Defining the Role of Government in

Trans-nationalization Efforts of Indian

SMEs
in Machine Tool Sector

Prepared for

Department of Scientific & Industrial Research,

Government of India

Prepared by
Indian Machine Tool Manufacturers
Association

April 2008

TABLE OF CONTENTS
1 INTRODUCTION .........................................................................................................................3
1.1 Trans-nationalization of small and medium enterprises.........................................................3
1.2 Role of public policy ..............................................................................................................3
1.3 Importance of the machine tool industry................................................................................4
1.4 Scope of study ........................................................................................................................5
2 STUDY METHODOLOGY ..........................................................................................................6
2.1 Industry definition ..................................................................................................................6
2.2 Survey design .........................................................................................................................6
2.3 Respondent summary .............................................................................................................7
3 GLOBAL MACHINE TOOL INDUSTRY...................................................................................8
3.1 Industry characteristics...........................................................................................................8
3.2 Key statistics ..........................................................................................................................8
3.3 Technology trends ................................................................................................................10
3.4 Market trends........................................................................................................................12
4 GOVERNMENT POLICIES.......................................................................................................14
4.1 Country specific policy interventions...................................................................................14
4.1.1 Japan...........................................................................................................................14
4.1.2 South Korea................................................................................................................14
4.1.3 China ...........................................................................................................................15
4.1.4 European Union (EU) ................................................................................................16
4.1.5 Taiwan ........................................................................................................................17
4.2 Promotion of trans-nationalization .......................................................................................17
4.3 Results of policy interventions .............................................................................................18
5 STUDY FINDINGS ....................................................................................................................19
5.1 Indian machine tool industry current status.......................................................................19
5.2 Other findings.......................................................................................................................23
6 TRANS-NATIONALIZATION OF INDIAN MACHINE TOOL INDUSTRY .......................25
6.1 Current status........................................................................................................................25
6.2 Experience of companies through joint marketing........26
6.3 Trans-nationalization opportunity and necessity...............................................................27
6.4 Success stories: case studies................................................................................................28
7 RECOMMENDATIONS.............................................................................................................35
7.1 Context .................................................................................................................................35
7.2 Machine tools - a strategic industry.....................................................................................36
7.3 Other recommendations .......................................................................................................36
8 ANNEXURES .............................................................................................................................41
9 REFERENCES ............................................................................................................................58

LIST OF TABLES
Table 1: Stages of trans-nationalization: ..........................................................................................3
Table 2: Policy measures ..................................................................................................................4
Table 3: Survey respondent summary ..............................................................................................7
Table 4: Government support for machine tool industry in South Korea.......................................15
Table 5: India machine tool exports and imports ...........................................................................19
Table 6: Machine tool accessory exports........................................................................................21
Table 7: Leading machine tool / accessory exporters.....................................................................21
Table 8 : Technology benchmarking ..............................................................................................22
Table 9: Export orientation of Indian SMEs...................................................................................25
Table 10: FDI by Indian machine tool firms ..................................................................................26
Table 11: Export market analysis ...................................................................................................27
Table 12: Policy recommendations ................................................................................................37

LIST OF FIGURES
Figure 1: Global machine tool production- 2006..............................................................................9
Figure 2: Global machine tool exports - 2006 ..................................................................................9
Figure 3: Global machine tool imports 2006 .................................................................................9
Figure 4: Trend in machine tool production ...................................................................................10
Figure 5: Machine tool market share ..............................................................................................10
Figure 6: Technology evolution in machine tools ..........................................................................11
Figure 7: European Unions NEXT initiative.................................................................................17
Figure 8: Market share of imported machine tools.........................................................................20
Figure 9: Policy goals firm performance linkage ........................................................................35

1 INTRODUCTION
1.1 Trans-nationalization of small and medium enterprises
Trans-nationalization has become increasingly important to the competitiveness of enterprises
of all sizes. Even small and medium-sized enterprises (SMEs) with a global strategy can move
quickly to exploit opportunities for revenue growth and enhance capabilities for long-term
competitiveness.
SME trans-nationalization can take different forms - including exporting, alliances / mergers
across national borders, technology transfers and the establishment of operations or offices in
other countries. The process is often sequential with clearly identifiable stages
i.
ii.
iii.

Exports of products (directly, through agents or buyback arrangements)

Alliances - sales via licensing or franchising, technology transfers
Foreign Direct Investment (FDI) including overseas mergers / acquisitions

This approach has the advantage of minimizing risk and investment required at each stage of
growth while allowing for learning and experience gathering before further expansion. The
benefits and challenges at each stage of trans-nationalization is summarized below

Table 1: Stages of trans-nationalization:

Benefits

Exports
Low investment, cost/
commitment

Alliances
Requires limited
resources and market
knowledge

FDI
Development of new
knowledge and
capabilities
Minimizes transaction
related risks
Location based
advantages

Identifying the right

partner
Structuring partnership

Complex, time
consuming
High upfront investment
and greater risk
Least flexible

Flexible, fast
Lower risk
Challenges

Tariffs and non tariff

trade barriers
Transportation costs of
goods can be high

1.2 Role of public policy

Despite the broad acceptance of the importance of trans-nationalization of SMEs, there are
significant internal and external barriers that impede its progress. Public policy at local,
regional and national levels can play a significant role in reducing these barriers and also proactively promoting trans-nationalization through interventions in areas where private sector
initiatives are absent or inadequate.
As a first step, data is needed about the SME population in a given country and industry
before appropriate actions or policies can be developed. Once the SMEs are identified, they
should be segmented according to size and growth orientation. Further assessment is then
required to determine the needs of those groups of SMEs. It is important to reach out to SMEs
and get their perspective on the challenges and opportunities they face.
There are a number of areas in which actions can be taken to reduce the barriers to conducting
business abroad and many efforts are already in place or being tested in various countries and
regions, as shown below.

Table 2: Policy measures

Policy Area
Creating an openness to transnationalization
Information dissemination
Provision of business support services
Reforming education

Building networks
Financial assistance and incentives
Legal framework

Measures
Promoting successful firms as role models to create
awareness of international business opportunities
Providing information on tax rules, regulation and
finance in foreign countries
Counseling, consulting and competence
development through functional workshops and
related activities
More international content in curricula, encouraging
faculty with international experience, creating
internships for young students to work in foreign
countries
Cluster development programmes, collaborative
research and technology transfers between public
and private institutions
Export marketing funds
Protection of intellectual property, enforcement of
laws on anti-competitive and unfair trade practices
that hurt SMEs

1.3 Importance of the machine tool industry

The machine tool industry is universally recognized as a strategic industry for driving
industrialization of a country. Known as a mother industry, it produces capital goods such as
lathes and machining centres for a broad spectrum of the manufacturing sector. The demand
for machine tools is largely from the automotive (including ancillaries and component
manufacturers), capital goods and consumer durable sectors. Intermediate goods sectors such
as auto ancillaries, bearings and electronic components are also important sources of demand.
Measured in terms of output and employment, the machine tool sector is amongst the smallest
in the manufacturing industry in the developed countries. At the peak of US dominance in the
late seventies, the sector accounted for only 0.3% of total value of manufactured goods in that
country. The industry also tends to be heterogeneous in the product offerings and comprises of
large number of small firms. The situation, in the Indian context, is similar.
Despite its small size, the machine tool industry is far more important than its share of
industrial value add or employment would suggest. Machine tools are the core machinery
in the metal working sectors of industry. Moreover, the organization and control of production
in the metal working industry is closely tied to the characteristics of the machine tools used.
Therefore the machine tool sector plays a very important role in influencing the productivity
and competitiveness of larger manufacturing sectors. Several industry experts have argued
that leading industrialized countries have invariably had a strong domestic machine tool
sector and that the decline of US manufacturing is a direct consequence of the loss of
competitiveness of its domestic machine tool industry.
Beneficiaries of advanced manufacturing processes enabled by new machine tool technologies
are producers who use machine tools. The benefits to them include improved productivity;
shorter product cycle times, energy savings, and improved product quality. Another major
beneficiary of machine tool technologies is the consumer who buys the products made by the
tools. The principal benefits to the consumer are lower prices, improved quality, greater
reliability, and higher energy efficiency. Benefits also flow to the overall economy as inflation
is held in check, the global competitive position improves, workers acquire training and skills
concomitant with the new technologies, and productivity growth spurs real wage growth.
The role of manufacturing in job creation is an issue of enormous importance to India.
Manufacturing currently employs about 45 million people (or 11% of the workforce). It also

serves as a transitional alternative to manpower in agriculture. In expanding manufacturing,

India creates a channel through which low skilled labour in agriculture can access more value
added jobs. Manufacturing has the highest multiplier effect among all economic sectors as a
manufacturers need for raw materials, suppliers, distributors and other services spurs the
creation of jobs, investment and innovation in the rest of the economy. Several global
economic studies have estimated that every job created in manufacturing has a multiplier
effect, creating 2-3 jobs in services. Also, there is an increasing level of 'software' or services
involved in manufacturing.
There is growing optimism that India can become a primary sourcing and manufacturing base
for skill intensive sectors such as automobiles and auto components. Research by the
McKinsey, the global consulting firm, indicates that the export potential for auto components
from India could be about $ 25 billion by 2015. Leading Indian suppliers possess world-class
product and process engineering capabilities. Almost all big global automakers already source
components in India. Many automakers are now creating engineering and design centres in
India to capitalize on these skills.
The automobile and machine tool sectors have a symbiotic relationship. The Japanese auto
industry has had an enormous impact on that countrys machine tool sector. Data from the
Japan Association of Machine Tool Builders indicates that domestic auto and auto part makers
create about 30-40% of induced domestic demand for machine tools. This point is well
reflected by the fact that the Japanese machine-tool industry was the largest producer in the
world one year after the Japanese became the worlds largest automakers. If India has to
emerge as an important global sourcing base for automobiles and auto components, the
machine tool sector will have a crucial role to play.
Viewed in this perspective, the role of the machine tool sector in India has crucial strategic
importance. A vibrant domestic machine tool industry is the key to increasing competitiveness
of Indian manufacturing. The strengths of the Indian machine tool industry can also be
leveraged to increase its scale and competitiveness in international markets.

1.4 Scope of study

Recognizing the link between competitiveness and the degree of trans-nationalization of an
industry, the Department of Scientific and Industrial Research (DSIR), New Delhi initiated a
study for defining the role of government to promote trans-nationalization efforts of Indian
small/medium enterprises (SMEs) in the machine tool industry. The study had the following
objectives a) Evaluate trans-nationalization objectives of Indian SMEs in the machine tools sector.
b) Benchmark technological capabilities of Indian SMEs vis--vis global competition.
c) Identify impact of industrial policy for machine tool sector adopted by leading
machine tool manufacturing countries e.g. Japan, Korea, China, US and European
Union with special reference to:
i.strengthening industry linkages
ii.raising local content
iii.Foreign Direct Investment (FDI) strategy
iv.Research & Development support
d) Recommend policy measures to support the Indian machine tool sector through
innovation & technology development, entrepreneurship promotion, infrastructure
and enabling facilities, trade and fiscal policy.

2 STUDY METHODOLOGY
2.1 Industry definition
The machine tool industry comprises manufacturers of the following types of machinery and
its accessories a) Metal cutting machinery such as lathes, milling machines, drilling / boring machines, and
b) Metal forming machinery such as presses, punches, forges jigs and fixtures etc.
Based on technology, machine tools can be classified into Computerized Numerically
Controlled (CNC) and some NC machines and Conventional.
The machine tool component industry includes manufacturers of the following systems CNC systems: A form of programmable automation in which the machine tool is
controlled by a program in computer memory.
Servo motors: A servo motor is an automatic device which uses error-sensing feedback to
correct the performance of a mechanism. The term applies to systems where the feedback
or error-correction signals help control mechanical position or other parameters.
Spindles, bearings, guide ways and ball screws
Cast iron products such as beds, columns and saddles
Hydraulic systems: Hydraulic machinery refers to the machines and tools which use fluid
power to do work.

2.2 Survey design

a) A structured questionnaire comprising the following five sections was developed and the
same is provided in Annexure.
i.

ii.
iii.
iv.
v.

