On the Growth Path

India has emerged as the world’s fastest growing economy and the demand for capital goods has also considerably increased. Yet there is a limited presence of indigenous sophisticated manufacturing technologies. What are the Government’s initiatives in this regard to facilitate the domestic capital goods manufacturers for developing advance technologies?

ANANT GEETE: The Government has launched a Scheme for the enhancement of competitiveness in the Indian Capital Goods Sector in 2014. One of the Scheme components is setting up of a Centre of Excellence (CoE) for Technology Development in Institutes of national eminence like the
Indian Institute of Technology, Central Manufacturing Technology Institute etc. in collaboration with the Industry. Brief particulars of the projects undertaken under CoE component are indicated below:

CMTI, Bangalore: Development of 450 and 550 rpm & above speed shuttle less looms in CMTI, Bangalore, in partnership with a consortium of five shuttle less looms manufacturers has commenced in April 2015. The design phase of the project is complete and manufacturing of parts is in progress. Further activities like assembly, inter-facing of various sub-systems, testing and trial runs is expected to be completed by July 2017.

IIT Madras: Development of 11 machine tools technologies has commenced at Research Park II situated near IIT Madras with six industry partners which include three SMEs. All the projects are under implementation and being worked out as per respective project milestones.

PSG College of Technology, Coimbatore: Three Welding Technologies are under development in CoE related to automation in welding, intelligent power supply system and development of electrodes and filler materials for alloy materials. All the projects are under implementation and being worked out as per
respective project milestones.

Eight projects from IIT, Delhi relating to Textile Machinery and 12 projects from IIT, Kharagpur in the field of specific and additive materials, manufacturing, auto-mation and fabrication are presently under examination in the Department.

Further a new Capital Goods Scheme is presently being formulated incorporating the recommendations of the National Capital Goods Policy launched by DHI in 2016. The new CG Scheme provides for promotion of Advanced Manufacturing by the establishment of Demonstration and Training Centres for Industry 4.0, 3D Printing and so on.

India’s domestic machine tool industry is weighed down by low investment in talent and is unable to move up the chain in terms of designs and advanced technologies. How is the Government facilitating the Indian machine tool companies to upscale their products to compete with global market players?

ANANT GEETE: Other than setting up Centres of Excellence for Technology Development under the Capital Goods Scheme launched by the Department, initiative has been taken to make machine tool companies competitive at global level through the component of Technology Acquisition Fund Programme (TAFP) for acquisition/transfer of technology. Under TAFP programme two machine tool projects relating to the development of four Guideway CNC Lathe and Turn Mill Centres are presently under implementation in HMT Machine Tools Ltd.

Further, under the Integrated Industrial Infrastructure Facility Centre (IIIFC) component under the Scheme, an Integrated Machine Tools Park is coming up at Tumkur in Karnataka in association with the Government of Karnataka and an active involvement of Indian Machine Tools Manufacturers’ Association (IMTMA). The state-of-the-art 500-acre Machine Tool Park is being set up as Greenfield project at Vasanthanarasapur near Tumkur with global level industrial infrastructure. The land has been acquired by Karnataka state Government in the National Industrial Manufacturing Zone (NIMZ). The project is likely to be completed in two and a half years. All the facilities and their utilisation have been planned with the users ie. the IMTMA. SPV has been formed. Once completed it is expected to double the existing turnover of the Indian Machine Tool sector with an associated increase in export and employment.

Additionally, a Common Engineering Facility Centre under the Capital Goods Scheme is being set up at Chakan for Tools, Dies and Moulds industry in and around Pune. These interventions under the Scheme -- Centre of Excellence, Common Engineering Facility Centre and Technology Acquisition Fund Programme—together will boost the domestic Machine Tools Industry.

Currently, the domestic Capital Goods industry meets around 30-50 percent of the demand in the country and 40-45 percent is met by imports. To bridge the gap of demand creation, how does the Government plan to contribute in terms of procurement policies and non-tariff barriers?

