Machine Tool Industry in India

An Introduction to Machine Tool Industries

Machine tools, often referred to as industrial equipment, are power driven tools that can be used for manufacturing machines and machine components (example: lathes, grinders, etc.). Most of this category are industrial devices, which can be used for cutting, abrading, shaping, grinding, drilling, snapping, forming or nibbling or other sort of deformities and shearing materials such as metals, wood, etc. based on the specification of products. The machine tools are distinguished from other machines by the facts regarding its use, that is, they are machines used to make other machines or its critical components with ease and accuracy. Today, with highly automated and semi-automated systems, the precision made machine tools, drives the economical production of machine parts.

Importance of Machine tool industry:

Among various industries by which an economical state can specialise or emerge with, machine tool industry plays a vital role and has a significant consideration. The fact that what makes the difference here is, as stated, they are machines that are used to make machine components. By a common sense of knowledge the importance of this strategic segment can be assumed as:

1. Machines reduces human effort. Computer aided precision, speed and time consumption in turn enables most economical productivity, uniformity and perfection of the product.
2. Economical production, finding the right market can again add up for mass production. This mass production makes the prices to stay steady, conserving the volume of business while at the same time, economy will be growing.
3. Not all nations are proving their cutting edge technicalities or skills in machine tool production. So providing them with related services such as B2B sales of the tools, supply of components and servicing or B2C selling the dead end products (i.e., products produced by the beneficiary domestic industries) can boost the growth rate of an economy.
4. Indigenous production of machine tools can enable other domestic industries for purchasing these machines and getting service at relatively low cost, time and effort; and the lion part is that the “economical shell” will be conserved. That is, the domestic economy will be spent in the domestic economy itself. Exports in addition to this can boost the economy as well.

Structure of Machine tool industry:

CNC*- Computer Numerically Controlled.

NC*- Numerically Controlled.

The global evolutionary race of machine tool production:

The global machine tools industry (comprising top 28 machine tools manufacturing countries), had a turnover of US$ 51.85 billion in 2005. Today almost all economic powers in the planet are behind the race of industrialisation and are beginning to show considerable developments among their collaborative and native machine tool manufacturing sector. Previously, the sector was monopolised by large economies like the U.S, Japan, Germany, Europe and a lot others.

Now, since one or two decades, many Asian countries are set for the race and almost are at the catch of their industrial equipment market. Japan, although being a leader of Asian equipment sector, China and South- Korea had a considerable growth in the area that made the three countries, three largest revenue generators of the planet by machine manufacturing in 2015. The last decade shows the emerging leadership of China in the machine manufacturing and consumption sector and reached $24 billion by 2016 out of a net $84 billion globally. Japan and Germany are strong in production and equally stable in technology and sophistication.

Whatever be the matter, Europe, the kings of the sector still holds their historical positions in machine market, the central and eastern parts of the continent becoming an attractive space for the buyers and sellers of industrial equipment and conducting the sector related expo.

While considering the role of Asia again, India is becoming a steady emerging player in the sector and the analysts thinks the manufacturing sector to be grown by 13% during the period of 2016-2020. Still the country faces tight competition with Germany, US, China and Japan.

Impact of Industry 4.0 in machine tools:

The fourth industrial revolution aims an amalgamation of technologies that turn factories to smart, combining data analytics across machines, robotics, simulation, system integration, industrial IOTs, cyber security, cloud, additive manufacturing and augmented reality. This blurs the boundaries between physical, digital and biological spheres (cyber-physical systems) and aims in adaptability, resource efficiency, and ergonomics, as well as the integration of customers and business partners in business and value processes.

1. Predictive maintenance and Proper use: With the use of sensors within the machines, the wear and tear of itself will be predicted and the operator will be alerted for its timely replacement. Also the related possible wear and tears will be alerted to avoid or correct any improper operation. This reduces the down time in productivity and keep the machines running efficiently at the same time avoiding worker injury, and malfunction and machine repair.
2. Efficient utilization and energy saving: Idle time is a frequent occurrence during manufacturing process and mostly it’s a difficult task to determine why this occurs. Data analytics on things like tool changes, program stops and feed holds help finding these answers more and facilitate a more efficient use of machine tools. Smart meters, IoTs, connectivity and other facilitation helps the same data analytics on energy consumption can help reduce the company’s cost on energy.
3. Raised quality assurance: During the production process its common that faulty products may slip through, unnoticed, and the operators have to spend a lot time and resource behind this. Self-data collection by the smart factories can display the point of fault or human made mistake in the process, analyse and act according to the conditions in the next round and track down the faulty product. Therefore, potential quality issues can be spotted easily.
4. Role of human resource: The human workers won’t be completely washed off. The mode of action changes from a physical environment to a virtual environment. Just what they have to do is updating or retraining their career arena. Otherwise the workers will be provided with extreme safety and also some existing blue collar may change white collar.