Unit : year of establishment, initial investment in plant & machinery, nature of

products and by-products produced, number of workers, both skilled and
unskilled, number of supervisory, technical and managerial staff, their
qualifications, experience, entrepreneurial background, etc.
Technology: nature of technology in use, its cost, capacity and capabilities, etc.
Product: capacity of production, number, quantum and value of output, capacity
utilization, etc.
Innovation : development of new / improved products / processes, substitution of
raw materials, reverse engineering, quality improvement, cost reduction, etc. and
facilities available for the same.
Internationalization strategy: products / markets for export, closest competitors,
sales channel, foreign investment plans etc.

b) 90 machine tool industrial units were identified for the survey, from the following
sources:

IMTMA Directory
Participants in the IMTEX 2007 machine tool exhibition
Participants in EMO-Hanover machine tool fair see Annexure
Suppliers to major machine tool manufactures such as HMT, ACE Designers,
MICO Bosch and Bharat Fritz Werner.
Export details as per shipment data

The following criteria was adopted to select units for the survery

i)

All IMTMA member units with export sales both assembly and accessory
manufacturers
ii) Coverage of units in all major machine tool manufacturing centres in India
Bangalore, Coimbatore, Hyderabad, Mumbai, Rajkot, Indore and Pune
iii) Select machine tool importers and multi-national firms to get a perspective of
technology trends in the industry.
c) Subsequent to e-mailing of questionnaire to all the 90 machine tool units identified for
Survey, field visits to 63 machine tool tool manufacturers and ancillary units were carried
out in Bangalore, Hyderabad, Mumbai, Rajkot, Indore and Coimbatore.
d) Details of industrial policy on machine tool sector in countries such as Japan, US,
European Union, China and South Korea have been obtained from academic journals and
trade publications that have addressed this subject. Information from the commercial
department of the Indian embassy in Germany was also obtained.
2.3 Respondent summary
A total of 63 firms responded to the survey and questionnaire. The table below provides a
summary of the size and business focus of these firms. Details are provided in Annexure . As
firms did not provide information on the size of their investment in plant & machinery, the
classification as small, medium and large enterprises was made subjectively based on
turnover (below 50 cr-small; 50-100 cr-medium and above 100 cr-large).

Table 3: Survey respondent summary

Item
Unit operations:
Assembling and marketing machine tools
Assembling and selling jigs, fixtures & accessories
Tools, dies, moulds
Supplying imported CNC packages
TOTAL
Size of units:
Large units (turnover more than Rs.100 crores)
Medium units (turnover Rs.50 to 100 crores)
Small units (turnover below 50 crores)
MNCs
TOTAL
No. of employees:
Total number of employees above 100
Total number of employees 50 to 100
Total number of employees below 50
TOTAL
Exporting units:
No of firms exporting or with other trans-nationalization operations
No of firms deriving more than 50% of turnover from exports
Large units
MNCs importers
Medium size units
Small units
Location of units:
Bangalore
Coimbatore
Hyderabad
Mumbai
Indore
Rajkot
Total

No. of Respondents
22
28
10
3
63
10
4
46
3
63
10
11
43
63
21
3
15
3
7
38
43
10
3
2
2
3
63

Note: Firms based in Pune did not respond to the survey questionnaire.

3 GLOBAL MACHINE TOOL INDUSTRY

3.1 Industry characteristics
Highly heterogeneous
It is estimated that there are over 3000 different types and sizes of machine tools. The
machine tool industry is made of mostly small and medium sized firms. In Germany, for
example, there are about 320 machine tool companies employing 65,000 employees with
an annual turnover of about $ 10 billion. Only 3% of the manufacturers employ more than
1000 people. Similarly, the industry in Italy comprises of about 450 firms, 70% of which
employ less than 50 people.
High capital intensity
This results from the large requirements for working capital due to small batches, low
degree of automation in production and large variety of products.
Foreign direct investment is low though international trade is significant
The small size of machine tool firms makes foreign investment impractical while the
presence of wide network of machine tool distributors worldwide often makes it
unnecessary.

3.2 Key statistics

Source: Gardner Inc (2007 World Machine Tool Output and Consumption Survey)

The global machine tools industry had a turnover of about US$ 59.55 billion in 2006.
Japan is the leading machine tool manufacturing country, accounting for about 23% of
global production.
China is the leading consumer of machine tools, with US$ 12.94 billion worth of
consumption approx. 21% of machine tools consumed worldwide.
Germany is the largest exporter with exports totaling US$ 7.52 billion or 25 % of world
trade in machine tools.
International trade is a very important feature of the industry 55% of total production is
exported.
Globally, India ranks 18th in production (US $ 0.41 billion) and 11th in consumption (US $
0.88 billion).

Figure 1: Global machine tool production- 2006

Global Machine Tool Production 2006
(in US $Billion)
13.5
19.2

Japan
Germany
China
Italy
South Korea
Rest of the world

10.3
4.1
5.5

7.0

Figure 2: Global machine tool exports - 2006

Global Machine Tool Exports (2006)
(in US $Billion)
7.5
10.6

Germany
Japan
Italy
Taiwan

6.9
2.5
2.9

Switzerland
Rest of the world

3.3

Figure 3: Global machine tool imports 2006

Global Machine Tool Imports (2006)
(in US $Billion)
7.1

China
United States

13.2

4.4

South Korea
Germany
Taiwan

1.8

2.6

Rest of the world

2.4

Figure 4: Trend in machine tool production

Global Machine Tool Production Trends
15
Total Production ($ bn)
12
9
6
3
0

2002

2003

Japan
Korea

2004
Year
Germany
Taiwan

2005

2006

China, Peoples Rep.

United States

Italy
Switzerland

3.3 Technology trends

Historically, technological innovation has had a considerable impact on the industry
structure and the competitive strength of companies.
The introduction of Numerical Control (NC) and later Computer Numerical Control (CNC)
technology in the late seventies catapulted Japanese manufacturers to a dominant position in
the global market. The US machine tool industry suffered a major decline.
In conventional machine tools, the machine tool manufacturers themselves produced the
hydraulic and pneumatic controls. Companies that had perfected the art of producing
machines with high accuracy gained significant competitive advantage. But numerical
controls soon enabled most manufacturers to produce accurate machines.

Figure 5: Machine tool market share

Source: The recent history of the machine tool industry and the effects of technological change, Institute for
Innovation Research and Technology Management, University of Munich Nov 2001

i.

Changes in machine tool technology have fundamentally changed the nature of the
product itself.

The shift to computer-based and particularly microcomputer-based numerical controls

considerably increased the versatility and flexibility of machine tools, simplified

10

programming and allowed for more functions to be controlled automatically. Several machine
tool groups, each representing one specific function, converged into multi-purpose machines.

Figure 6: Technology evolution in machine tools

Source: The recent history of the machine tool industry and the effects of technological change, Institute for
Innovation Research and Technology Management, University of Munich Nov 2001

The Japanese success can be attributed to the creation of two specific products - NC
multifunctional machining centres and NC lathes. Both types of machines are standardized
general purpose machine tools.
ii.

Technology development occurred outside the machine tool industry and went
beyond the mechanical technology base of the typical machine tool company.

In CNC machine tools, the technologies involved directly are mechanical engineering, control
engineering, and computer software engineering. A CNC machine tool also depends on a
number of generic technologies, e.g. semiconductor, laser, fiber optics, and heat treatment
technologies.
In the early years of CNC technology, the technological superiority of the Japanese was
sustained by the close technological collaboration between CNC manufacturers and the
machine tool producers. The relationships were usually exclusive and long term in nature.
The contribution of CNC makers to the machine-tool industry is considerable. This point can
be partially confirmed by the cost ratio of CNC-related parts and software to the total
cost of machine-tool building. It sometimes amounts to even 30- 40%.
iii.

General purpose machine tool building has become primarily an assembly operation

The quality of a machine tool depends enormously on key sub systems namely servo
motors, spindles, guide ways, precision bearings and ball screws. As is the case with CNC
systems, these sub systems can be sourced from leading global manufacturers. This has
reduced machine tool building to a mere assembly operation. The value creation in the
industry occurs mainly in the machine tool ancillary industry.
iv.

However, many special purpose machines require high degree of technical

sophistication

There is a clear trend toward greater use of multi-configuration machine tools. Tools are
becoming increasingly complex in terms of being multi-functional, multi-spindle with subspindles, multi-turret, and multi-axis. Lathes with 12 or so axes are being put into production,
and the use of four-axis lathes and turn / mill machines is commonplace. The milling
capability is comparable to that of some machining centres. Parts that previously required
multiple turning and milling machines are now being produced on a single machine. This
requires advanced software to effectively use the machines and may also requires powerful

11

postprocessors to drive the tools. However, the savings in setup time and the increase in
production efficiency can be significant.
v.

Technology improvements are incremental in core machining functionality

VDW, the German Machine Tool Builders Association, has identified the following current
trends in machine tool technology.
1

High performance machining

Reduction of machining time by increase of cutting speeds.

Dry machining

Reduction or elimination of coolants in machining to limit environmental damage

Micro-processing

Metal-cutting and non-metal-cutting processes for generation of miniaturized

components, partially having geometric dimensions in the micron and surfaces

Rapid prototyping
Rapid realization of prototypes and preproduction series of new products for
geometrical and functional testing

vi.

While, exciting developments are occurring in machine tool software

Availability of off-the-shelf PC software applications has forced the more traditional control
manufacturers to re-examine their core competencies and differentiate their products by
introducing the control architecture itself. CAD/CAM developers are striving to undertake
much of the toolpath conditioning functions traditionally considered to be the domain of
control manufacturers.
Significant improvement is being made in software for machine simulation, tool-path
verification, and rendering. Realistic simulation of the entire machining process including the
machine tool, holders, machine components, cutting tools and stock can be made. Simulation
of the tool path is provided to verify its accuracy. Gouges, undercuts and any discrepancies
between the target part and the machined part are shown. Users can compare the in-process
model with the designed work-piece. Rendering software provides for photorealistic images of
the machined part.
Software is evolving from the use of basic instructions to full-process automation. For
instance, wizards can be used for processes such as electrode design or tooling assembly
creation. Full five-axis processes including the machine tool, controller, tool path generator
and postprocessor are available from some vendors for milling of intricate products such as
impellers, turbine blades, tubes, pipes, aerospace components, dies and deep cavities within
moulds.

3.4 Market trends

i.

Manufacturers are responding to customer demands for more automation

Development in the machine tool industry is moving towards unattended machining. High
speed machining equipment is moving forward with better controls and machine drives.
Automated parts loading; tool changers backed by tool life management; spindle sensors to

12

guard against broken cutters; automated tool length sensing; and advance machine controls
and data management are features that make lights out machining possible.
A survey done by the Fraunhofer [23] Institute for System and Innovation Research (ISI),
Germany predicts that in the near future machine tools will be fitted with self-monitoring,
failure protection and tele-service functions.
ii.

Machine tool manufacturers are emphasizing customer orientation rather than just
product development

iii.

Success of Italian machine tool manufacturers in the US market is attributed to the

emphasis on application engineering and service presence.
Significant investments made in infrastructure for product and technical support in
key markets.
Italian manufacturers have moved their personnel and setup relationships with
distribution channels.

New business models are emerging [24]

The European Union has initiated a 4 year (2005-09) project titled NEXT Generation
Production Systems (NEXT), which aims to take the European production machinery
industry to new frontiers in diverse fields. The project has made the following observations on
demand trends in the machine tool industry.
a. Customers in end user industries are focusing more on product engineering, branding and
marketing. Investment in production equipment and manufacturing are no more
considered as a pre-requisite for competitiveness. Customers are more interested in
buying machine tool functions rather than the product itself.
b. As product life cycles are getting shorter and demand for production capacity more
uncertain, customers want to adopt flexible production systems. Investment in machine
tools is viewed as being incompatible with this strategy.
c. More than ever before, customer focus is on life cycle costs of machine tools rather than
upfront purchase costs.
The project included a survey of new business concepts in nineteen machine tool companies
in Germany, Italy, UK, Austria and Spain during Nov. 2005 to may 2006. The survey revealed
that these firms had a variety of business practicesi.
ii.

Build- own operate at customer site

Own and operate at customer site with final purchase option

iii.

Multi-ownership for big and complex projects - operating joint venture company
established by different stakeholders owns production machines that are operated and
maintained by the equipment supplier.
Machine tool producer acting as an ancillary vendor to the customer

iv.

The study suggests that there is a discernible shift in customer preference, especially in the
European markets, that will require machine tool builders to transform themselves from
product vendors to service providers.

13

4 GOVERNMENT POLICIES
4.1 Country specific policy interventions
4.1.1 Japan [25]

i.
ii.
iii.
iv.
v.

