An Open Letter to Hon’ble Finance Minister of India Shri P Chidambaram Hon’ble Minister of Finance Government of India
SUBJECT: INDIA’S MACHINE TOOLS INDUSTRY Dear Sir: I am glad to be writing to you and it would be a privilege if you were to read this, preferably before you decide on the 2013–14 budget. The machine tools sector in India is a baby as compared to other industries. It ought to be of interest to know why the Indian government should pay any attention at all to an industry whose total consumption is `10,000 crore, production is just `3,000 crore, with employment of only 50,000 people and a measly contribution of `700 crore to the National Exchequer?
There is an innate need to support the machine tools industry. Why? 1. Machine tools have the highest capital output ratio. For every rupee of machine tools consumed, the chain effect in production is a multiple of at least 100. Hence, it is known as the ‘Mother Industry’. 2. India needs to produce more machine tools in the country itself instead of importing them. What happened after Pokhran I and II? The Canadian government cut off exchange of nuclear materials and technology, the American government cut off all assistance. Japan imposed economic sanctions and Germany imposed severe export licensing rules on the sale of hi-tech machinery. Economic growth was affected and many of our strategic projects (DRDO, ISRO) suffered. Shall we again be at the mercy of other countries for our growth and strategic interests? 3. India has the opportunity to become a manufacturing hub by 2020. The share of manufacturing in our GDP has to grow to 25%.This will require, by industry estimates, an investment of `50,000 crore per year in machine tools alone over the next 10 years. This lays emphasis on domestic machine tools production. 4. Manufacturing thrives where there is a vibrant local machine tools production. Countries like US, Germany, China, Taiwan, Japan and South Korea, which are strong in the machine tools sector, are also strong in the manufacturing sector. 5. Currently, the Indian machine tools industry has a market share of 30%. It is an absolute MUST to increase this share to 60%. The industry as well as India’s strategic interests need an assurance that advanced technology will be available in the future from domestic sources.
A humble request for certain actions from the government: • • • • • • • •
Setting up machine tools parks in the machine tools hubs of Karnataka, Maharashtra, Saurashtra and Punjab Incentivising investments in new technology machines (of the Mechatronics era) Creating common facility centres Support ongoing Quality & Productivity Improvement and Technology Development Programmes Create a Machine Tools Technology Development Fund to encourage R&D Introduce a compulsory course on machine tools in all technical institutes and colleges Modernise all workshops in engineering colleges and ITIs Government-owned undertakings and PSUs to treat Indian and foreign manufacturers at par with the contractual terms, with special consideration for Indian MSMEs
I hope that the Finance Ministry, under your able leadership, can draw up a Mission Report on this strategically important industry and take suitable steps. Jai Hind! Sincerely,
Shailesh Sheth