Indian machine tools industry that imports 25 per cent of its total component requirement and exports just 3 per cent of its output has started to shift to ‘import substitution’ mechanism to hedge against rupee depreciation.

Indian machine tools manufacturers’ association (IMTMA), president, Vikram Sirur, said, “Few companies have started collaborating with Indian institutes of technology and other academia to develop components used in their companies that they import. Due to increase in cost in recent times, many member companies of our organisation have started collaborative projects with institutes like IIT Mumbai, IIT Chennai and PSG Coimbatore in the field of material engineering and light weight material research”.

Speaking to Financial Chronicle, Sirur said, “In the process, companies are also trying to bridge technological gap. Sometimes because of proprietary rights, it is difficult to import components needed for industry”. They are going into agreement with academia to develop certain component by funding them, he added.

IMTMA’s chairman, programmes committee and past president, Shailesh Sheth, “The rupee depreciation has both bad and good effects on us. While the import has become costly, our products are more cost competitive in global market”.

Though the export is very minimal, the floods in Thailand and the tsunami in Japan have boosted hopes for Indian machine tools industry. Sheth, said, “About 6000 large machines that make machine tools were destroyed in both the countries. Japan is a big exporter for machine tools to all over the world. We expect that will help us in gaining our export market”.

Sirur said, “Thailand is big importer for auto components and we are seeing how we gain cater to these new demands from Thailand”. A free trade agreement (FTA) between India and Thailand is in the pipeline. Sheth expects the export to be doubled in terms of volumes compared to last year.

While the last recession in 2008-09 saw a 40 per cent decline in the export volume, Sheth, said, “We are not sure about giving a per cent for export, but the volume of exports will double”. The year 2008-09 saw a total of Rs 894 million (Rs 89.4 crore), compared to Rs 1508 million (Rs 151 crore) for the year 2007-08. The total domestic consumption for the year 2010-11 was Rs 11,700 crore and the total domestic production was Rs 4,096 crore. IMTMA expects a growth of 10 to 15 per cent for the current year.

Earlier speaking to the media, Sirur, said, “We are expecting a compounded annual growth rate of 15 per cent in the 12th five year plan. And for this to occur, we are expecting an investment of Rs 7,000 to Rs 10,000 crore to be invested”.

Source : mydigitalfc.com