Ministry of International Trade & Industry (MITI) attempts to rationalize the industry
through mergers and divestments of product lines.
Recommendation to focus on CNC technology
Government funding for R&D to be coordinated by the machine tool association
Special depreciation allowances to stimulate purchase of CNC machines by Japanese
firms
Setting up of state owned laboratories, nationwide, to assist small medium businesses in
adopting NC technology.

4.1.2 South Korea

i.
ii.
iii.
iv.
v.

vi.

The government sponsored the establishment of the Korea Institute for Science &
Technology (KIST) KIST was instrumental in developing the first CNC machine in Korea
with Hwacheon in 1977.
Direct investment policy was made attractive to foreign semiconductor companies such as
Fairchild, Motorola and Toshiba.
The government provided financial incentives to the chaebols (large business
conglomerates) to enter the CNC machine tool industry. Daewoo, for example, was
provided with government guaranteed loans to absorb the investment risks.
On the demand side, the government established a buyers credit system made up of the
Procurement Fund for Locally-Produced Machinery for domestic users and Long-term
Export Credit Financing for foreign buyers.
The government established Korea Institute of Machinery & Material and Changwon
National University in the regional base of Changwon Machinery Industrial District. The
two institutions developed CNC technologies since their establishment. Most CNC
machine tool builders and user firms were based in the region.
The Korean government also provided financial support to Korea Industrial Electronics, a
joint venture of Korean firms for developing CNC control technology. The company had
a foreign partner, Allen Bradley, with relevant technology expertise.

14

Table 4: Government support for machine tool industry in South Korea [26]

Source: The evolution of a technological system: the case of CNC machine tools in Korea, Journal of Evolutionary
Economics, 2003

4.1.3 China

The Chinese government has established a Cabinet level program to nurture its machinery
manufacturers to become globally competitive by 2010. Precision machine tools are
specifically targeted as an industry to be built up. The National Development and Reform
Commission stated in June 2006, that our countrys machining industry is weak in innovation
and heavily reliant on foreign involvement, the industrys structure is irrational and it is not
internationally competitive. To build up the machining industry, the Chinese government
will encourage the purchase and use of China-made equipment in key projects.

15

Several incentives have been created for Chinese industry to buy from domestic producers i)
ii)

iii)

Chinas notification to the World Trade Organizatin (WTO) shows that if Chinese
producers buy die products produced by one of 160 specified Chinese die manufacturers,
they would be eligible to get 70 % value-added tax (VAT) refund.
Chinas notification to the WTO stated that if Chinese purchasers bought casting or
forging products from one of 284 specialized Chinese casting and forging companies
rather than purchasing foreign imports, they could get a refund equal to 35 % of the VAT
paid on those products.
70 Chinese machine tool companies making computer numerically controlled (CNC)
machine tools and related products can have 50% of the VAT rebated to them. As the
VAT rate is 17%, it gives them a significant competitive advantage over import
competition.

The following are key objectives laid down in Chinas technology policy (11th Plan 20062010) for the machine tool industry [27]:
i.
ii.
iii.
iv.

Reduce dependence on imports

Develop all important mechanical components
Develop its own CNC, motors and drives
Develop CNC turning, machining, milling and boring machines; high precision, 4+ axes
machines, high precision grinders, EDM and wire EDM, metal forming and special
machines

v.

Eventually, export these machines

4.1.4 European Union (EU)

The EUs NEXT programme has the identified five major objectives
a) Performance - 5x improvement in machine productivity, as well as an order of magnitude
improvement in machine accuracy, compared to current available machines
b) User centricity - get machines that help the operator in all his tasks by providing a
complete set of features (added applications, ergonomic aspects, improved maintenance
aspects) to automatically recognize machining tasks, process conditions etc
c) Environment friendliness - aim is to develop machines that consider environmental
aspects through their entire life-cycle: use of recycled materials for machine elements,
reduction of energy consumption, zero waste production, dismantling and recycling of
machines.
d) Training - academic and professional training, by the generation of new contents arising
from the research and establishing the means to reach the target audience - machine using
and building SMEs all over Europe
e) New business concepts Promoting new business models to achieve full life cycle service
orientation
The NEXT project brings together institutions from several scientific disciplines - Mechanical
Engineering / Mechatronics / Material Science / Microsystems & Adaptronics / Automation &
Control / Manufacturing Processes / Industrial Design / Ergonomics & Eco-Design /
Marketing.
The approach has been to employ multi-disciplinary teams that span the complete value chain
of the production machinery industry to provide a strategic direction to the industry at large.
As can be seen from the illustration below, the goals of the project have been clearly defined
in terms of the technical capabilities that next generation machine tools will be required to
possess.

16

Figure 7: European Unions NEXT initiative

The program has a budget of 24 million EUR with EU and various national funds contributing
70% of the corpus.
4.1.5 Taiwan

i.

ii.

iii.

Establishment of Industrial Technology Research Institute to accelerate industrial

technology development. ITRI helped advance Taiwan's machine tool industry to the level
of process-intensive precision production, assisting local manufactures outgrowing the
conventional tool production. More than 50 new machine tool models have been
developed.
Taiwans Ministry of Economic Affairs is promoting the Taichung Precision Machinery
Technology and Innovation Pak to assisting product development by providing machine
tool makers with technological support from various research institutes and industry
development centres.
National support programme for developing linear motors and advanced spindles.

4.2 Promotion of trans-nationalization

The primary objective of government support in all these countries was to create an advanced
indigenous machine tool technology capability. Trans-nationalization itself is not an explicitly
stated goal in the policy statements. But it can be convincingly argued that the support
provided by the government greatly improved the technological capability and
competitiveness of the respective machine tool industries which later contributed to the
success of their export strategy.

17

4.3 Results of policy interventions

It is widely accepted that government policies played a key role in crafting Japans dominance
in machine tools. The Japanese share of the world market (excluding Japan, i.e., exports only)
for CNC lathes grew, in terms of units, from 12.6 percent in 1975 to nearly 50 percent in
1984. During the same period, Japans market share in total machine tool production
increased from 9% to about 22%, making Japan the global leader overtaking the United States
and erstwhile West Germany
South Korea was a late comer to the machine tool industry but has rapidly caught up with
leaders such as Japan and Germany. The first CNC machine was produced in the country in
1977, 25 and 19 years respectively after similar developments in the United States and Japan.
By the late 1990s, the South Korean industry could produce all kinds of CNC machine tools
such as CNC lathes, machining centres, CNC milling machines, etc. Technological
competences also increased. The number of CNC machine tool-related patents applied to
Korean Intellectual Property Office by domestic applicants increased from 10 (36% of the
total) in 1986 to 56 (86%) in 1995.
Government policy interventions were both extensive and evolutionary. In the early stages
(pre 1987), machine tool industry policy in South Korea sought to provide direct support to
individual firms, especially the chaebols. In the adolescent stage, government support has
been more indirect in nature. It consisted of measures such as providing a vision for the
future and acting as a bridging institution by creating linkages between industry, academic
and research institutions.

18

5 STUDY FINDINGS
5.1 Indian machine tool industry current status
Industry is fragmented
The Indian machine tool industry comprises about 450 units spread all over the country. Of
these, only about 150 can be considered as organized sector units with annual turnover of
more than Rs.2 crore. Moreover, the number of units assembling complete machine tools is
much lower.
The ten largest firms, comprising industrial groups such as HMT Machine Tools, Ace
Designers, Jyoti CNC, Bharat Fritz Werner (BFW), Ace Manufacturing Systems, Lakshmi
Machine Tools (Machine Tool Division), TAL Manufacturing Solutions, Perfect Machine
Tools, Lokesh Machines and PARI account for more than 50% of Indias assembled machine
tool production.
There are about 25 units such as Pragati Automation (Bangalore), Electropneumatics (Pune),
Janatics Pneumatic (Coimbatore) and ISGEC (Noida) that have sales in the range of Rs. 40 100 crores. The product range of these companies are very wide. ISGEC manufactures
hydraulic and mechanial presses. Janatics manufactures valves, cylinders, silencers etc.
Electropneumatics specializes in the manufacture of hyrdaulic and pneumatic presses and
some special purpose machines. Pragati manufactures machine tool components like turrets,
tool changers.
In the Rs. 5 crore to Rs. 50 crore turnover range, there are about 60 units spread all over the
country. They mainly assemble for larger brands mentioned above or manufacture
accessories.
Source: IMTMA

Machine tool exports from India is insignificant valued at just over Rs 60 crore in 200607, as can be seen in Table 5. It should be noted that this represents export numbers
reported by IMTMA members only.

Table 5: India machine tool exports and imports

Type
Metal cutting
Domestic
Imports - new
Imports - used
Exports
Exports
(% of domestic production)
Metal forming
Domestic
Imports - new
Imports - used
Exports
Exports
(% of domestic production)

Quantity - nos

Value (Rs cr).

Growth

2005-06

2006-07

2005-06

2006-07

2006-07
nos

2006-07
value.

6640
7477
8828
208

7300
11328
10498
284

1173
1891
387
40

1535
2892
557
63

10%
52%
19%
37%

31
53%
44%
56%

3%

3.8%

3.4%

4.1%

924
1537
992
14

1853
NA
NA
15

248
NA
NA
2.4

468
NA
NA
2.9

83%
NA
NA
7%

89%
NA
NA
9.6%

1.5%

0.9%

1.0%

0.6%

Source: As reported by IMTMA members

19

Note: Data reported for metal cutting machines (codes 8456-8461 under the Harmonized Tariff System)
and for metal forming machines (8462-8463) are for complete machines only, not including parts or
rebuilt machines.

Industry has experienced strong growth in recent years but is rapidly losing market share
to imports
Riding on a buoyant domestic economy, the Indian machine tool industry has grown at over
35% p.a. during the last five years. But its inability to meet domestic demand because of
capacity limitations and technology limitations, has led to a surge in imported machine tools.
Anecdotal evidence suggests that even second hand machine tools are being imported from
countries such as Germany. Imports now account for 70% of domestic machine tool
consumption, up from 42% in 2002.

Figure 8: Market share of imported machine tools

Imports
(% of domestic consumption)
80%
70%
60%
50%
40%
30%

68%

69%

2005

2006

56%
50%
42%

20%
10%
0%
2002

2003

2004

Besides, import content of domestically manufactured machine tools is high, especially

for CNC machines
The industry is dependent on imports for critical items such as

Linear guides and ball screws

Precision bearings
Servo motors, drives and CNC systems
Spindles

However, export of machine tool accessories is significant over Rs 600 cr in 2006-07

Data provided by the Director General of Commercial Intelligence & Statistics indicates that
exports of accessories are about 55% higher than the total exports of assembled machine tools
both cutting and forming machines.

20

Table 6: Machine tool accessory exports

Harmonized Tariff no./ITEM

2005-06
Rs cr.
21

2006-07
Rs cr.
14

15

UAE, USA, Italy, Nigeria

63

93

8459- unit head machines-drilling,

tapping, milling, treading etc

39

67

8460-deburring, sharpening etc

21

25

8461- shaping, slotting, grinding

etc.
8462 Metal forming- presses,
forge and hammers
8463- other machine tools

32

30

USA, South Africa,

Nigeria, Thailand,
Singapore
UAE, USA, South
Africa, Singapore
,Nigeria, Indonesia
USA, Singapore, Sri
Lanka,
USA, Kuwait, USA

111

115

28

28

324

387

556

607

880

994

8456- special m/c tools- removal

my laser, photon beam etc
8457- machining centres, unit
construction machines
8458-lathes, turning centres

Total: Assembled machine tools

(cutting and forming)
8466 parts & accessories for all
above machines
TOTAL : assembled machine
tools and accessories

Export destination
Germany, USA, Mexico

UAE, China, South

Korea, Germany, USA
USA, UAE, Australia,
Belgium
UAE, USA, Mexico

Source: Director General of Commercial Intelligence and Statistics (DGCIS)

Note: Export figures provided by DGCIS will not match those reported by IMTMA because of issues
related to product classification and partial reporting by IMTMA members.
Many units covered in the survey derive a large proportion of their sales from exports of accessories to
developed markets.