ANANT GEETE: The Government of India has approved of a policy for providing preference to ‘Make in India’ in government procurements. The new policy will give a substantial boost to domestic manufacturing and service provision, thereby creating employment. It will also stimulate the flow of capital and technology into domestic manufacturing and services and provide a further thrust towards manufacture of parts, components, sub-components etc, in line with the vision of ‘Make in India’.

According to the policy, procurement of goods for `50 lakhs and less, and where the Nodal Ministry determines that there is sufficient local capacity and local competition, only local suppliers will be eligible.

For procurements valued at more than `50 lakhs (or where there is insufficient local capacity/competition) if the lowest bid is not from a non-local supplier, the lowest-cost local supplier who is within a margin of 20 percent of the lowest bid, will be given the opportunity to match the lowest bid. If the procurement is of a type that the order can be divided and given to more than one supplier, the non-local supplier who is the lowest bidder will get half of the order and the local supplier will get the other half if it agrees to match the price of the lowest bid. If the procurement cannot be divided, then the lowest cost local supplier will be given the order if it agrees to match the lowest bid.

Small purchases of less than `5 lakhs are exempted. The order also covers autonomous bodies, government companies/entities under the government’s control.

The policy also requires that specifications in tenders must not be restrictive e.g. should not require proof of supply in other countries or proof of exports in respect of previous experience. They must not result in unreasonable exclusion of local suppliers who would otherwise be eligible, beyond what is essential for ensuring quality or creditworthiness of the supplier.

The policy lays down a procedure for verification of local content relying primarily on self-certification. There will be penal consequences for false declarations. In some cases, verification by statutory/cost auditors etc. will be required.

Price preference policy has already been reflected in the Revised General Financial Rules brought out by the Ministry of Finance in this year.

How does the government facilitate the indigenous machine tool manufacturers in terms of upgrading the existing testing and certification facilities and setting up new ones and making standards mandatory to curb imports of sub-standard machinery?

ANANT GEETE: The Government of India has brought out a National Capital Goods Policy which also covers Machine Tools Industry as a sub sector of Capital Goods Industry. A Capital Goods Scheme with increasing scope in line with the recommendations of the CG Policy is presently under formulation. The CG Scheme will provide for, inter alia, study of gap analysis and standards development programme and
setting up of testing and certification facilities. The standardization initiative will be taken in active involvement with the Standard Development Organization, like Bureau of Indian Standards.

With ‘Make in India’ as a key growth driver for India and capital Goods policy industry as a key manufacturing sector, how is the Government supporting to enhance the utilisation of domestic demand as well as offering business opportunities to both Indian and foreign original-equipment manufacturers (OEMs)?

ANANT GEETE: In line with recommendations of the National Capital Goods Policy, components like Heavy Industry Cluster Development Initiative and Plant modernization have been incorporated under the new Scheme being formulated in the Department for Capital Goods. These initiatives along with Integrated Machine Tools Parks being developed near Tumkur are expected to increase cost competitiveness of the domestic manufacturing sector that will translate in enhancing utilization of the domestic capacity. The Machine Tool park will be open to Foreign OEMs for setting up manufacturing units.

Further an Inter-Ministerial Standing Committee has been formed to address the issues of Capital Goods such as Public Procurement, Inverted Duty Structure and Import of Second Hand Capital Goods which are inhibiting domestic capacity utilization. Some actions have already been initiatiated to improve the public procurement scenario by introducing provision in favour of domestic preference in General Financial Rules and bringing out a policy for purchase preference for indigenously manufactured goods/machineries.

The new Capital Goods policy has been at an opportune moment when the industry is gathering momentum to go to next level. How can the Indian made capital goods to be promoted through HIEMDA (Heavy Industry Export & Market Development Assistance) scheme?

ANANT GEETE: Under the new Capital Goods Scheme, presently under development, there is a component namely Heavy Industry Export & Market Development Assistance under which there are measures like Capital Goods Display showrooms abroad, export assistance to capital goods industry associations and participation in major industrial exhibitions in India and abroad.

The interview was conducted by:
Soumi Mitra, Editor-in-Chief