The net outcome is self-optimisation, self-configuration, and self-diagnostics and what the effect will be, is that, manual intervention for controlling the process will be reduced using this smart tooling and this will be a key to reduce scrap, optimise cost, and better machine utilisation.

Therefore, with industry 4.0, companies can catch up with the increasing customer requirements, and volatile market requirements. The interconnection between the products and production process, transparency and real-time availability of data lay a decentralised control over production, flexibility of process and competition.

Machine Tool Industries in India

India, being one of the important player in industrial equipment sector, as per the Gardiner Business Media Survey, 2017, is the 12th largest producer and 8th largest consumer of machine tools which was 13th and 10th respectively in 2016. The industry started a slow- steady growth in the sector following the huge level investments by the automobile industry of the nation during the 2000s decade. During the era 2016-2025 industrial equipment sector in India is expected to grow by 25-30% and by 5.5% by 2019.

History of Indian Machine tools industry:

Now according to the Indian Machine Tool Manufacturer’s Association, the sector comprises of about 1000 units with 75% being ISO certified that was about 450 during the 2000s. The growth rate shows 25 of these units are large scale players accounting 70% of the total turnover of the sector and the rest organisations come under the MSME sector. The production area marked 23% growth, while export, import and consumption area marked 22%, 4% and 12% growth during the 2016-17 FY.

According to the survey of 2017, 2015-16 has been encouraging for the nation’s machine tool industry and it showed a production growth rate of 520 Cr touching 4,750 Cr from 4,230 Cr of 2014-15 era, while the consumption growth rate was 1,100 Cr touching 10,300 Cr from 9,200 Cr of 2014-15. The market size was 10,300 Cr of which 42% is domestic production worth 4500 cr. The 2016-17 market size of machine tools in India is estimated to be around 11,600 Cr (1.78 billion dollars) and the domestic production accounts for about 47 % of the total consumption. This shows an impressive growth rate of 23 % as recorded by the Indian machine tools manufacturer’s association.

Catalysts of growth:

The growth of Indian automobile industries urged the developments in manufacturing the industrial equipment in India. The automotive industry urges these change to fulfil the needs of its end users. Also the fact is that, besides being a large consumer, India is also a major exporter of its automobiles, which boosted the investments in industrial equipment manufacturing.

Also the machine tool manufacturing companies quoted many foreign outsourced works that contributed in familiarising an Indian signature among global machine tool manufacturing nations.

The machine tool industry is a success mantra to government’s flagship ‘Make in India’ and ‘Skill India’ initiatives in that, it makes the machines required for the manufacturing sector. The government provides grants and concessions for the foreign companies to invest in India for increasing the business market.

Key players in the Indian machine tool industries and their products:

HMT Machine Tools:

The Hindustan Machine Tools, founded in 1953, headquartered in Bangalore. It is a state-owned company that manufactures machine tools, tractors, watches, printing machinery, lathes, metal pressers, grinders, millers, drillers, gear cutting machineries, dye casting equipment, etc. However the watch, bearing and tractor manufacturing units were closed by 2016 due to tight competition.

Bharat Fritz Werner (BFW):

Headquartered in Bangalore, 1961, BFW is a machine tool manufacturer in India, owned by Kothari group in collaboration with Fritz Werner Werkzeugmaschinen GmbH of West Germany. The company manufactures CNC machine tools for horizontal/ vertical machining, turning, multitasking machines, special purpose machines, and many other custom designed machines.

ACE Micromatic:

ACE Micromatic is one of the largest players in the machine tool manufacturing industry, with its products ranging from CNC lathes, machining, grinding equipment to high pressure hydraulic systems. The company has a market presence over several nations in Asia, Australia, Middle East, America and Europe. AMS claims to build over 30,000 CNC lathes, 11,000 machining centres and 4,500 grinding machines around the globe.