Table 7: Leading machine tool / accessory exporters

Company

Products

Pragati
Automation,
Bangalore

Tool turrets,
automatic tool
changers

32

45.7%

ETA Technology,
Bangalore

Friction welding,
valve straightening

12

29.27%

UCAM,
Bangalore

Rotary index
tables, pallet
changer
Turning centres,
vertical machining
centres

12%

30

10.7%

CNC tool holders

12

50%

Gear boxes, gears

30

12

Jyoti CNC
Automation,
Rajkot
Lakshmi
Automatic Loom
Works,
Coimbatore
Shanthi Gears,
Coimbatore

Exports
Rs. cr

Exports
(% sales)

FY 2006-07

FY 2006-07

Strategy & Countries

Exhibitions, country office,
distributors:
Germany, Brazil, Italy,
Spain
Unique product,
collaboration:
Europe, China
Exhibitions, direct selling:
UK, Italy, China, Iran,
Taiwan
Distributors, acquisition of
French company:
Europe, Canada
Collaboration & buy back
arrangement with Eppinger
Tooling Asia Private
Limited, Germany
Agents, R&D for product
development, exhibitions:
Germany, China

21

Technology gap vis--vis leading global competitors persists

Indian machine tools lag behind in the following features

High speed, high productivity machining

Multi-axes, multi function capabilities
Higher accuracy, form and surface finish
Ability to machine hard components
Sustained accuracy, high reliability
Active vibration control
Automation

The following table illustrates the technology gap that Indian manufacturers have to bridge. It
is clear that key sub-systems are not manufactured in India and that India lags considerably
behind even China is this respect.

Table 8 : Technology benchmarking

Parameter
Spindle speeds

Tool changers

Precision ball
screws

State of technology
Highest speeds upto
75,000 rpm
now a part of all CNC
machines,
including
lathes
and
milling
machines
Robotic arm tool change
time of < 1.5 seconds
Change time quoted in
machine specifications
Precision: 0.002 / 300mm
Speed: 80-160 m/min

China
Less than 15,000 rpm

India
Spindle motors
imported
Tool change
time : 1-2
seconds

Tool change time : 3-4

seconds

Precision: 0.004 /
300mm
Speed: 45 m/min

Indian and
Imported

Way covers
Numerical
Control
systems
Linear
guideways

Speed: 30-40 m/min

Mean Time Between
Failure : 30,000 hours

15 m / min
Mean Time Between
Failure : 10,000 hours

30 m/min
Imported

Precision: 0.003/1,000mm
Speed: 200 m/min

Imported

Lathes

Precision: 0.005
/1,000mm
Speed: 100 m/min
Manufactured in China

Imported

N.A

Cast iron / steel

frames

Manufactured in China

Manufactured
in India

N.A

Imported

Machine
frames

Grinding

Axis drive
systems

with live milling spindles,

the lathe is evolving into a
multifunction machining
centre
full tool changers and
auto parts loaders
fabricated thin metal
hollow filled with poly
cement to provide mass
and compressive structure
with the added advantage
of dampening vibration
7-axis
CNC
cutter
grinders are now standard
CNC OD grinders can
now cut flat-sided OD and
unique shapes
for high speed machines
ball screws have a cooling
passage

Source: Canadian Tooling & Machining Association, China Machine Tool Builders Association

22

5.2 Other findings

The following is a summary of other key survey responses and opinions expressed by industry
experts interviewed for the study The Indian machine tool industry and automobile industry are not moving in step with
each other. Unlike the experience of Japan, South Korea or Germany, the Indian machine
tool industry has not capitalized on tremendous growth of the automobile and autocomponent industry. The Indian automobile industry prefers to import high precision
machine tools at significantly higher costs as Indian machine tools are perceived to be less
reliable and accurate.
India is falling behind other major world competitors such as Korea, Taiwan, Japan and
China in machine tool technology. Indian manufacturers are being propelled by a cyclical
upturn in the economy but structural weaknesses in the industry are significant.
With the exception of a few firms, the Indian machine tool industry has not pursued transnationalization. However, firms that have actively targeted export markets have achieved
encouraging results.
Broadly three strategies adopted by machine tools exporters are discernible
i)

Export of standard products where absence of branding is not a constraint adopted

by HMT, BFW, Ace Designers and others
These are value for money products that include CNC machines, drilling / milling
machines, low cost presses etc. The primary export markets for these products are
emerging markets in Asia as well as developed countries.

ii)

Riding on the brand image of the importer - adopted by LMW and Jyoti CNC.
The focus here is on exporting machine tools to advanced markets such as
Switzerland, Germany, USA and Italy. This strategy is adopted by the larger
companies in India who have developed long term relationships with the principal
overseas manufacturers. The relationship is usually collaboration or a contract
manufacturing arrangement. An example of this is the strategy that has been adopted
by LMW, BFW which export machines to be sold under the importers brand name.
A related development is the establishment of wholly owned subsidiaries in India by
foreign machine tool manufacturers. TUSSOR, a Spanish company has a
manufacturing facility in Coimbatore for manufacturing machines for export under
their brand name. Some of the components/sub assemblies are supplied by local
vendors.

iii)

Export of complete projects, which include machine tools built by a third party
adopted by MICO Bosch (for their captive consumption in BOSCH plants worldwide)
These are turnkey projects involving engineering design, erection and commissioning.
Engineering and design often accounts for 40%-50% of the total project cost.
Machine tools are exported as a part of the total project solution and can be sourced
from many suppliers.

23

Barriers to exports and other trans-nationalization measures by SMEs from India are (in
order of importance)
o
o
o
o
o
o
o

Capacity constraints
High marketing costs
Extreme competition on price from Korean, Chinese and Taiwanese
manufacturers
Inability to attain quality and accuracy levels required by foreign buyers
Many customers increasingly want suppliers to offer total solutions rather than
individual machine tools
Human resource talent shortage
Non tariff barriers in export markets such as China

Investment in R&D is negligible. What is often claimed as product development is usually

a case of reverse engineering of machines manufactured abroad. There is no significant
investment in basic/applied R&D in machine tools. Even the Central Manufacturing
Technology Institute, Bangalore is engaged in testing and building advanced machines
and tools for defence, space and atomic energy rather than in machine tool R&D.
The most advanced machine tools are manufactured and imported into India by world
leaders like DMG (Germany), Mazak, Makino (Japan).
Exports of engineering design and process services for manufacturing industry are
growing, especially from cities such as Bangalore and Pune. But these are mainly for auto
and aerospace companies abroad, not for machine tools.
Participation of Indian companies in international machine tool exhibitions is poor. For
example, at the EMO Hanover (the industrys most prestigious trade show) in 2007, there
were only 29 companies from India of which only seven were machine tool companies,
rest being either tooling companies or component/accessory manufacturers. Estimates of
the number of participants from the industry in China and Taiwan are much higher 70 to
100.

24

6 TRANS-NATIONALIZATION OF INDIAN MACHINE TOOL

INDUSTRY
6.1 Current status
Stage 1: Exports
To better understand the approach of Indian SMEs to exports, survey respondents can be
segmented into four categories as shown in the framework below

Table 9: Export orientation of Indian SMEs

Segment
Domestic
marketing

Pre - export

Active
involvement

Committed
involvement

Description

Firms

The firm is only

interested in the
domestic market and
does not export at all.
The firm is not
interested or willing
to experiment with
exporting. The
export/sales ratio is
nil
The firm searches for
information and
evaluates the
feasibility of
exporting activities.
The export/sales ratio
is at or near 0.
There is a systematic
effort to increase
sales through export
to multiple countries,
A suitable
organizational
structure is in place
to support these
activities. The
export/sales ratio
usually varies from
10-39 percent.
The firm depends
heavily on foreign
markets. Firm is
continuously faced
with choices for the
allocation of limited
resources to either
domestic or foreign
markets. The
export/sales ratio is
40 percent or more.

About 63% of the firms surveyed are

entirely focused on the Indian market
and have no plans to export.

Markets

----

Bombay Machines, Acumac

Machine Tools etc., mostly small
firms

Marketing
strategy

----

Agents,
Participation in
exhibitions
----

Component vendors
UCAM, Shanti Gears, VJ Industries,
Bipico Industries, Fenwick & Ravi, ,
Janatics Pneumatics, Kladon Design
Machine Tool Builders
Maxpreci, India Precision Engineers,
CNC India Tools, Shoma
Enterprises, Mecprosys Machine
Tools, Macpower CNC Machines,
Shailesh Machines, Forbes Gokak,
Lokesh Machines, HMT, Ace, BFW
Pragati Automation, ETA
Technology, Lakshmi Automatic
Loom Works

China,
Taiwan, Iran,
US, Russia,
Europe

Agents,
Participations in
exhibitions, direct
sales

Asia, Europe,
Africa
Italy, UK,
Spain,
Germany,
Brazil, China

Overseas offices,
exhibitions, buyback arrangements

Framework : From Gankema,Harold , Snuif,Henoch , Zwart,Peter , The Internationalization Process of Small and
Medium-sized Enterprises: An Evaluation of Stage Theory, Journal of Small Business Management, October 2000.

Analysis of the export orientation of Indian firms reveals that firms have adopted a range of
different export marketing strategies simultaneously direct sales, appointing agents,
participating in exhibitions and buy back arrangements.

25

Firms with buy-back arrangements with foreign companies have been able to sustain high
level of exports consistently. Significantly, these exports are often to developed markets.
Indotech and ITL in Indore export bandsaw machines to Germany. Bharat Fritz Werner
produces sophisticated 5 axes machining centres for Starrag Heckert of Switzerland.
Stage 2: Alliances
Indian firms have not used franchising or technology licensing in overseas markets. However
they have entered into technical collaborations to upgrade their technology. Examples of such
firms are Micromatic Grinding which has a collaboration with Toyoda of Japan and Lokesh
Machines with Grob of Germany.
Stage 3: Foreign Direct Investment
There are a few instances of Indian firms setting up manufacturing facilities or acquiring
companies abroad and even these are recent in origin.

Table 10: FDI by Indian machine tool firms

Firm
Jyoti CNC
Automation
Batliboi

Electronica
Machine Tools
ACE Group

Nature of investment
Acquired French high precision CNC
machine manufacturer - Huron
Graffestaden.
Acquisition of Quickmill Inc, Canadian
company manufacturing large area
CNC Gantry and Bridge Milling and
Drilling Machines.
i) Marketing office in Switzerland
ii) Assembly plant in China
Established local office in China

Rationale
Access to customers in the
Aerospace and Automobile industries
in developed markets of Europe
Access to wider markets in several
industries and developed countries.
Access to European market
Lower operational costs in China
Sales and support centre

6.2 Experience of companies through Joint export marketing:

Towards early part of 2000s several Indian machine tool companies joined together to
export machines to Germany and European markets through a distributor based in
Germany. The idea was to share the cost of establishing a showroom in Germany
which is very high. Marketing was arranged through a distributor who also set up the
showroom at his cost and recovered the proportional cost on the sale price of the
machines. The product range consisted of general purpose and CNC machines. The
plan however was not entirely successful due to the high cost of the establishment and
the cost of holding machines in Germany while generating orders. These added
substantially to the end price of the machines, which already was required to be
around 20% cheaper than equivalent Korean brands. Thus the prices became non
competitive, and the experiment had to be closed within a short period.
The learning from this experience is manifold:
Unless the costs of local market presence is managed at low levels the export
of machines to highly developed markets such as US and Europe is very
difficult.
Customers expect low price, immediate delivery, high quality and prompt after
sale service.
There is no alternative to having showrooms, machines in stock and a presence
of marketing/sales/application engineers to get orders.
Extensive travel is also a necessity to meet customers in different regions.
26

 The need for a local distributor with good market reach and customer
knowledge cannot be over emphasised.
The marketing commission alone is around 20-30 percent.
Even in the era of internet, sales cannot be done over the net, it requires
physical presence in the target market to instill customer confidence in Indian
manufacturers.
Competition from Korea, Spain, Brazil and Taiwan is intense.
It is necessary to build an Indian brand for machine tools through concerted effort
over a period of time, as the Korean, Taiwanese, Spanish and Brazilian companies
have done, with active support from their government.
6.3 Trans-nationalization opportunity and necessity
Indian machine tool manufacturers possess the following strengths
i.
ii.
iii.

Ability to produce standard machine tools with quality levels at par with competitors such
as Korea and Taiwan. Most Indian firms now possess ISO quality certification.
Competent design skills, though there are concerns that this strength is being eroded due
to attrrition of talent.
Capable of building tooled up and special purpose machines engineered to meet customer
needs. In this segment of the market, Indian manufacturers are very price competitive
against similar machines from Europe. Korean, Taiwanese and Chinese manufacturers do
not have any large presence in this segment.

