INDIA STANDS FIRM AMONG UNCERTAINTIES

In the Indian economic outlook, the manufacturing sector shows signs of growth while the GDP growth rate has moderated.

India’s Manufacturing sector saw a growth rate of 14.8 percent and a capacity utilization ratio of 73.5 percent in the first half of the fiscal year (FY2023), according to data from National Statistical Office (NSO). The economy is showing signs of recovery, with purchasing managers’ index (PMI) for manufacturing and services increasing and credit growth remaining high. In the Automobile industry, retail sales grew by 15.9 percent during April-January FY23.

The country’s real GDP growth in Q3 2022-23 moderated at 4.4 percent YoY, which is lower than the previous quarter’s 6.3 percent YoY growth, due to the global slowdown and sluggish domestic demand. Despite this, India’s GDP growth has surpassed pre-pandemic levels by 11.5 percent. Analysts’ forecasts indicate GDP growth of 5.5-6.4 percent YoY for FY2023-24.

In February 2023, high-frequency indicators showed mixed results, with some improvements while others contracted. The easing of supply chain pressures combined with inflationary pressures and monetary tightening contributed to this trend. The average CPI inflation for FY23 came at 6.6 percent as compared to 5.5 percent in FY22. While the IIP continued to inch upward due to monthly improvements in manufacturing and electricity, auto sales declined across all segments except electric vehicles (EV).

The Indian Machine Tool industry’s performance is an encouraging sign for the country’s economy, which is showing signs of persistent growth despite global uncertainties and challenges.

Indian Machine Tool Industry Outlook: Strong Growth with Increased Imports and Exports

The Indian Machine Tool industry has been performing well, with the latest data indicating that total production in FY2022-23 surpassed `10,300 crore (US$ 1.3 billion), a 11 percent growth from the previous year. The total orders booked for FY2022-23 are estimated to have surpassed `12,200 crore (US$ 1.4 billion), showing a 20 percent growth from the previous year.

The machine tool imports for FY2022-23 were estimated to have increased by over 85 percent reaching `13,671 crore (US$ 1.1 billion) compared to low-based imports in FY 2021-22. The top five machine tool types imported in FY2022-23 were presses, vertical machining centers, lathes, laser cutting machines, and horizontal machining centers, with presses being the highest accounting for 13 percent of the total imports.

On the other hand, total machine tool exports in FY2022-23 were valued at `1,463 crore (US$ 186 million), showing a considerable increase from the previous year. The top five machine tool types exported in FY2022-23 were presses, lathes, vertical machining centers, horizontal machining centers, and cylindrical grinding machines and presses contributed 23 percent of the total exports.

Overall, the consumption of machine tools in India is estimated to have increased by over 43 percent, reaching `22,582 crore (US$ 2.9 billion) in FY2022-23 compared to FY 2021-22. Higher demand from user industries and emerging sectors, promotion of infrastructure, transportation, and mobility, and increase in exports of Indian manufactured goods are the key factors that have contributed to the increase in consumption of machine tools in the domestic market.