IMTEX optimistic on auto investments, forecasts higher business for tool sector

Bangalore, January 28, 2013: Indian tool manufacturers are not so worried about a slowdown in the automotive sector, which accounts for around 40 percent of their total business.

Despite the current downturn in the auto industry, a positive sentiment prevailed at IMTEX 2013, the seven-day international machine tool expo that began in Bangalore on January 24. Organised by the Indian Machine Tool Manufacturers’ Association (IMTMA) at the Bangalore International Exhibition Centre, the expo eyes new business of around Rs 1,200 crore, of which 40-45 percent is expected to come from the automotive sector. The ongoing expo features over 900 exhibitors from 25 countries and 600 machine tools weighing 6,000 tonnes with a total value of Rs 1500 crore.

Vikram Sirur, president of IMTMA, said: “If at all there is any slowdown in the auto sector, it’s a temporary one. The growth curve in the auto sector has already hit its bottom. Now it should bounce back. The auto industry will bounce back much faster than its recent dip and the growth rate would be much higher than the previous highs.”

Vehicle and component manufacturers will not delay their investments due to temporary slowdown. The investments are to achieve their long-term plans. Hence, they will continue to invest that ensures continuous business flow to the Indian tool sector, he added.

S Sandilya, president of the Society of Indian Automobile Manufacturers (SIAM), who inaugurated the expo, said vehicle manufacturers have invested around Rs 22,500 crore in 2011-12, of which around 50-60 percent went to the Indian tool industry. In the current year, he said auto manufacturers plan to launch at least 50 vehicle models in India. This will make vehicle producers to maintain their investments.

Harish Lakshman, vice-president of the Automotive Component Manufacturers Association (ACMA), said: “The auto component industry is catering to the ever-expanding domestic market and exporting to external replacement market. The automobile industry globally is the single largest customer of the machine tools industry. There is a huge need for the machine tools industry to expand production capacity exponentially to meet the demand of OEMs and their ancillaries, including small and medium enterprises in the supply chain.” He said auto component makers in India witnessed sales of $ 43 billion (Rs 230,953 crore) in 2012, up from $23 billion (Rs 123, 533 crore) recorded in 2009. Overall sales are forecast to grow to $ 115 billion (Rs 617,665 crore) by March 2021. Meanwhile, auto component exports are expected to touch $ 30 billion (Rs 161,130 crore) by 2021 from the current level of $ 7 billion (Rs 37,597 crore).

Lakshman acknowledged that there is a slowdown in the automotive industry at present but the long-term investments will continue he said. Over the past five years, he said the auto component industry has been making $ 1.7-2 billion worth of investments every year. These are expected to increase to $ 3 billion per year by 2020. Further, he said the industry is expected to invest $ 30 billion to achieve $ 115 billion in sales by 2021

JAISHANKAR JAYARAMIAH