Considering that world trade in machine tools is about $ 65 billion annually, Indias presence
in the global market is insignificant less than 1%. It follows that, given the strengths of the
industry and the size of the global market, Indian firms have significant export and transnationalization potential.
The table below provides information on important markets that Indian companies should
target.

Table 11: Export market analysis

Market
ASEAN mainly
Thailand &
Indonesia

Attractiveness
Large auto component
industry in the region
emerging

SAARC

Small market but mostly

ignored by competitors
Oil, petrochemical and
steel industries

Middle East
mainly UAE and
Saudi Arabia
Europe mainly
Germany, France,
Italy & UK
Africa mainly
South Africa,
Kenya, Nigeria,
Egypt, Algeria

Target products
Standard CNC
machines and some
Special Purpose
Machines
General Purpose
Machines
Heavy duty machines

Competition
Korea, Taiwan and
China ; Japan and Europe
in certain types

Germany, Italy and Spain

Large manufacturing
sector

Standard CNC
machines

Korea, Taiwan, Spain

apart from local cos.

Nascent engineering
industries ;
petrochemical, auto
industries

Both CNC and

conventional machines

Korea and Taiwan in

CNC machines ; Taiwan,
China in conventional
machines

Not significant

Indian firms have largely focussed on meeting only domestic demand. However, this makes
them financially vulnerable during an economic downturn as was experienced during the

27

recession period of 1998-2002. The industry is conservative in expanding capacity because of

large demand fluctuations and consequently suffers from serious capacity constraints when
economic growth revives. This has allowed foreign manufacturers to enter the Indian market
thereby structurally weakening the domestic industry. It is therefore imperative for Indian
firms to puruse foreign markets to reduce their vulnerability to fluctuations in domestic
demand.

Trans-nationalization of Indian machine tool companies, especially SMEs, is nascent

- predominantly exports. As pointed out earlier, even globally, exports are the most
important type of trans-nationalization in this industry. Only very large firms in the
industry make direct investments in foreign markets. Therefore a focus on exports
alone in the near term (3-5 years) can yield substantial benefits for Indian SMEs.
6.4 Success stories: case studies

i) Jyoti CNC Automation

Jyoti CNC was established in 1988 by P G Jadeja and S L Jadeja in Rajkot. The
company initially manufactured gear boxes for small lathes. In 1994, Jyoti made a
foray into manufacturing special purpose machines for the textile machinery
components industry.
By 1997, Jyoti had developed the capability to design and manufacture CNC
machining centres. In 2001, Jyoti developed a vertical milling centre with linear
motors and in 2004 it designed and manufactured a CNC laser cutting machine for
diamond industry.
In FY 2006-07, the company achieved exports of Rs 30 cr on a turnover of Rs 280 cr.
Jyoti has actively participated in international machine tool exhibitions such as EMO
since 2003. Jyoti obtained the ISO 9001:1994 quality certification in 2000.
Key milestones in the companys trans-nationalization strategy have been

2006 Export House Certification

2006 Alliance with Huron Graffenstaden, France for contract manufacture of CNC
machines
2007 Acquisition of Huron Graffenstaden

The acquisition of Huron Graffenstaden in 2007 has provided the company immediate
access to customers in European markets such as France, UK, Portugal, Germany,
Netherlands, Hungary, Poland, Spain, Austria and Switzerland besides Canada. Jyoti
is represented by agents in Italy, Czech Republic & Slovakia, US and Iran.
Jyoti CNC is perhaps the best example of an Indian machine tool company strongly
pursuing trans-nationalization. The company has rapidly progressed from being a
machine tool component manufacturer to a conventional machine tool builder to
developing expertise in CNC machine design and development. The acquisition of
Huron Graffenstaden is a bold move to establish a strong market presence in the
developed markets. It has also added Hurons specialized 3 and 5 axes high speed
machining centres to Jyotis product portfolio.
The ability to design and manufacture increasingly complex machine tools coupled
with a keen focus on exporting to developed markets has been key to Jyotis success
in trans-nationalization.

28

Product range - sample

Vertical Machining Centre with linear motors

Horizontal Machining Centre

ii) Pragati Automation

Pragati Automation, an Ace Micromatic Group company, was established in
Bangalore in 1977. Pragati manufactures machine tool accessories such as tool turrets
for CNC lathes, auto tool changers for machining centres, power chucking cylinders,
copy turning attachments etc. The company achieved a turnover of Rs 70 cr in FY 07
with exports of Rs.32 cr.
Key features of Pragatis trans-nationalization strategy are

supply to all large machine tool manufacturers in India and then expand in
overseas markets Italy, Germany, Spain, USA & Brazil are some of the
important export markets.
maintain prices at same level anywhere in the world and compete all over the
world for supplies to OEMs,
maintain sales offices in key locations (USA,Italy) and use distributors in other
markets
participate in exhibitions all over the world from China, Taiwan, Europe to
USA and South Africa
offer complete range of products to OEMs so that they need not go to other
suppliers
plan new country entry strategies with great detail and perseverance Pragati
has taken more than 2 years to enter China to break through import restrictions
& barriers,

Pragati is an excellent example of a company that has placed product development and
quality above everything else. It has succeeded in developing world class products and
then focussed on highly efficient production to attain international price
competitiveness.

29

Product range sample

Automatic tool changers

Servo turrets

Index tables

iii) ETA Technology

Established in 1991 in Bangalore. ETA has been very successful in the export of its
products. However, the model followed by this company is different from that
followed by Jyoti CNC and Pragati Automation. ETA Technologies has selected
highly specialized, niche area for its operations: it started with friction welding
machines, and

30

subsequently took up specialized products in hot upsetting, assembly/testing

machines, servo controlled presses and special automobile components.
The machines require special engineering inputs, and are custom built to user
specifications. By focussing on specializations of this nature ths company is relatively
free from competition from the South-Asian countries, and has established a
reputation in the advanced markets of the world, besides the Indian market. Its export
accounts for 50% of the companys turnover. The experience of ETA Technologies
clearly brings out the avenues open for companies to transnationalize in niche, high
technology product areas with less competitive threats from other countries.
Important export markets for ETA are Spain, Germany, Turkey and USA.
Product range sample
Friction welding machine

Electrical upsetter

iv) Ace Micromatic Group

Besides Pragati Automation, the Ace Micromatic Group consists of

Ace Designers - manufacturer of CNC lathes and turning solutions

Ace Manufacturing Systems manufacturer of vertical machining centres
Micromatic Grinding Technologies manufacturer of cylidrical grinders

Ace Designers was promoted by Mr Srinivas Shirgurkar, Mr A.V. Sathe, and Mr B.

Machado in Bangalore in 1979 as a machine tool design company. Aces foray into
manufacturing took off with special purpose machines for the engine valve industry,
followed by semi automatic multi-slide lathes for the auto industry. In 1986 Ace
launched its first CNC chucker LC-16 which was adjudged as the best designed
machine at IMTEX 86, the premier machine tool exhibition. In 1996, the company
became the largest CNC lathe manufacturer in the country.
31

Having begun as a machine tool design unit, the emphasis on R&D has always been
very strong at Ace. It has been the backbone of the company's strong presence in the
machine tool industry and has also been responsible for the string of successful
machines and the constant endeavour to make these machines affordable.
Ace began its export foray in the eighties with exports of Auto Lathes with automatic
load/unload systems for the bearing Industry. A large number of these machines are in
use and regularly exported to Brazil, Egypt, Germany, Spain, UK & USA. Ace has
about two hundred CNC Lathes at customer sites in Italy Australia, France, and USA.
Important steps taken by Ace to trans-nationalize have been

setting up a wholly owned subsidiary Ace International Inc. in Michigan USA to

establish a foot hold in the competitive US markets in 1992.
establishing distributor network in Italy, France, and Australia.
efforts are on way to set up a distributor network in Germany, Benelux, UK &
Spain

Ace Manufacturing Systems (AMS) was setup in 1994 to develop CNC machining
centres. The company obtained its first export order from Italy in 2000 for supplying
vertical machining centres. In 2002, AMS started working with M/s. Howa Machinery
& SCMS of Japan to export horizontal machining centres. In 2004, the company
exported 24 horizontal machining centres to Japan.
The Ace Micromatic group achieved a turnover of Rs 560 cr in FY 07.
The strategy of the Ace Micromtic group has been to manufacture standard CNC
machines in volume to high quality and export them to the advanced as well as
developing markets. The products face severe competition from Korea, Taiwan, Spain
brands. The foray into the USA market was not profitable due to the high costs of
market presence in the USA. So the company withdrew from the US market and is
now focussing on the South Asian, Middle-East, Turkey and similar emerging
markets.

Product range sample

Machining centre

Turning Centre

Auto Lathe CNC

32

v) Shanthi Gears
Shanthi Gears manufactures speciality gears that range in weight from a few grams to
more than 20 tonnes. The gears are used in products ranging from looms to powergenerating turbines and aircraft.
The company was started in 1969 by P Subramaniam in Coimbatore and initially
produced gears for the textile machinery industry. In the late seventies the company
began to manufacture worm gear boxes. By the mid eighties Shanti gears had begun to
produce helical gears, bevel helical gears and geared motors.
To gain better control over production, in 1986 the company built its own foundry.
This integration helped the company improve the quality and delivery times of its
products. The foundry caters to the needs of grey iron and spheroidal graphite
castings, as well as non-ferrous ones such as phosphor bronze, aluminium etc. As a
part of backward integration, a forging plant was commissioned simultaneously.
Shanthi Gears also makes its own hobbing and milling cutters, cutting down the
delivery time of special orders, which have become a hallmark of the company. With
its in-house design, manufacturing and quality-control facilities, the company is able
to fill orders for practically any custom-made gears. Today, nearly 50 percent of the
companys business involves special orders. Shanthi Gears has a team of over 80
engineers providing engineering design solutions as an outsourced service.
The company commenced exports in the mid nineties and now has a liaison office
near Duesseldorf, Germany to provide sales and service support to the European
market. In 2006-07, the company had exports of Rs 30 cr. Shanthi Gears has an ISO
9001:2000 certification.
Shanthi Gears exemplifies how Indian companies can use excellence in product
development and manufacturing technology to break into developed export markets.
The company has always stressed high product quality as its strength in export
markets.

Product range- sample

Worm gear box

33

Helical and bevel helical gear box

Geared motor

vi) Lakshmi Automatic Loom Works

Lakshmi Automatic Loom Works Ltd., is a leading weaving and circular knitting
machine manufacturer based in Coimbatore. The company is part of the well known
Lakshmi Mills group.
The company has two divisions, namely - the weaving machinery and knitting
machinery.
The knitting machinery division has a 100% export oriented unit manufacturing
accessories such as tool holders for CNC machines. Lakshmi Automatic has entered
into a buy back arrangement with Eppinger Tooling Asia Private Limited, Germany
for exporting tool holders. Exports in 2006-07 were Rs 12 cr.

34

7 RECOMMENDATIONS
7.1 Context
Policy measures designed to improve performance of firms in the machine tool industry
should be formulated within the context of national goals and the broad objectives of
industrial policy.

Figure 9: Policy goals firm performance linkage

The National Manufacturing Competitiveness Council (NMCC), an autonomous body

constituted by the Government of India in 2004 serves as the policy forum for the
manufacturing sector. The NMCC has articulated the need to achieve a growth rate of 14%
p.a. in the manufacturing sector in the coming decade and increase its share of national GDP
to 30% from the current level of 17%. To achieve this goal, NMCC has identified the
following policy objectives for the manufacturing sector a)
b)
c)
d)
e)
f)
g)
h)

Enhance Government focus on manufacturing competitiveness

Creating conditions for investment in and growth of the manufacturing sector
Lowering the cost of manufacturing
Investing in innovation
Strengthening education and training at all levels
Adoption of global best practices in manufacturing
Right market framework, competition and regulation
Infrastructure development

The recommendations proposed in this study are within this context of national goals outlined
by the NMCC.

35

7.2 Machine tools - a strategic industry

The following features and developments in the machine tool industry need to be underscored
i.

A vibrant and technologically advanced domestic machine tool industry is critical for the
growth and development of Indias manufacturing sector. The industry has an enormous
multiplier effect on manufacturing output (typically 1:100) and hence employment
generation. Economic studies suggest that a one rupee value of machine tool production
creates a ten rupee output for the broader capital goods industry and a hundred rupee
output in downstream consumer goods.

ii.

