The Hindu Business Line : Machine tools yet to catch outsourcing fever

The machine tool industry is poised to assume a new role as a sourcing vendor. But with the country's demand itself growing at a rapid pace, the prospect would take some time to sink in unlike the information technology sector's outsourcing revolution.

A trickle has started with low volume precision components being sourced from Indian companies.

Going by the trend, developed countries specialising in high-end technology of rolling multi-functions of machining and tooling to optimise the costs and overcome the skill scarcity could give only a small portion of the vendor business to Indian counterparts.

Servicing Customers

While the machine tools industry faced the hurdle of exorbitant land costs for setting up larger units for servicing the global customers, the revival of the sector in the last three to four years due to robust economic growth resulting in huge demand for capital goods has created keen competition. This would restrain the investors from any adventure before achieving high standards and consistency in production to emerge competitive to meet the global customers.

However, the 13th Indian Machine Tool Exhibition starting here on Thursday is expected to offer a platform for exploring the opportunities that could lead to Indian companies becoming strategic partners in some key segments.

With a projected growth of 25 per cent for 2008-10 the local demand itself is going to be huge, said leaders from the industry. Currently, India imports one- third of its machine tools requirements of Rs 4,000 crore.

Contract Manufacturing

"With the market moving to India, it would take a while for India to emerge a net exporter of machine tools," said Mr Shrinivas Shirgurkar, Managing Director, Ace Designers Ltd.

The company itself is scouting for contract manufacturing opportunities and has set up a sales office in Shanghai through its group company Micromatic for selling its products. With China being the largest consumer, apart from being the producer of machines, his company was optimistic of becoming a production hub.

Micromatic Grinding Technologies (MGT) recently set up a new facility in Ghaziabad to produce high-speed Cam Grinding Machine under licence from JTKET Corp for both the domestic and global markets.

Quality Product

Mr N.K. Dhand, Managing Director, said JTKET's decision to license the product — jointly designed and developed by the two partners — would allow MGT to manufacture a quality product that meets the requirements of global market leaders.

Mr Kumar Kanetkar, Managing Director, Kennametal India Ltd, which has its facility here, has identified the centre as a centre of excellence and plans to use the facility as a hub for certain components for exports to Asia-pacific. "This is a recent development and we at the Indian operations are quite excited by the possibilities and the opportunity," he said.

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