With the new financial year drawing close, a look back to 2019-20 is crucial for setting and realizing some major goals for 2020-21…
As we move into a new financial year, it is time for us to take stock of what went well and what didn’t in the year gone by and what goals we need to redefine in the coming year. Well, we have a whole new financial year ahead of us and it will do wonders if we could be a little more innovative and flexible to embrace changes so that we will be in better position as the year unfolds.
Diversification as solution
The year 2019 was perhaps the most daunting one for business and economy in recent memory. The Auto sector has had a tough time with a general slowdown in demand for new vehicles, the government’s push towards BS-VI norms and the entry of electric vehicles. The increased upfront insurance premiums and new axle norms also dwarfed business opportunities.
The Auto sector disruptions posed serious challenges to the Machine Tool industry business as well which depends on the sector to a great extent. The Machine Tool industry, caught in this unprecedented global slowdown, is now pinning hopes for a turnaround. There is a general
belief that the economy may come out of its lull, drawing people back to spending.
The successful debut of new automobile manufacturers in Indian market with their initial models hitting the bull’s eye have perhaps given a signal to auto manufacturers that customers are looking for vehicles with added safety features and that they need to score well in those parameters. For the Machine Tool industry, it is about diversifying into niche sectors such as Defence, Railways, Power, Construction, Aerospace, Medical Equipment, and many more. Manufacturers need to intensify their R&D, enhance technological capabilities, reorient market strategies, expand their range, equip workforce with requisite skills and increase the cash flow. This will enable the Machine Tool industry to re-emerge as a market leader for various user industries.
Recently, it was announced that the Government of India will invest `17 lakh crore for the Road sector within the next five years and the Construction Equipment industry can expect a 40 percent increase in sales. The Indian Railways is planning to increase its freight traffic to 3.3 billion tonne by 2030 besides using LHB coaches for all passenger trains. Under the draft Defence Production Policy 2018, the Government is eyeing $5 billion exports by 2025. The Defence Ministry is planning to fund 250 start-ups and five defence innovation hubs.
In the Power sector, the Government plans to establish renewable energy capacity of 500 GW and make some major investments by 2030 besides universal household electrification, which will increase the demand for power equipment. The centre also intends to make India a global hub for medical devices manufacturing which will attract investors from India and overseas, especially for medical devices and surgical implants. All these developments bode well for the Machine Tool industry.
India has set for itself a target to make the country a $5 trillion economy by 2025 with the Manufacturing sector contributing $1 trillion towards it. The country needs to grow at a CAGR of 14 percent in the next five years to realize this dream. Further, we need to take care of the liquidity crunch and generate impactful reforms which can spur demand. As this happens, the Manufacturing industry will re-emerge as a strong contender and the Machine Tool industry can also look for some uptick in its orders gradually.
Governments across the world are intensifying their efforts to contain Coronavirus which originated from Wuhan in China. For the Auto Component industry, there’s been a supply shortage from China. We must now indigenously develop components and reduce dependence on the country. With the international community looking at multiple sources of supply, India gets a significant opportunity to build expertise, be a major supplier for the world and be self-reliant. Safeguarding the health of people is a priority. The Government of India is also taking adequate steps to contain the spread of the pandemic. Indian Machine Tool Manufacturers’ Association (IMTMA) remains committed in complying with the measures enacted by the World Health Organisation and extending all possible support to the Manufacturing industry in its hour of need.
Manufacturers need to intensify their R&D, enhance technological capabilities, reorient market strategies, expand their range, equip workforce with requisite skills and increase the cash flow.