“Automation is must for manufacturing to stay competitive”

According to Gardner Research Survey, the Indian machine tool industry is globally ranked 12th in production and 8th in consumption. Current market size for Indian machine tool industry is around $ 2.3 billion (Rs 14,692 crore), of which the domestic production accounts for almost 50 per cent of the total consumption. In FY 2017-2018, there was a growth of around 26 per cent in production and around 27 per cent in consumption. However, due to recent slowdown in the industrial sector, machine tools market is subdued at present, says Indradev Babu, the Founder & Managing Director of UCAM Pvt Ltd and Vice President of Indian Machine Tool Manufacturers’ Association (IMTMA). Babu is a machine tools industry veteran. In this interview with Rakesh Rao, he discusses challenges before the industry and the road ahead for machine tools & accessories industry. 
 
What is the status of machine tools and accessories industry in India?
Typically, accessories segment follows the demand trend of the machine tools. Last couple of years, machine tools industry has seen a phenomenal boom in India and the machine tools producing companies did not know how to manage supply of the machines. There were big problems with supply chain. While problems and issues on supply side were getting addressed, suddenly the market started to fall down from October-November 2018 onwards. Though the business is going on and orders are coming, the market continues to stay subdued. Many large companies are looking at how to control their inventories. For machine tool producers, there is a bit of tight cash flow situation in the market. 
 
The market is showing interest but order conversion is slow and companies are also delaying to take orders. But there is a lot of hope and, with single party gaining a majority at the centre, we expect sentiments to work positively. What is really becoming a concern is the automotive industry which is facing challenge on two fronts. With Bharat Stage VI (BS VI) norms coming into effect in 2020, there is a lot of uncertainty around future of diesel engine. At the same time, due to stricter emission norms, the auto makers have to make changes in the technology. This is affecting the supply chain in the automotive sector. And naturally it is hitting the machine tool users and accessory makers. 
 
Second is the buzz around electro-mobility and its affect on the component suppliers. However, electric vehicles are not such a big concern. Though everybody know it is the future, people expect the shift from internal combustion engine (ICE) to electric engine to be gradual and will take longer time. Meanwhile both – ICE and EVs - have to co-exist. 
 
Are you seeing the light at the end of the tunnel?
I think the market should start to show off pretty soon once the issue becomes clearer and consumption picks up again. The GDP of the country is expected to grow. The projection is huge as per the expectations of the government and other industry experts who are studying the Indian market scenario. When the GDP growth picks up pace, manufacturing will also follow the footsteps. At present, manufacturing sector accounts for 16-17 per cent of the country’s GDP which is very low when compared to other developed countries. We expect the contribution of manufacturing to the economy to grow from the present level as industrial activities pick up. 
 
As manufacturing goes up, it will pull the machine tools sector, which will in turn give a boost to demand for accessories. Even now, when demand is subdued, companies are looking to add accessories to machine tools for improving productivity. Indian industry has to become more competitive, especially when market in opening up with the entry of global companies. Competition is good in one way that it forces companies to strengthen its processes. You get more aligned to fight in the market and that will help you to export your products. 
 
Are imports a worrying factor for machine tools industry? Do you see imports coming down? 
Consumption of machine tools is growing in India. We are one of the leading consumers for machine tools in the world. Domestic industry fulfil 50 per cent of the consumption (up from 30 per cent in the past). 
 
So, domestic manufacturers have been successful in fulfilling the needs of Indian industries by producing more quality products. This is a healthy trend and the efforts of the Indian companies need to be appreciated because machine tools use complex technology. At present, low to middle level technologies are produced in India, while high-end, sophisticated machines are imported. 
 
Is Make in India initiative having a positive effect on the Indian manufacturing industry?
It is a difficult thing to say because I have not seen any data which suggests that it is working. The principle of Make in India is good as it aims to increase the share of manufacturing sector to GDP in India and create more jobs opportunities. Especially, in aerospace and defence, the government aspires to increase contribution of indigenously made equipment in the overall defence production.
 
To scale up manufacturing capability you need to have skilled employees. The government’s Skill India initiative for skill development is important; however more efforts need to be put in to fill the skill gap. Hence, Make in India, at present, is just a sentiment, and its exact contribution is very difficult for me to say.
 
Are you not seeing threat from imports especially from China and Taiwan?
Threat is always going to be there. People have to survive and grow, they need to compete. There is nothing to be scared about. With China’s economy slowing down a bit, they are eyeing Indian market. India has managed the Taiwanese competition well. With respect to China, we have to see in terms of machine tools. Chinese white goods and smart phones are well accepted in India. But acceptance of machine tool brands from China is still not happening and we have to see how they will take it on in machine tools. The way China is growing globally in economic areas, we need to be ready to compete with China in future and put in place strategies accordingly. No doubt Indians have become competitive and smarter; we need to gain more confidence of our customers by building better products.
 
Automation is increasing everywhere and also digitalisation industry 4.0. How is this affecting the machine tool industry? How Indian manufacturers are reacting to this trend?
Recently, at one of the forums, experts were discussing whether digitalisation is leading to job loss? Many companies, who have already adopted digitalisation, are saying they are not reducing manpower. No doubt there will not be any retrenchment, but new jobs would 
be lost. 
 
Today, companies are looking at competitiveness and factories of the future are totally automated. Industry 4.0 is a reality and many companies in India are looking at ways to adopt automation. So this is really a dichotomy for the industry. On one hand people fear job loss due to automation; on the other companies have no option but to go for modernisation to stay competitive. 
 
In reality, automation will lead to loss of jobs and India badly needs to more jobs. The way forward is to increase the rate of industrialisation, so that more people are needed to perform job and only some areas are automated. In machine tool industry no job losses have happened. More and more recruitments are happening. Machines are being produced in big volumes and some level of automation is necessary to be productive. But, in the other general manufacturing industries, rise in automation can pose a challenge with respect to job losses. So it is important to address this challenge.
 
We cannot stay behind, we have to be competitive otherwise we will lose out. Automation is must for manufacturing to stay competitive. There is no other way. There is no choice to digitalisation. How to manage job loss and create more opportunities, as a country we need to discuss and chalk out a way forward to address this issue. We have to create more job opportunities and have to keeping growing at above 7.5 per cent for another 10-20 years. 
Share post:

Related Stories