Lokesh Machines:

Lokesh machines, 7 December, 1983, manufactures machine tools like CNC machines such as lathes, machining and turning centres, special purpose machines like drilling, boring, milling machines, auto components like cylinder block, cylinder head, connecting rod, etc. The company exports CNC machines to Japan, Germany, Netherlands, Italy, Turkey, China and Middle East countries and has been listed among the top five machine tool manufacturers in the country. The company has a sales turnover of 1,827.65 million in 2017-18 Y, with a growth of 38.69% when compared to that of 2016-17 FY.

Jyoti CNC Automations:

Jyoti CNC automations, incorporated in 1991 is headquartered in Rajkot district and is one of the largest manufacturers of machining and turning equipment. It has a large business market in Germany, UK, France, Canada, Brazil, US, Switzerland, Spain, Turkey, Poland, Srilanka, Middle East, Netherland, Italy, South Africa etc. The company extends its industrial spheres in areas like agriculture, aerospace, automobile, diamond and jewellery, die and mould, general engineering, infrastructure, oil and gas, railway, telecommunication, etc. It claims to cater 20% of the domestic market. The company has a turnover of 400 Cr per year.

Other prominent vendors and their products

ITL Industries:

ITL industries limited, is a manufacturer, supplier, and exporter of machine tools. The company has over 30 years of experience in the field and is the first to manufacture double column band saw machines. Its wide array of products include Band Saw & Band Saw Blades, Hydraulic Power Hacksaw, Special Purpose Metal Sawing Machines and Tube Mill, high Speed Metal Cutting Band saw Machines, Double Column Automatic Band Saw Machine with (LM) Guides, Double Column Automatic Motorized Swivelling Mitre Cutting Band Saw Machine with LM Guides, Band Saw Bimetallic Blades, High Speed Circular Sawing Machines with TCT & HSS Cutter. Its business sphere extends the entire India, Africa and many other parts of Asia.

Makino India:

Makino India, incorporated in 2001, headquartered at Bengaluru, subsidiary of Makino Asia, Singapore (A subsidiary of Makino Milling Machine Co., ltd, Japan, 1937) serves across the globe in Japan, Singapore, China, Thailand, Korea, Germany and US. It is one of the leading producer of Machining centres, EDM, Die-Mould milling, EDM, CAD CAM, micro machining, etc. In India, the company has its manufacturing and sales wing in Bengaluru, Chennai, Delhi, Mumbai and Pune.

Okuma India:

Okuma Corporation is a Japanese machine tool manufacturer, setup in 1898 as manufacturers of noodles making machines and the registered in the name Okuma Noodle Machine Co. What made the company change the set up to Okuma machinery works in 1918 is that no lathes used in Japan at that times were having precision and the founder Eiichi Okuma couldn’t make perfect sticks that cut the noodles, using lathes. Therefore, OS lathes were the early prime product of the company. Now it served hundreds of year’s history and the company manufactures and sells many CNC machine tools that include lathes, multi-tasking machines grinding machines, etc.

Okuma India was setup in 2007, in collaboration with another Japanese company Mitsui & Co. which later in 2010 become complete subsidiary of Okuma Corporation. Headquartered in Gurgaon, Haryana, the company makes its service from Pune, Chennai, Coimbatore, Kolhapur, Nashik, etc. The major products manufactured in India include CNC lathes, machining centres, cylindrical grinders and other multi-tasking machines.

Heavy Engineering Corporation Limited:

Heavy Engineering Corporation Limited (HECL), is one of the largest integrated engineering complex in India, set up at Ranchi, Jharkhand in 1958. HECL boasts to have a complete manufacturing setup ranging from casting to testing at the same location. The company have a full end facilities such as melting and refinement furnaces, facilities for forging, heat treatment, testing, machining, and fabrication. It has a large array of products that include cranes, steel sector, products for casting and forging, machine tools, products in mining sector, crushing equipment and mineral processing products, machine tools for railway, etc.

