Capital Goods and Machine Tools Fortunes are Intertwined

Capital goods sector occupies a strategic position in India’s economy as it provides the machinery and equipment needed for many industries involved in manufacturing of goods and services directly or indirectly. Conventionally the Indian capital goods sector has been dependent on imports to meet its demands, however, this can change with investments in technology and talent. India’s export performance in capital goods sector which has remained modest can see an uplift. Government initiatives such as National Capital Goods Policy and Make in India are aimed to enhance the productivity and competitiveness of the capital goods sector. As industries leverage free trade agreements, there are good prospects of scaling up exports.

A thriving capital goods sector is imperative for machine tool industry, for strengthening India’s manufacturing capabilities, as well as for creating employment opportunities. This would be realized when products designed and developed by indigenous manufacturers match their global counterparts in terms of technology, quality, reliability, performance and satisfaction. Indian manufacturers need to infuse their shopfloor by upgrading to the latest technologies while the government on its part should address inverted duty structure and import of second-hand machinery which adversely affects the competitiveness of capital goods manufacturers. India should also explore attracting foreign direct investments coupled with appropriate technology to sharpen the sector.

As per prevailing trends, industry is likely to get impacted by the new technologies disrupting and transforming manufacturing industries resulting in new culture and business model. The country should adopt strategies to leverage its strengths in information technology and take advantage to further enhance its capital goods sector. With India emerging as one of the fastest growing economies in the world the demand for capital goods has increased manifold. A change is on the horizon with many new opportunities likely to be created.

Machine tool industry now needs to gear up to the opportunities by leveraging their ongoing R&D and innovations and adopting new technologies across its domain of activities. As this happens India will be on the right track with manufacturing and machine tool sector contributing its share to realize the dream of becoming a $5 trillion economy by 2024-25.