WHY MACHINE TOOL EXPORTS ARE CRUCIAL

Exports serve as a catalyst for economic activity, fostering innovation, and bolstering business confidence. Furthermore, they contribute to a stronger competitive edge within domestic markets, leading to job creation and encouraging consumer confidence in Indian products. Here’s knowing the export scene in the context of Indian machine tools and learning ways to bolster it…

Exports play a vital role in boosting the growth, competitiveness, and reputation of an industry. When it comes to merchandise exports, India has been doing significantly well in the Electrical and Electronics sectors and the Machine Tool industry needs to emulate this. Successful exports can reinforce India’s brand as a formidable nation in the field of machine tool manufacturing.

For the calendar year 2022, global machine tool consumption was around US$ 79.5 billion, with China (US$ 27.4 billion), USA (US$ 10.1 billion), and Italy (US$ 5.7 billion) occupying the top three rankings, according to the World Machine Tool survey published by Gardner Intelligence, the research department of Gardner Business Media Inc. (USA). As per the report, China (US$ 27.1 billion), Japan (US$ 10.5 billion), and Germany (US$ 10.2 billion) occupied the top three positions in the global rankings of machine tool-producing nations.

India, with a production of around US$ 1.4 billion, was alongside Brazil among the countries that reported a marginal increase in production growth figures. Our consumption for the year 2022 stood at US$ 2.8 billion.

Exploring new opportunities

India, with a global ranking of 9th in production and 7th in consumption, has immense scope of augmenting its position further and becoming a leader in machine tool exports including supply chain. This is possible when the Indian Machine Tool industry creates the demand initially at the domestic level by building cost-effective standard products and creating a strong supply chain. Once it aligns itself with global standard compliances, such as CE marking, the industry will gain the necessary confidence to venture into untapped markets and explore new opportunities for growth.

The Indian Machine Tool industry currently exports about 10 percent of what it produces to international markets. We have a long way to meet the size of global markets in Asia, Europe, and America. There are numerous challenges such as having a continuous presence, skilled human resources, and strong liaison with distributors, dealers, and local players. For example, India must compete with products manufactured by Germany that are technologically superior and simultaneously compete with those from China that are highly cost-competitive.

So how do we chart out a growth path for exports? What is expected of companies in terms of capital investments, creating a strong presence overseas, and serving customers in those regions seamlessly? TK Ramesh, Managing Director, Ace Designers Ltd, offers his two cents on developing a strategy to enhance exports:

Identification and Adaptation

Increasing the share of exports is an involved process that begins with understanding the global market and adapting to its needs. The Indian Machine Tool industry needs to identify potential export markets where there is demand for the types of machines that are manufactured locally. It is important to analyze competition, pricing, and customer preferences in those target markets. Another way is to customize machines to meet the specific needs of target markets. This may involve modifying features, sizes, or functionalities to align with the local industry standards or regulations.

Determining Products’ Export Potential

A universal approach to evaluating the export potential of homegrown machines is to first test them domestically. When such products have features that will be difficult to replicate overseas then one is highly likely to find success. A crucial first step in planning is to develop a broad consensus on the company’s goals, objectives, capabilities, and constraints.

Demographic Potential

Enhancing exports is a long-term process that needs unswerving dedication, adaptability, and responsiveness to market dynamics. Regularly evaluating export strategy, monitoring results, and making necessary adjustments are key to maximizing success. Capacity and cost competitiveness, global competition, staying abreast of technological advancements, and navigating past complex trade barriers, customs regulations, and compliance requirements are the primary challenges. Nevertheless, it is important to look for opportunities in markets that are either stable or emerging and promising. China, Europe, and US markets are stable while Mexico, Brazil, and Vietnam are emerging and hold promise.

Many African nations are experiencing economic growth. Countries such as Nigeria, South Africa, Kenya, and Egypt have a growing demand for machine tools in various sectors. Countries in Latin America, including Mexico, Brazil, Argentina, and Chile offer opportunities for the Indian Machine Tool industry. Some of the Eastern European nations like the Czech Republic, Poland, Hungary, and Romania are emerging as potential markets with lower production costs while also investing in developing and building expertise in specific areas of manufacturing. Central Asian republics such as Kazakhstan, Uzbekistan, and Turkmenistan are undergoing industrial growth and infrastructure development. Exploring these markets can offer Indian machine tool manufacturers access to new customers and projects in sectors like Oil & Gas, Mining, and Construction.

Role of the Government

The Government needs to address industry-specific challenges like trade barriers, customs regulations, compliance requirements, tariffs, import restrictions, and so on. Industries need to look out for Government programs and incentives that encourage exports such as trade missions, export financing, tax benefits, and export credit insurance.

Brand Building Exercise

The Indian Machine Tool industry can enhance its brand image, establish a strong global presence, and gain recognition for its capabilities through different endeavors. Some of these are building a strong value proposition, showcasing industry expertise, establishing strategic partnerships, strengthening after-sales support, developing case studies and testimonials, investing in R&D, and other measures.

While it is essential to explore market potential continuously, it is also important to have a comprehensive region-based marketing strategy to raise awareness about machines. Utilizing numerous channels like trade shows, online platforms, industry publications, social media channels, and other means of outreach such as networking with distributors and agents who have knowledge of target markets will pay rich dividends.

A Holistic Approach

IMTMA, with the help of the Government and Industry, can establish India Tech Centers on a lease or rental basis in prospective countries and these can be used for marketing, service, and support, which will help in stabilizing the growth of Indian industries and trigger export growth. Developing competitive products, having a continuous presence in global markets, and a focused approach and strategy for exports by individual companies can enable the Indian Machine Tool industry to capture the export market significantly in the coming years.

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