Lakshmi Machine Works:

Founded in 1962, Lakshmi Machine Works is one of India’s largest manufacturer of textile machines, and other CNC machines. The company headquartered at Coimbatore is owned by the Lakshmi Mills family. Presently, the company has over 60% market share in the domestic textile spinning machinery industry and is currently a brand leader in manufacturing customized products. LMW has its manufacturing, sales and service extended in the spheres of textile machinery, machine tools, and aerospace components.

The textile machinery division of LMW has a sales network wide over India and overseas in Thailand, Bangladesh, Vietnam, Indonesia, Pakistan, Kenya, Iran and Turkey. The machine tool manufacturing division have a wide array of products including milling machines, turning machines, turn mills etc. and has a nation-wide sales network. The foundry division has a range of products from locomotive castings or turbo charger parts, marine transmission castings, castings for power and energy, and body, wedges and bonnets of pumps and valves. LMW advanced technology centre handles the production of engine parts from various exotic alloys for commercial and military aircraft engine industries, structural components for aerospace industry, sheet metal alloys, etc. The wing also has Aerospace Composite Division, that concepts a single stop solution from parts manufacturing to large structure assembly.

PARI Robotics:

Precision Automation and Robotics India Limited began its journey in industrial automation in 1990, have provided installation over continents, and the service range from automated assembly to automated machining and automated material handling and logistics. The network of PARI Robotics extends over US, Russia, Germany, France, India, China, Switzerland, Turkey, Romania, Mexico, and Italy. The company operates in India in Bengaluru, Chennai, Ahmedabad, Delhi and Mumbai.

Mac power CNC:

The Mac Power CNC Machines Ltd. is an Indian manufacturer of machine tools, founded in 2003 by the Mac power group, and headquartered in Rajkot, Gujarat. It is one of the largest Indian manufacturer of CNC turning machines, turning and machining centres (VMC, HMC), Turn ‘O’ mill centre, drill tap centre, cylindrical grinder along with robotic automation solution, etc.

Miven Machine Tools:

Miven machine tools, headquartered in Hubbali, Karnataka was founded in 1985 in collaboration with The Warner and Swasey, a Subsidiary of Giddings & Lewis Inc. USA by Mysore Kirloskar as the Indian Promoters. MIVMACHTOOLS manufactures CNC turning machines, CNC Chucker machines, and other small and special purpose CNC machines.

Analysis for stepping into machine tool industry in India

Although Indian machine tool industry needs a boost to feed both domestic consumption rate as well as exports and thereby reducing imports, the sector is somewhat competitive for a start-up:

Low supplier power:

Inadequate supply power for domestic use, increases the dependency of customers on importing these goods.

Competitive rivalry:

The machine tool industry in India is fragmented, and the existing fields are dominated by some large players. But owing to a growing customer base, start-up players also have a good opportunity in the sector.

Threat of new entrants:

The gap in domestic supplies give a good opportunity for new entrants and start-ups. But the entry of well-established large players make a threat to the new comers. Also the field requires a large investment in the technology phase itself. Provided the risks to be a side factor of every business, proper investment, strategy and marketing can make good revenue for both the nation as well as entrepreneurs.

Threat of substitutes:

Product substitutes, in the domestic level, although is a competition, a significant absence may increase the risk of customers turning towards the importing mentality.

Customer power:

India has a strong and constantly growing user base for the industrial equipment. This can contribute to the good side of risk takers. The domestic demand is outstripping the domestic supply. The export sector is also getting better. In addition, the increasing usage of CNC machine makes a strong customer base which is expected to increase for improving production and cost. The key users such as automobile sector, auto components, consumer durables, etc. are also in demand of sophisticated machine tools. This much of user base along with technologies introduced by MNCs paves an opportunity to fulfil the domestic requirements of machine tools.

Policies and Regulations of the Indian Government

The Indian Government supports, encourages and gives a sort of concession for the manufacturing sector, which especially benefits the machine tool industries. According to IBEF report, some important highlights in these policies include:

1. 100% FDI allowed.
2. Exemption from obtaining an industrial licence to manufacture.
3. Freedom in selecting location.
4. Reservation of only specific items under machine tools for production by small-scale industries.
5. Reduction of import duties, encouraging imports for machine tools industry.
6. Encourage exports from Export Oriented Units (EOUs), Special Economic Zones (SEZs) and Export Processing Units (EPUs).
7. Recognise exports as national priority, by all union and state government agencies and private sector.
8. Locations with high growth potential to be supported by government, to bridge technology and productivity gaps.
9. Skills up-gradation, physical infrastructure, environmental mitigation facilities to be provided by the Government, in selected areas of intervention.
10. Schemes similar to SEZs can be developed for export oriented units, with capital investment in plant and machinery over US$ 6 million.