A technologically advanced machine tool industry is vital to meet the requirements of

programmes in Indias strategic sectors Space, Defence and Nuclear Energy.

iii.

Advanced manufacturing countries have always supported the machine tool industry as a
strategic industry. Most recently, China and Taiwan have revealed ambitious plans to
secure global domination of the industry.

iv.

Indian machine tool industry has inherent strengths but it is not keeping pace with highly
dynamic competitors such as Korea, Taiwan and China in technological capabilities.

v.

Current and future path of technology of key machine tool sub-systems is controlled by a
few large global firms that are unlikely to make state-of-art technology available to Indian
firms. India must ensure technological self-reliance in the machine tool industry.
We, therefore, recommend that the machine tool industry be declared a strategic
industry. A national programme for developing indigenous technology must be instituted.
The objective of this programme should be the development and commercialization of key
machine tool components and subsystems - spindles, CNC controls, servo motors, precision
bearings and guideways for the benefit of Indian manufacturers.
7.3 Other recommendations
The study findings strongly suggest that a wide range of initiatives spanning technology
development, marketing, human resources and industry co-ordination are needed to strengthen
the competitive position of Indian SMEs and promote their trans-nationalization. As these
initiatives are beyond the capability of individual firms and the industry collectively to
implement, a set of policy recommendations are being made to the Government of India.
It is envisaged that while these measures will aid all firms in the industry, those which already
have an international orientation (active and committed exporters, and firms which have made
manufacturing / marketing investments abroad) are likely to be the biggest beneficiaries.
Specific policy measures that are recommended are given in Table 12 below:

36

Table 12: Policy recommendations

Policy Area
Technology

Taxation

Rationale

Implementing Agency

Central Manufacturing
Technology Institute
(CMTI), Bangalore
should have a dedicated
centre of excellence for
machine tool technology
with links to academic /
R&D institutions in India
and abroad. An Advanced
Machine Tool Testing
Facility should be set up
at CMTI on priority to
help SMEs and larger
companies to test,
upgrade and develop
machines, accessories,
sub-systems and parts to
international standards.

Recommendation

CMTI is an R&D
organization with facilities
located in Bangalore which
has the largest number of
SME units. It is rendering
limited assistance to the
industry in the area of
design, & development of
machine tools, control
systems and can develop this
expertise provided modern
facilities are set up.

Ministry of S&T/Heavy
Industry

b)

Support and drive a

National Program for
the Development of
Machine Tool
Electronics and
Precision Elements:
This is a very important
technology issue for
SMEs and large units, all
of which are solely
dependent on imports for
the critical components of
modern machine tools.

Required for technology

security and for cost
reduction. The R&D
program (estimated to cost
around Rs.300 cr) can spawn
an entirely new set of hightech SMEs in the machine
tool and industrial machinery
sector with high prospects
for domestic and export
markets.

Ministry of S&T/Heavy
Industry

a)

Weighted deduction for

expenditure incurred on
technology
development/R&D
should be allowed

This is already being allowed

for 7 other industries and
machine tools should be
included as well.

Ministry of Finance

b)

No service tax should be

levied on services utilized
for machine tool exports

ST on certain inputs like

inland transport,
clearing/customs house
charges etc. may be
exempted for exports

Ministry of Finance

c)

Fringe Benefit Tax

treatment should be at par
with the IT industry

a)

CMTI can also play a key

role in tracking technology
developments globally in
machine tools.

Ministry of Finance

37

Investment

a)

Establish machine tool

parks along the lines of
software technology
parks and textile parks. A
Public Private
Partnership model with
international participation
can be considered

Geographical proximity of
SME units facilitates
capacity integration and
economies of scale. This
factor has immensely
benefited SMEs in Italy.
Italy's machine tool industry
is located in the Milan
region. Most of the suppliers
to the industry are likewise
located in this part of the
country.Machine Tool Parks
have placed Taiwan among
the top producers and
exporters of machine tools;

Ministry of Heavy
Industry

Taiwan has become one of

the top machine tool
producing and exporting
countries through the
establishment of machine
tool parks, in Taichung, for
instance.
b)

Establish common
facility centres in at least
three regions North,
South and Western India
to provide SMEs with
facilities for precision
machining,
CAD/CAM/CAE,
metrology and heat
treatment

Modern facilities in core

areas are required to upgrade
technology among SMEs
and to some extent even
larger companies.

Ministry of Heavy
Industry

38

Market
Development

a)

Establish large
showrooms in important
locations overseas in
consultation with
IMTMA. This could be
taken up by Engineering
Export Promotion
Council (EEPC). A
nominal charge can be
recovered from machine
tool companies. (EEPC
has set up showrooms in
Johannesberg and
Chicago but not to
accommodate machine
tools)

Space requirements to
display machine tools are
large. Showrooms currently
used by EEPC are
insufficient in size. The costs
of large showrooms are too
high to be borne entirely by
Indian SMEs.
Foreign manufacturers such
as Makino, Mazak and DMG
have leveraged their
showrooms in India to
increase sales. The American
Machine Tool association
has also announced its
intention to open a display
centre for US machines.

Engineering Export
Promotion Council /
Ministry of Commerce

b)

EEPC schemes for

participation in
exhibitions and market
research may be
administered by IMTMA
and given more publicity.

The Made in India brand

image for machine tools
needs to be enhanced.
Exhibitions will provide an
opportunity for SMEs to
market themselves as ideal
partners for contract
manufacturing for bigger
international players. This
strategy of riding on
international brands should
be pursued till the Made in
India brand is established.
There is a large export
market for custom built
machines where Indian
manufacturers can compete
since this segment is
dominated by German
manufacturers that supply
very expensive machines.
Market research will help
SMEs identify target markets
and products.

Engineering Export
Promotion Council /
Ministry of Commerce

c)

Part fund quality training

/ certification
programmes and
consultancy services

Need for quality

consciousness in the industry
needs to be reinforced.

Engineering Export
Promotion Council /
Ministry of Commerce

d)

Rupee invoicing of
exports should be taken
as a strategy.

Appreciation of the rupee

against the dollar has had an
adverse impact on Indian
export competitiveness
especially against China.
MoC may examine steps
required to promote
acceptance of rupee
invoicing abroad.

Ministry of Commerce

e)

Establish a design and

consulting company that
that can design and
supply manufacturing
facilities for automobile,
auto ancillary and other
engineering industries.
This company could be
similar to Engineers India
Limited.

Customers increasingly
prefer project solutions to
buying individual machine
tools.
Expertise in engineering
design, CNC programming
and automation is already
available in the country.
Korean companies have
benefitted from this model.

Ministry of Industry

39

Manpower

Education and
Training

Trade policy

Make a critical assessment of

manpower and skills
requirement for the next 10
years and plans to meet this
through suitable upgradation
of academic, vocational and
training mechanisms in the
country.

There is concern at the

scarcity of the specialized
talent that is required to
continuously drive the
machine tool industry to
higher technology and
international arena. This has
to be tackled urgently

TIFAC;
Ministry of HRD

a)

Introduce Manufacturing
Engineering as a distinct
discipline in engineering
colleges and industrial
training institutes and
upgrade curriculum and
facilities to suit modern
requirements of machine
tool and manufacturing
industries.

There is a critical shortage of

competent manpower at all
levels in the machine tool
industry technicians,
engineers, and sales. The
problem is particularly acute
in SMEs. The current
Mechanical Engineering
curriculum in the country
does not prepare graduates
for a career in
manufacturing.

Ministry of
Education/Human
Resources Development

b)

Fund overseas long

duration (1-2 year)
training programmes in
machine tool technology
for personnel in Indian
SMEs. Training
programmes can be
designed by IMTMA in
co-ordination with
foreign machine tool
associations.

Industry personnel must be

exposed to best global
manufacturing practices and
technology. A critical mass
of foreign trained engineers
must be created for Indian
industry to catch up with the
competition. These
programmes will also
improve the image of the
metal working industry
especially in comparison to
the IT industry, and help to
attract and retain talent.

Ministry of Human
Resources Development

c)

Opportunities for
exchange programes for
Indian machine tool
employees to work
abroad; similarly for
foreign professionals to
work with Indian firms
for 1-2 years; partially
paid for by government

Exchange visits improve

skills and technology
especially in Indian SMEs

Ministry of Industry

d)

Provide training and

participation in the
World Skills
competition for machine
tool related skills: will
require facility
creation/augmentation
and training
Include Indian machine
tools in list of goods for
preferential treatment in
trade agreements.

India has become a member

of World Skills organization
but needs great improvement
to reach international skil
levels. This will have a
beneficiary effect on
engineering skills acros all
industries
Overcomes trade barriers
currently experienced by the
industry in export markets.

Ministry of
Education/HRD

a)

Ministry of Commerce

40

8 ANNEXURES
8.1 Global Production, Consumption & Trade Data Source: Gardner Inc (2007 World
Machine Tool Output and Consumption Survey)
A. Machine Tool Production - 2006
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Country
Japan
Germany
China
Italy
Korea
Taiwan
USA
Switzerland
Spain
France
Canada
Brazil
U.K.
Netherlands
Czech
Republic
Turkey
Austria
India
Belgium
Finland

Metal Forming

Metal Cutting

(US$ billion)

Total

Metal Cutting
(US $ billion)

(US $ billion)

(%)

Metal Forming
(%)

13.5
10.3
7.0
5.5
4.1
3.7
3.6
2.8
1.2
1.1
1.1
1.0
0.9
0.5

11.9
7.5
5.2
2.8
3.0
2.8
2.9
2.3
0.8
0.6
0.7
0.8
0.7
0.1

1.6
2.8
1.8
2.7
1.2
0.8
0.8
0.5
0.4
0.5
0.4
0.2
0.2
0.4

88%
73%
74%
51%
72%
77%
79%
84%
64%
54%
60%
81%
78%
20%

12%
27%
26%
49%
28%
23%
21%
17%
36%
46%
40%
19%
22%
80%

0.4
0.4
0.4
0.4
0.3
0.3

0.4
0.1
0.3
0.4
-

0.3
0.1
0.3
0.3

92%
30%
60%
88%
10%
16%

8%
70%
40%
12%
90%
84%

B. Machine Tool Consumption 2006

Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Country
China
Japan
United States
Germany
Korea, Rep. of
Italy
Taiwan
France
Canada
Brazil
India
Mexico
Spain
Turkey
Switzerland
United Kingdom
Netherlands
Czech Republic
Sweden
Russia

Consumption
(US$ billion)
12.9
7.4
6.3
5.2
5.0
3.6
2.5
1.6
1.6
1.4
1.3
1.3
1.1
1.1
0.9
0.9
0.4
0.4
0.4
0.4

41

C. Machine Tool Exports - 2006

Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Country

Exports

Exports

(US $ Billion)

(as % of production)

Germany
Japan
Italy
Taiwan
Switzerland
USA
Korea
China
UK
Spain
Belgium
France
Czech Republic
Austria
Netherlands
Turkey
Canada
Finland
Sweden
Brazil

7.5
6.9
3.3
2.9
2.5
1.8
1.7
1.2
0.9
0.7
0.7
0.7
0.5
0.5
0.3
0.3
0.3
0.2
0.2
0.1

73%
51%
60%
79%
89%
50%
40%
17%
101%
57%
219%
58%
107%
114%
71%
69%
25%
82%
86%
16%

Imports
(US $ Billion)
7.1
4.4
2.6
2.4
1.8
1.4
1.1
1.1
1.0
0.9
0.8
0.8
0.7
0.9
0.6
0.6
0.5
0.4
0.4
0.3

Imports (as % of
2006 consumption)
55%
71%
51%
47%
70%
38%
98%
70%
88%
101%
11%
46%
213%
69%
44%
52%
62%
108%
92%
119%

D. Machine Tool Imports 2006

Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Country
China
United States
Korea, Rep. of
Germany
Taiwan
Italy
Mexico
France
Turkey
United Kingdom
Japan
Canada
Belgium
India
Brazil
Spain
Switzerland
Czech Republic
Sweden
Austria

42

8.2 Survey questionnaire

Defining the Role of Government in Trans-nationalization Efforts of Indian SMEs in Machine
Tool Sector
1.

Name & address of respondent company

2.

Name & address of respondent

3.

Year of establishment of business

4.

Names of sister concerns within the group-

5.

List of main customers

a. Indiab. Abroad

6.

7.

