...says Abhijat Sanghvi, President, Fasteners Association of India (FAI). According to him, the US is looking to source fasteners from India (due to the trade war escalation with China), thus providing a major opportunity for Indian manufacturers.
What is the present status of fasteners market in India?
The current global fastener market is estimated at $ 83 billion of which India has less than 5 per cent market share. On the positive side, Asia Pacific is almost 43 per cent of the world markets of which China, Taiwan, Indonesia and India are seen as the main drivers. The growth rate for the industry is forecasted at 7.40 per cent till 2023. With very few public listed companies from the industry, and the top 20 companies contributing to over 70 per cent of the India markets with the rest being MSMEs, there is inadequate data available which Fasteners Association of India (FAI) is working to assimilate over time.
There is an imbalance with imports of fasteners to India at $ 971 million (estimated) for FY 2018-19 far exceeding exports out of India at $ 622 million (estimated) for the same period. The positive is exports are growing at a much faster pace approximately 15 per cent over the last couple of years. The domestic growth will be a key factor in increasing demand.
What are the factors driving the demand for fasteners?
Primarily, fasteners are one of the main items used to fasten two things together besides adhesives or welding. These are used universally across a spectrum of industries ie automotive, engineering, construction, infrastructure, aerospace, etc. Hence, the demand for these is directly correlated with increase in growth in the above industries. The Indian population strength of 1.3 billion is attracting worldwide investment with the entry of a major part of the automotive players globally seeking to break into the Indian markets. This trend will continue as will the infrastructure investments in various areas & subsequently boost demand accordingly.
USA, which imports large volumes of fasteners from China, has now aligned India seriously into its sourcing horizon due to the trade war escalation with China. This could serve as a major opportunity for Indian manufacturers.
Are government initiatives like Make in India, etc boosting the demand for fasteners?
There are several factors that have contributed to the increase in demand for fasteners. Besides the Make in India initiative that is bringing in large investments, implementation of GST, shift of global hubs from West to East, robust economic policies, Digital India thrust, MSME growth focus among many reasons have resulted in an upward trend for the Industry.
What are the challenges before the fasteners industry?
We do face many challenges. We have a small share of global demand & the image of the Indian fastener industry needs to be strengthened. There is a technological lag in the industry barring the top few players. The transparency & understanding among industry is inadequate. Also, lack of managerial & skilled labour training is an issue and needs an impetus. FAI has achieved some momentum in these areas unifying the industry, conducting technical & industry seminars, successfully creating India’s first fastener training institute for operators and representing India at global fastener fairs. It is working towards its vision of India being a major force in the fastener industry globally.
Fluctuating steel prices is a concern with imports being curbed due to anti-dumping duty resulting in higher domestic steel prices while finished fasteners face no such high duties making it difficult for our manufacturers to compete.
Outlook for the Indian fasteners industry
The outlook for the industry is very bullish. There will be consolidation over time as without economies of scale, growth in this Industry will be stagnant & jeopardise survival due to eroding margins in standard products. The ideal balance would be to scale up volumes in standard products & offer special parts as part of the product range with great value addition. In an industry where long working capital cycles exist for domestic supplies, managing funds efficiently will also be a key. Excellence in quality & customer service beyond expectations will have to be executed consistently. For those who get this right, there are tremendous opportunities forward.