Better infrastructure and faster mechanisms required to foster MSMEs growth

March 1, 2022 7:23 pm

A lot of PLI schemes are announced, as well as boosting investment, whether it is for R&D, or whether it is for manufacturing.

Interacting with OEM Update, T. K. Ramesh, Managing Director, Micromatic Machine Tools, Ace Micromatic Group, briefed that they manufacture CNC Lathes and machining centres and from both the number of machines that we make in a year and from the value, we are the largest machine tool group in India. We exclusively sell over 8000 CNC machines every year. 

Budget with respect to machine tool segment and MSMEs 

Specifically with respect to machine tools, the impact is going to be nothing specifically direct, but there are definitely indirect benefits. There’s a lot of focus on manufacturing. So obviously, there’s a spillover effect upon Machine Tools. So, while capacities get increased with extended special schemes for automotive manufacturing, we believe it will directly impact consumption of machinery and benefit the machine tool industry as a whole. 

MSMEs will definitely be included as a lot of the components are part of the supply chain. And MSMEs obviously will benefit because more of the manufacturing is outsourced. But the criticality is, coming out of the pandemic, and if you really look at manufacturing, perhaps 2019-20 was a slow year for all of manufacturing, and 2021 was better than 2019-20. The expectation is 2022 is expected to be more stable than the last two years. And the next two, three years, there’s a lot of catching up to do. So, how fast and when that happens is the question; almost all these policies are going to help this. If you want the bottom line from a budget perspective at least the direction has been maintained. That instil confidence. I hope there will be investments, more manufacturing and we may become a little more competitive, which again is going to boost investment and manufacturing. 

Replying to machine technologies recovering the momentum lost during pandemic he says, it looks in that direction. The important aspect is how fast and how quick. 

The direction seems right and the budget facilitates in continuation of the direction. How much of an impact is how much will people take advantage, invest, and put their money perhaps may be known by June, July 2022. 

Financial incentives that help both the business and machine tools segment 

As you know, a lot of PLI schemes are announced, as well as boosting investment, whether it is for R&D, or whether it is for manufacturing. The second area of what has happened is not part of the budget, but it is more part of the export import policy and the trade agreements in and around the schemes. All said and done, India is really competing with Southeast Asia and China. We see the level playing field becoming more and more level. This is when the belief is that the infrastructure investments are planned in the budget. Historically, actual achievement is still in the 30-40 percent only, you know, the conversion of the plans into actual ground change will help make India competitive from a global perspective. 

So the only silver lining to the cloud is the direction, and it’s being strengthened. It is the good part. So, it comes back to implementation. 

Future role for CAD CAM machine tool market 

Talking both from our own company view and our customers point, they already have a fair amount of installed capability which is not being utilised to its full capacity. The present situation & Status of MSME market will explode. But see, that is where this availability of the better competence better people again, not just at a labour level. Enough investment has already been made. It is about competency and it is about the environment, the discipline of the environment. If you look at the big difference in CAD CAM between India and China or even a smaller nation like India and Singapore or India and Thailand. The more effective utilisation of what has been installed happens in China or in Thailand or in Singapore simply because the environment is more suited and people are more accountable. And the manufacturing system is also more keen to CAD CAM. So those connections need to be strengthened. And I don’t think that it is about investment. It is about competence. 

Strategy to meet labour and a skill shortage 

Several initiatives have been taken for skill development and National skilling Institute and participation in the government plan for skill has certainly improved. Academy interactions have been much better than what it used to be. So, the direction again is right, strengthening of what is something that really needs to be done and I believe, government and industry want to come at least three four steps forward to ensure that the interactions start actually from ground level.

The CII is working very closely with the government. I think four centres of excellence have been announced. So, while the infrastructure has been put in place and the methodology has also been put in place. So, moving of people and then participation are the two areas that need to be strengthened this year and next year. Perhaps in the next two years we will see more output of training and development and skill. 

Additive manufacturing: a rising segment for its advantages 

That is a hugely rising segment, where capital investments are expected to grow okay, but additive manufacturing is disruptive for the kind of business that we are doing. We start from our raw materials, take out what we don’t want and then get a finished part where as additives are not taken out, you only add what is required. So, the potential of saving and cost effectiveness and speed is really going to make a difference. It is still in its formative stage as far as metal additive manufacturing is concerned. In the plastics area and non metal area a lot of work is done, it is working in the metal part manufacturing. So, a lot of material science is still being evolved. Metal additive manufacturing perhaps will take at least another year or two before some kind of stability happens. 

Local manufacturing of parts and components in your industry 

I believe is an area which is really going to bring in a lot of growth. Now, with supply chains becoming more local, because of all geopolitical situation say China, whether it is Russia, it is nationalism that is sparking up everywhere, along with the fact that there is availability of people and maybe even buying technology or whatever the new PLI is and things like subsystems parts, whether it is for the machine tool industry, whether it is for the automotive industry, I believe at least for the short term growth is going to happen and the long term is going to take time, it will not happen in months. 

Though a lot of emphasis is given in the budget offerings yet, how long that is going to be nurtured. What I’m trying to say is, it is subsystems and parts where tremendous growth needs to happen. And if that needs to happen, then it will be the MSME that will have to play a great role. Well, I don’t believe the present is good enough for MSMEs. While the budget has made allocations, The present situation & Status of MSME are not enough and perhaps when they are going to be implemented is something that we all have to wait and push for. 

This budget is simply laying foundation for future 

I believe, making MSMEs attractive is the most important immediate need. There is an opportunity. There is an opportunity for cost effectiveness. But MSMEs can be made a little more competitive by better infrastructure, lesser red tape, faster mechanisms and funding of course. I personally believe that there are huge markets right next to us, Sri Lanka, Bangladesh, and Pakistan. Now, can we become the next Singapore or whatever, that’s what we should concentrate on in the immediate next two, three years; before we take on Europe in the Americas. 

Conclusively, there are challenges, but we are living in good times. I definitely believe that in the region, given our size, and given our even global positioning, we have created a platform for manufacturing, we have created a platform of excellence for it. We are recognised now in the world. So a lot of good things have happened. But it’s you know, the finishing up of those things. It is about implementation at local levels. It is about some of the important but not difficult things that they need to get in the short term. For all the long term things that we vision in the budget what we need to do at grass root level is some small tinkering corrections though fast and quick now.