Main products of the company (collect brochures) a.

b.
c.
Number of employees -

8.

Data on turnover- (value Rs. Lakhs)

2005-06

2006-07

Turnover from Machine Tools

Number of machine tools sold
Turnover from other products
Turnover from supply of spares and other accessories
Income from consultancy, design etc. (if any)
Purchase of outsourced local components from vendors
9.

Details on imports (details of main imported items) value Rs. Lakhs

TOTAL IMPORTS
Direct imports of Machine Tools - attachments/
tooling
Import of other products CNC elements
Import of tooling
Purchase of imported assemblies from agents/ stockists
Purchase of design and drawings from abroad (if any)

2005-06

2006-07

10. Details on exports (details of main export items)- value Rs. Lakhs
TOTAL EXPORTS
Turnover from export of Machine Tools
Turnover from export of other products
Export of technical consultancy
Export of design and detailing
Any other exports (kindly give details)

2005-06

2006-07

11. If no exports give reasons

12. What are the names of other manufacturers in India in the SME sector (turnover below Rs. 60 crores) in
India who compete with you in the product range you have?
13. Have you tried for any risk capital for funding up gradation of technology in your unit or your group?
YES/ NO
14. In case you have competed with imported machine tools in some customer enquiries within the country
and did not get the contract, kindly give the reasons for loosing the order

43

a.
b.
c.
d.
e.
f.

Lack of appropriate technologyLack of capacityTight delivery schedulesLack of high tech automation componentsCould not match customers requirements of design
Imported machines were much cheaper (kindly give details of how cheap the machines were)-

15. Do you know of any technology funding programmes from Government of India? YES / NO
16. If YES what are the programmes?
17. Have you ever competed in enquiries from overseas Companies? YES / NO
18. If YES which country and the details of outcome of enquiry19. Have you attended any of the machine tool exhibitions in India and abroad in the last few years- kindly
give a list20. What should be the focus countries for Indian machine tool manufacturers in the SME sector to become
globally competitive?
21. Are you interested in setting up a manufacturing facility abroad as Joint Venture or supply of turnkey
projects? YES / NO
22. If YES what are the constraints faced and facilities required?

44

8.3 List of Participants in EMO-Hanover 2007 Trade Fair

1
2
3
4
5
6
7
8
9

M. K. International
Gaurav Engineers
ACE Designers Ltd
Bharat Fritz Werner Ltd
Cobra Carbide Pvt. Ltd
Fenwick and Ravi
Pragati Automation Pvt. Ltd
Uday Computer Aided Mfg. Pvt. Ltd.
Proteck Circuits and Systems Pvt. Ltd

Aurangabad
Aurangabad
Bangalore
Bangalore
Bangalore
Bangalore
Bangalore
Bangalore
Chennai

10

Airtech Private Ltd

Dharwad

11
12
13
14
15
16
17
18
19
20
21
22
23

Micromatic Grinding Technologies Limited

ITL Industries Ltd.
Sharp Chucks & Machines Ltd.
Khushbu Engineers
Bipico Industries (Tools) Pvt. Ltd.
Forbes Gokak Ltd
Krishna International
Shobha Industries
Ind-Sphinx Precision Limited
Carbtools (India) Pvt. Ltd
Electronica Machine Tools Ltd.
Universal Engg. & Mfg. Industry
Jyoti CNC Automation Pvt. Ltd.

Ghaziabad
Indore
Jalandhar
Kolhapur
Mumbai
Mumbai
New Delhi
New Delhi
Parwanoo - HP
Pune
Pune
Pune
Rajkot

45

8.4 Survey respondents

Bangalore
No

Name of unit

(Fig for FY 2006 07)

Location

Person contacted

Domestic
Turnover
(Rs cr)

Export
Turnover
(Rs cr)

Total
turnover
(Rs Cr)

size

Products

Product Feature

Small

Friction
welding, CNC
Grinding

niche market
designs

25

Small

Rotary Tables,
Indexing table

high quality
products

0.9

3.9

Small

1.4

0.35

1.75

Small

V. Phadnis, Astt. Mgr

1.7

0.6

2.3

Small

Bangalore

K.Appunni, Mgr

1.6

0.4

Small

Fenwick & Ravi

Bangalore

Fenwick Thomas,
Partner

5.5

6.5

Small

Kladon Designs Pvt.

Ltd

Bangalore

Suresh, Director

3.6

0.45

4.05

Small

Mecprosys M/c tools

Pvt. Ltd

Bangalore

Suryanarayan, M.D.

1.8

0.2

Small

ETA Technology Pvt.

Ltd

Bangalore

P.S.Nair. M.D.

29

12

41

UCAM P Ltd

Bangalore

Lakshmi, Finance Dir.

22

Maxpreci Machines
Pvt. Ltd

Bangalore

Thamby Alapat, E.D.

Indian Precision
Engineers

Bangalore

Thirumala, GM

CNC India Tools

Bangalore

Shoma Enterprise

Eng.
Rebuilding
m/cs
Electromagneti
c clutches &
brakes
Toolings &
reconditioning
CNC
Machinesaerospace,
press tools
CNC Lathe
accessories
Product
design, sound
proof
enclosures
Fixtures, auto
m/c tools

niche product

Transnationalization
strategy
niche market, direct
orders- very less
competition
worldwide
participate in
exibitions- direct
marketting & agents
give good margin to
agents in Dubai & Sri
Lanka

niche product

direct sales

service based
tooling

direct sales-agents

design based
products

indirect exports
through m/c tools

Own designs

exibitions, agents

custom designs

indirect exports
through m/c tools

None

indirect exports
through m/c tools

46

(Fig for FY 2006 07)

No

Name of unit

Location

Person contacted

Domestic
Turnover
(Rs cr)

Export
Turnover
(Rs cr)

Total
turnover
(Rs Cr)

size

10

Tool Grinding Tech

Bangalore

Santosh Prabhu

Small

11

Cosmos Engg

Bangalore

Biswas S

Small

12

VJ Industries

Bangalore

Nagabhushan

5.5

1.5

Small

Bangalore

Shiva Shankar DGM

Small

Bangalore

KR Saji

5.25

5.25

Small

14

Sunmas Machine
Tools
Enconpass

15

Metalica Pressings

Bangalore

Ranjith K

3.5

3.5

Small

16

Chandra Engg
Works

Bangalore

Rakesh

4.15

4.15

Small

17

Ashwini Engg Works

Bangalore

Suresh Kumar

4.1

4.1

Small

18

Radiant Tech

Bangalore

Mrs. Rama Proprietor

Small

19

Technomech
Engineering

Bangalore

Suresh M

3.7

3.7

Small

20

Acumac Machine
Tools

Bangalore

Milind Jalihal

3.13

3.13

Small

13

Products
CNC Tool and
Grinding m/c,
Cutting Tools
Pressed
Products
Pressed Comp,
Sheet Metal
Prod
Special
Purpose M/C
Control Panels
Pressed
Products
SPM
assemblies,
parts for earth
movers
CNC m/c
Comp
Aerospace
Components
Cutting Tools,
Dyes and
Bushes
CNC Internal
Grinding m/c,
Centre Hole
Grinding m/c,
Spindles

Product Feature

Transnationalization
strategy

None

None

None

In process

None

US export

None

None

None

No orders

None

No orders

None

Not Tried, already

overloaded

None

None

None

In process

None

Bargaining

None

Market Penetration
Difficult

47

(Fig for FY 2006 07)

No

Name of unit

Location

Person contacted

Domestic
Turnover
(Rs cr)

Export
Turnover
(Rs cr)

Total
turnover
(Rs Cr)

size

21

Machine Elements

Bangalore

Harish Asrani Partner

2.9

2.9

Small

22

Protocol Ind

Bangalore

V.Shankar

2.5

2.5

Small

23

Sushma Industries

Bangalore

Ravi Kumar Marketing

Manager

2.3

2.3

Small

24

Unique Instruments
& Mfrs Pvt. Ltd.

Bangalore

Jatil Bhavsar Marketing Manager

2.19

2.19

Small

V.M. Engg,

Bangalore

Chandra Kumar, CEO

Small

26

Akshaya Special m/c

Pvt Ltd

Bangalore

Arivalagan - MD

1.3

1.3

Small

27

Krafield Tool Room,

Bangalore

Kishore Kumar

1.15

1.15

Small

28

Pratham Pressings

Bangalore

Yogesh Shah

1.14

1.14

Small

29

Geetha Consulting
Engg

Bangalore

Chiranjeev Sharma

0.92

0.92

Small

25

Products
MTA, MTS,
Reconditioning
of m/c tools
Pressed
Components,
Brass
Precision
Thermal
Testing Eqp,
Instrumentation
Software soln
Caliberation
Inspections,
Precision
measurements,
CNC millings
Spark Erosion
m/c, CNC
Engraving m/c
Special m/c
tools
Tooling,
Diemaking and
Aerospace
Comp
Pressed Comp,
Electro plated
pressed tools
Design and
Consultancy
for m/c tools

Product Feature

Transnationalization
strategy

None

None

None

None

None

Lack infrastrucutre to
export

None

Trying to export

None

Lack quality for

exports

None

technology &
manpower

None

Bargaining,getting
enquiries

None

Planning to export

None

Small Co., Less

Delivery time, Short
on Man-power

48

(Fig for FY 2006 07)

No

Name of unit

Location

Person contacted

Domestic
Turnover
(Rs cr)

Export
Turnover
(Rs cr)

Total
turnover
(Rs Cr)

Product Feature

Transnationalization
strategy

None

Not Ventured into

Export Brands

None

not decided, lack of

finance

None

BOSCH- gets orders

Mediu
m
Mediu
m

348

Large

M/c tools

None

286

Large

M/c tools

N.A.

N.A

278

25

303

Large

M/c Tools

R&D center in
Pune

Swiss buyer- back to

back technology
transfer

30

Jyothi Industries

Bangalore

31

Bombay Machines

Bangalore

Girish Hosmani
Director

0.27

0.27

32

MICO BOSCH

Bangalore

N.Umesh, GM & B.H.

45

53

33

Batliboi Ltd.

Bangalore

H.K.Prasanna Kumar,
Sales Mgr

87

92

34

HMT Ltd

Bangalore

A.V.Kamat,CMD

340

35

HMT Machine Tools

Ltd

Bangalore

K.H.Suresh, GM

280

36

BFW Ltd

Bangalore

Ashok N Badhe, GM

40

Products
m/c Tool
accessories,
SPM for metal
cutting tables
M/C Tools,
CNC Lathe
Industrial
Equipments
Milling m/c,
CNC lathe

Sharath Kumar,
Partner

Micromatic Machine
Tools Pvt. Ltd.,
Kennametal India Ltd
Pragati Automation
Pvt. Ltd

size

0.6

0.6

Small
Small

SPMs

order basis- no
strategy
Direct through HMT
International

560

10

570

Large

M/c tools

None

None

Bangalore

T.K.Ramesh, Vice
President
J.Prabhakar, Sr. Mgr

288

N.A.

288

Large

Bangalore

Atul S. Bhirangi, M.D.

38

32

70

Large

SPMs
own designsnew formats

N.A.
direct offices, agents,
exhibitions

DMG India Pvt. Ltd

Bangalore

S.G.Narayan, M.D.

N.A.

N.A.

N.A

41

Siemens India

Bangalore

Raghavendra Mutalik

N.A.

SPMs
Tool Turrets,
Tool Disc
Imported m/c
tools
CNC Systems
& drives

N.A.

N.A

42

Fanuc India Pvt. Ltd

Bangalore

Ms. Sonali Kulkarni,

President & CEO

N.A.

NA

CNC systems

N.A.

N.A

43

Liebherr Machine
Tools India Ltd

Bangalore

Anil Aggrawala, MD.

N.A.

NA

Gear cutting/
gear hobing

SPMs

37
38
39

Bangalore

N.A.
(importer)
N.A.
(importer)
N.A.
(importer)
N.A.

NA
NA

N.A.

49

(Fig for FY 2006 07)

Rajkot:
No

Name of unit

Location

Person contacted

Domestic
Turnover
(Rs cr)

Export
Turnover
(Rs cr)

Total
turnover
(Rs Cr)

size

Shailesh Machines
Pvt Ltd

Rajkot

Shailesh Kawa, MD

25

30

Small

Macpower CNC
Machines Pvt. Ltd.

Rajkot

Rupesh J Mehta, M.D.