Apart from these, State Governments has also instituted certain attractive state level policies.

Best states in India for setting up machine tool manufacturing industry

For any business to get well established the local governing body, mentality of natives and labour charges must be favourable. Such a location should also be business friendly, with ease of access, ease to market, ease of transport, etc. Currently Bengaluru, Hosur, Coimbatore, Chennai, Hyderabad, Noida, Kolkata, Mumbai, Indore, Ahmedabad etc. provide a good site when it comes to the reputation, business and market value for companies. The attractiveness for setting up a machine tool industry can be assessed on the basis of following parameters:

1. Presence of key user industries. This provides a strong and easy market access. The market will be assured due to this ease.
2. Availability of labour, supporting industries, etc.
3. Government policies.

Indian states such as Haryana, Gujarat, Tamil Nadu, Andhra Pradesh, etc. provides a good location, based on these parameters. Governments of states like Telangana, Uttarakhand, etc. is updating their policies to be more industry friendly and these could be attractive industrial states in the near future.

Opportunities to Invest in Indian machine tool industry

As stated in the article, while considering the domestic market in India, there is a big gap between the production capacity of each specific sector and the demands for industrial equipment. India has a society being aware of growing technological era and the introduction of industry 4.0. Moreover, being the largest internet users, data charges in the nation is becoming faster, cheap and almost free of cost. Also being one of the largest exporter of automobiles, India is becoming a good soil for both small scale and large scale Machine tool manufacturers. Along with the negotiated policies by the Government, the current international tie-ups is also becoming more business friendly. These factors provides a right time to invest in and harvest from the Indian market.

Employment opportunities in Indian machine tool industry

India is one of the world’s largest machine tool manufacturers and the country had a good economic growth rate with the sector, which is expected to increase steadily. Also the domestic consumption and demand of these goods are growing considerably in comparison with the present day supply, that make many foreign companies to invest in Indian industrial equipment manufacturing sector. The increase in consumer goods manufacturing industry adds up the domestic demand in a significant manner. This total increase in business creates good employability and pretty salaries for the technicians, architects, engineers etc. along with other professionals.

Raising job opportunities in technical, software and commerce field

1. The employability of ITI graduates in tool and dye making as well as fitters is rising, as there is a handful of jobs in the installation and service sector.
2. Polytechnic and diploma professionals are also being placed in the sector for assisting drawing as well as installation and supervising jobs.
3. Production and electrical engineers are being placed to design the custom made machineries and components for industrial automation.
4. Many of the small scale components manufacturing and lathe works will be outsourced to small scale industries, where individuals can meet their contracts for a good fortune for their own, and also make more employment.
5. Industry 4.0 enables a handful of jobs for the software companies and a lion share of the works will be outsourced, which again create employment opportunity in the software sector.
6. Business administration, commerce graduates have a placement opportunity as in many other industries although the overall employability is being raised.
7. The demand of these goods increases the distribution power, which again can boost up the entrepreneurship and employability in the distribution sector.
8. Exports make a large scale employability in the shipping and logistics sector.

Trainings in Indian machine tool industry

Education in India is being highly supported by the Government to build a generation of industry oriented professionals and a lot of initiatives like ITI, Polytechnic, vast number of Engineering colleges with vast number of courses, Internships, apprentice ships and trainings in other Government organisations, Skill India initiative, etc. Students can get industry level skilled in these institutions, and most of them provide a stipend to promote technical studies. Education in specific areas also create large number of domestic investments in this sector, which can create a stable future for the country.

Additionally, each company is willing to give special training to interested candidates creating a high quality skill in them and hiring them in the future. Candidates with good workmanship can earn a pretty amount of salary, and future promotion with respect to the working mentality. One has to browse through the internet and find their suitable fortune in the sector. Most of the companies listed above, as well as those that are not listed here has shared information on their trainings in their website and can be applied directly for the positions.

Study and review article prepared by content developers at Agrraj Consultancy Services Pvt. Ltd. Readers can also seek data from other sources for their proceedings to do Business in India.