth. It makes sense for German manufacturers to intensify their activities in these customer industries if they want to expand their business in India.
Diverse countries export machine tools to India including China, Japan, Germany, Italy, Spain, USA, Mexico, Taiwan, and the United Kingdom. Focusing on China, a few Chinese companies have been trading with Indian companies since the last 20 years. Liming states, “In 2016, China exported metal cutting machines to India worth 0.2 billion dollars. I believe that in the future, trade relations between the Indian and Chinese machine tool manufacturers will grow.”
Japan is one of the leading countries to export to the Indian machine tool market, Masayoshi Amano, President, Japan Machine Tool Builders’ Association (JMTBA) mentions, “On the export side, India is the fourth largest country for Japan but it only exports about 5 % of its total capacity. With the significant growth of the Indian economy, there is a big possibility to increase this percentage further.”
“With a share of 16 %, Germany is the third largest supplier of machine tools to India, after Japan and China. In 2017, deliveries increased by more than a fifth, in the first three quarters of 2018 they lost slightly, 3 % to just under 150 million euros,” opines Dr. Schäfer.
Other countries such as the USA and Italy are keen to improve their ranking in the Indian export market. Mahajan opines, “In terms of volume, the total import of machine tools in India, from the USA stands at the 7th position. There is a strong presence of companies from Germany, Japan as well as a few other Asian countries, who are actively selling their products in the market, a few of these have already set up their manufacturing plants in India. India’s high growth projections across various manufacturing sectors are already creating opportunities for the American machine tool companies to improve upon their import numbers.”
Italy is also gaining ground in the Indian machine tool industry. Veronica Just, Board Member of UCIMU-SISTEMI PER PRODURRE (Italian Machine Tool, Robots, Automation Systems Manufacturers' Association) explains, “In the Italian market, after a period of downturn, in the first nine months of 2018, India turned out to be the twelfth destination market for Italian manufacturers, and the second one in Asia.”
With the growing demand for machine tools in India, the global market is making a beeline to seize potential business opportunities in the region. In this energetic ambience, looks like China’s prediction might just come true!