54

62

Medium

Jyoti CNC
Automation Pvt. Ltd

Rajkot

P.G.Jadeja, M.D

250

30

280

Large

Domestic
Turnover
(Rs cr)

Export
Turnover
(Rs cr)

Total
turnover
(Rs Cr)

Products
Presses,
lathes
CNC Turning
centers, VMC
m/c
CNC Turning
centers, turnmill centers

Product Feature

Transnationalizat
ion strategy

None

African countries,
dealers

standard m/cs
collaborate with
European majors

export to Africa &

UK-known
distributors
join with large
European
manufacturers

Mumbai:
No

Name of unit

Location

Person contacted

size

Products

Product Feature

Bipico Industries Pvt

Ltd

Mumbai

Pramitbhai Patel

15

2.5

17.5

Small

Metal cutting
saws

none

Forbes Gokak Ltd

Mumbai

Abhay Jain

35

39

Small

Tapping
/threading tools

own metallurgy

Transnationalizat
ion strategy
export to Russia,
Europe, Asia
target developed
markets -direct
selling

50

(Fig for FY 2006 07)

Hyderabad:
No

Name of unit

Location

Person contacted

Domestic
Turnover
(Rs cr)

Export
Turnover
(Rs cr)

Total
turnover
(Rs Cr)

size

Precision Tools

Hyderabad

Narasimha Reddy,
M.D.

1.1

N.A.

1.1

Small

Praga Tools Ltd

Hyderabad

M.Shankar, Chief
Mktg

13

N.A.

13

Small

Lokesh Machines
Ltd

Hyderabad

M.Lokeswara Rao,
M.D.

110

114

Large

Products
Surface &
centerless
grinding m/c
Lathes,
machining
centers
Range of m/c
tools

Product Feature

Transnationalization
strategy

NA

NA

NA

NA

low cost high

volume products

exports on low prices

Product Feature

Transnationalization
strategy

Indore:
No

Name of unit

Location

Person contacted

Domestic
Turnover
(Rs cr)

Export
Turnover
(Rs cr)

Total
turnover
(Rs Cr)

size

Products

ITL Industries Ltd.

Indore

S.B.Naik, M.D.

26

13

39

Small

Bandsaw
machines

Indotech Machines

Indore

Mukul Gogate, GM

44

18

62

Medium

Bandsaw
machines

technology
partner-Kasto Germany
technology
partner-BomarCzech & Exact
Cut-Germany

buy back with

partners
buy back with
partners

51

Coimbatore:
No

Name of unit

(Fig for FY 2006 07)

Location

Person contacted

Domestic
Turnover
(Rs cr)

Export
Turnover
(Rs cr)

Total
turnover
(Rs Cr)

size

Products
Complete range
of m/c tools

PSG Industrial
Institute

Coimbatore

SubramaniamProduction and vendor

development incharge

N.A.

Small

Gedeeweiler

Coimbatore

Nithiayanandam

12

N.A.

12

Small

Teakrafts

Coimbatore

Sangeet Bagaria

21

1.2

22.2

Small

Lakshmi
Automatic Loom
Works

Coimbatore

Mani N

12

12

24

Small

G-Tech Engg

Coimbatore

Ganesan

11

N.A.

11

Small

Reshmi
Industries

Coimbatore

Murali

30

10

40

Small

Janatics India
Pvt. Ltd.

Coimbatore

Ganapathy
Subramaniam,

60

62

Mediu
m

Lakshmi Ring
Travellers Ltd

Coimbatore

Anbalagan, Prodn
Head

650

N.A.

650

large

Shanti Gears
Ltd.,

Coimbatore

Kurup

220

30

250

Large

10

Laksmi Machine
Works

Coimbatore

Annandurai

110

115

Large

Range of m/c
tools
Tea Processing
Mechanisation,
Agro m/c
CNC Tool
Holders
Injection
Moulding m/c,
Hydraulic,
Rubber
moulding m/c
Conewinding
machines
Pneumatic
Items, Industrial
Automations
Ring Travellers
for spinning mills
Gear Box,
Motors, CNC
m/c tool
Spinning mill
m/c, Machine
Tools

Product Feature

Transnationalizati
on strategy

N.A.

N.A

N.A.

N.A

develop own
designs

export through
large export house

collaboration &
reverse
engineering

buy back
arrangement

N.A.

N.A

Niche product

West Africa

reverse
engineering

N.A

N.A.

N.A

specislised in
gear & gear box
designs
collaboration &
reverse
engineering

export high tech

machines, agent in
Germany
exibitions, projects

52

8.5 Survey respondents contact list and addresses

BANGALORE
No

Name of unit

Person contacted

Address

ETA Technology Pvt. Ltd

P.S.Nair. M.D.

# 484 D, 13th Cross, Ivth phase,Peenya

UCAM P Ltd

Lakshmi, Finance Dir.

# A-11/A-12, 1st stage, 1st cross,Peenya,

Maxpreci Machines Pvt. Ltd

Thamby Alapat, E.D.

# A-373, 4TH Main, 8th Cross, Peenya

Indian Precision Engineers

Thirumala, GM

# 8/9, Shankarmutt Rd

CNC India Tools

V. Phadnis, Astt. Mgr

#349,Srinivasa Complex, 1st Floor, 6th Main, Outer Ring Rd. Narasimha Layout

Shoma Enterprise

K.Appunni, Mgr

# C-28, 2nd Stage, Peenya

Fenwick & Ravi

Fenwick Thomas, Partner

#10/3, Lakshmipura Main Road, Abbigere

Kladon Designa P. Ltd

Suresh, Director

# Lakshmi Venkateswara Ind. Est, No. 1 8th Main Rd.,Peenya 2nd stage

Mecprosys M/c tools Pvt. Ltd

Suryanarayan, M.D.

# B-178, 4TH Main Road, 2nd Stage,Peenya

10

Tool Grinding Tech

Santosh Prabhu

#467-469, 4th Phase, 12th Cross, Peenya

11

Cosmos Engg

Biswas S

#B-246, 4th Main, 2nd Stage, Peenya

12

VJ Industries

Nagabhushan

#A290, 6th Main, 2nd Stage, Peenya

13

Sunmas Machine Tools

Shiva Shankar DGM

#432/1, 4th Main, 12th Cross, 4th Phase, Peenya

14

Enconpass

KR Saji

#74/2A, Krishnappa Ind Estate, Hegganahalli

15

Metalica Pressings

Ranjith K

#B-192, 2nd Stage, Peenya

16

Chandra Engg Works

Rakesh

#52, Koramangala Ind Estate

17

Ashwini Engg Works

Suresh Kumar

#14, 4th Cross, 4th Stage, Rajajinagar Ind Town

18

Radiant Tech

Mrs. Rama - Proprietor

#177/26, 4 Main Road, Ind Towm, Rajajinagar

53

No

Name of unit

Person contacted

Address

19

Technomech Engineering

Suresh M

#12, 4th Main, 4th Cross, Rajajinagar Ind Town

20

Acumac Machine Tools

Milind Jalihal

#472-A, 12th Cross, 4 Phase, Peenya

21

Machine Elements

Harish Asrani - Partner

#48, 2nd Phase, Peenya Ind Estate

22

Protocol Ind

V.Shankar

#192/A, 7th Main, 6th Cross, Rajajinagar

23

Sushma Industries

Ravi Kumar Marketing Manager

#18E, Block B, 1st C Main Road, 2nd Phase, Peenya

24

Unique Instruments & Mfrs Pvt. Ltd.

Jatil Bhavsar - Marketing Manager

#423, 11th Cross, 3rd Main, Peenya

25

V.M. Engg,

Chandra Kumar, CEO

#B-30, 1st Stage, 1st Cross, Peenya

26

Akshaya Special m/c Pvt Ltd

Arivalagan - MD

#A-279, 2nd stage, Peenya Industrial Estate Bangalore

27

Krafield Tool Room,

Kishore Kumar

#9/2, 4th main, 6th Cross, Rajajinagar Ind town

28

Pratham Pressings

Yogesh Shah

#D-432, 10th Main, Peenya

29

Geetha Consulting Engg

Chiranjeev Sharma

#1297, 8th Cross, 1st Phase, JP Nagar

30

Jyothi Industries

Sharath Kumar, Partner

# A-18, HMT Ind Estate

31

Bombay Machines

Girish Hosmani Director

# C-88, 2nd Stage, Peenya

32

MICO BOSCH

N.Umesh, GM & B.H.

# Hosur Road

33

Batliboi Ltd.

H.K.Prasanna Kumar, Sales Mgr

# 99/2,N.R.Road

34

HMT Ltd

A.V.Kamat,CMD

# 59, Bellary Rd.

35

HMT Machine Tools Ltd

K.H.Suresh, GM

# HMT P.O.

36

BFW Ltd

Ashok N Badhe, GM

# off Tumkur Rd

37

Micromatic Machine Tools Pvt. Ltd.,

T.K.Ramesh, Vice President

#533, 10th Main, 4 th Ph. Peenya

54

No

Name of unit

Person contacted

Address

38

Kennametal India Ltd

J.Prabhakar, Sr. Mgr

# Tumkur road

39

Pragati Automation Pvt. Ltd

Atul S. Bhirangi, M.D.

# 413, Ivth Phase, Peenya

40

DMG India Pvt. Ltd

S.G.Narayan, M.D.

# Al Latheef, no.2/1,Union Street

41

Siemens India

Raghavendra Mutalik

# Du Park Trinity, M.G.Road

42

Fanuc India Pvt. Ltd

Ms. Sonali Kulkarni, President & CEO

# 41 A, Electronics City

43

Liebherr Machine Tools India Ltd

Anil Aggrawala, MD.

#353-354, 9th Cross, 4th Main, Ivth Phase, Peenya

RAJKOT
No

Name of unit

Person contacted

Address

Shailesh Machines Pvt Ltd

Shailesh Kawa, MD

#10, Bhaktinagar Station Plot,Rajkot - 360 002

Macpower CNC Machines Pvt. Ltd.

Rupesh J Mehta, M.D.

# Plot 2234, GIDC, METODA, Kranti Gate,Lodhika Vill. Metoda, Rajkot

Jyoti CNC Automation Pvt. Ltd

P.G.Jadeja, M.D

# G-506, Lodhika, GIDC, Vill. Metoda, Rajkot Distt

MUMBAI
No

Name of unit

Person contacted

Address

Bipico Industries Pvt Ltd

Pramitbhai Patel

#506-A, Lotus House, 5th Floor, 11, Sir V. Thackersey Road, Mumbai-020

Forbes Gokak Ltd

Abhay Jain

# Saki Powai Road, Chandivili, Mumbai

55

HYDERABAD
No
1
2
3

Name of unit

Person contacted

Address

Precision Tools
Praga Tools Ltd
Lokesh Machines Ltd

Narasimha Reddy, M.D.

M.Shankar, Chief Mktg
M.Lokeswara Rao, M.D.

# Balanagar Indl Area, Hyderabad

#6-6-8/32, Kavadiguda Rd., Secunderabad
# B-29, EEIE, Stage 2, Balanagar, Hyderabad

INDORE
No

Name of unit

Person contacted

Address

ITL Industries Ltd.

S.B.Naik, M.D.

#111, Sector B, Sanwer Road Industrial Area-452015

Indotech Machines

Mukul Gogate, GM

#28-29, RR Private Indl. Est., Nr. Shivna Spinners Sanwer Rd,indore-452015

56

COIMBATORE
No

Name of unit

Person contacted

Address

PSG Industrial Institute

Subramaniam- Production and vendor development

incharge

# Peelamedu, Coimbatore

Gedeeweiler

Nithiayanandam

# VELLALORE, Coimbatore

Teakrafts

Sangeet Bagaria

#18, SIDCO, Kurichi, Coimabtore

Lakshmi Automatic Loom

Works

Mani N

# Singarampalyam, Kinathukadavu Post

G-Tech Engg

Ganesan

#3, 2nd Street, Textool, Ganapathy

Reshmi Industries

Murali

#Ammankulam Road, Pappanaickenpalayam

Janatics India Pvt. Ltd.

Ganapathy Subramaniam,

#E-25, SIDCO, Kurichi, Coimbatore

Lakshmi Ring Travellers Ltd

Anbalagan, Prodn Head

# Unit 2, Muthugoundermpudur, Coimbatore

Shanti Gears Ltd.,

Kurup

#304A, Singanallur

Laksmi Machine Works

Annandurai

# Perianaickempalayam

10

57

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59