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Engineering Sector Growth Creates Avenues for Machine Tool Industry
Machine tools essentially rely on engineering sector. Both the sectors have a symbiotic relationship. Engineering sector is one of the largest consumers of machine tools and the sector’s growth is likely to spur demand. India’s engineering sector including light and heavy engineering have been witnessing growth on back of investments in infrastructure and industrial production.
Automobile exports from India increased over 15% in April to February 2017-18 period with over 25 million automobiles being produced in FY17.1 The country also overtook Germany to become the fourth largest automobile market in the world.2 Major Indian auto makers such as Ashok Leyland, Mahindra & Mahindra, Maruti Suzuki, among others are increasing their capital expenditure over the next 2-3 years.
Aerospace and defence manufacturing are two key important segments earmarked for development and manufacturing growth. These two segments are evolving in India and attracting major names across the globe in terms of investments. With Indian government providing investor friendly policies and space for investments, the prospects for growth look brighter than before.
Indigenous defence manufacturing has been boosted with firms signing developmental contracts with Ministry of Defence. Notable ones include Tata Advanced Systems for surface surveillance radar project for Indian Navy and Larsen & Toubro for production of guns for Indian Army.
Companies are foraying into aerospace manufacturing through joint ventures. Examples include Adani Aerospace and Defence which is setting up a modern aerospace ecosystem in Mundra, Airbus partnership with Tata Advanced Systems for final assembly of C295W military transport in India, Airbus partnership with Mahindra Defence for production of airbus military helicopters, Israel Aerospace Industries and Kalyani Strategic Systems joint venture to manufacture and market the Israeli firm’s defence systems.
A significant number of SMEs dot India’s engineering sector. The reduction in corporate tax rate to 25% for entities with annual turnover upto Rs.250 crores and the allocation of Rs.3 trillion for development of SME sector under Pradhan Mantri Mudra Yojana is expected to enhance the production capacities of SMEs in engineering sector.
All these spell good news for Indian machine tool industry. With a number of firms across manufacturing sector looking keenly to increase their market base the industry needs to stay tuned for the opportunities that are likely to arise.
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