1 January, 2019 Compiled for Knowledge partner INDUSTRY REPORT Machine Tool Industry 2019
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1
January, 2019
Compiled for Knowledge partner
INDUSTRY REPORTMachine ToolIndustry 2019
INDUSTRY REPORTMachine ToolIndustry 2019
Overview of Machine Tool Industry in India 3
Why Telangana & Andhra Pradesh? 4 Demand Drivers
Strong Automobile & Auto component Presence 5 Hyderabad as New Defence & Aerospace Hub 7 Investment in Railways 10 Electrical & Electronics 11
Initiatives and Policy Support by Government 12
Why Hyderabad as a Destination for OrganizingExpos on Machine Tool Industry 16
INDEX
Estimated Market size of Indian Machine Tool Industry for FY 2018-19 is
INR 11,500 – 12,000 Crore
Growing at a CAGR of 12-15% over next few years
The market is fragmented, major 25 large scale organizations - HMT, Bharat
Fritz Werner, Kenmateta, Batliboi, Ace, Fanuac, Lakshmi, Yuken, ASB etc.
- account for about 70% of the turnover and the rest are in the MSME sector of
the industry
Estimated Market size of Indian Machine Tool Industry in Telangana & AP for FY
2018-19 is INR 500 – 600 Crore
There are 25-30 players in the region
Lokesh machine, ranks amongst the top five machine tool manufacturers in the
country, and is based out of Hyderabad
Operating from five locations (Hyderabad and Pune)
Huge presence of user industries, which include - Automotive, Defence, Aerospace,
Electronics & Railways
Machine Tool Industry in Telangana & Andhra Pradesh (refer as AP in report)
Industry Break Up Regional Break up
10%
90%
Forming
Cutting
40%
38%
16%
6%
West
South
North
East
42% 20% 18% 10% 10%End Users
Automotive Consumer durables Defence and aerospace Railways Others
Hyderabad is gearing up to become the largest industrial hub in Telangana and South
India, as it has existing conducive ecosystem
Presence of more than 200+ automotive and auto-component manufacturer within two states
Bharat Forge, Steelbird, Mahindra, Benelli, Deccan Auto, Isuzu, Kia Motors etc.
Existing Players
Why Telangana & Andhra Pradesh?
Overview of Machine Tool Industry in India (2/2)
1)
Presence of about 1,000 aerospace and defence related small and medium
enterprises adds to its strength in the domain
DRDO, BDL, HAL, TASL, Adani, Kalyani Rafael, Pratt & Whitney etc.
Hyderabad, is marching towards establishing itself as one of the leading electronic hubs
globally. Home for 250+ companies and growing at a CAGR of 9.3%
Nvidia, Motorola, Qualcomm, AMD, CDAC, Cypress, BEL, HBL, ECIL, Apple, Micromax,
Celkon etc.
Investment in railways segment has created a huge potential for Machine Tool Supply in
the region
Sources: 1) IBEF report on Auto-components, 2018
2) ACMA and SIAM website; Make in India
2)
3)
4)
By 2020, Tamil Nadu, Andhra Pradesh, Karnataka and Kerala account for more than
75% of the total after-market potential
Hyderabad stands on 2nd rank in registration of commercial vehicles in the country. If
number of taxis registration are removed, Hyderabad is the city with highest
commercial vehicle registration
Around 50,000-60,000 dealers, distributors & retails of auto components are present in
these two states
Andhra Pradesh and Telangana are wooing investment in the automotive space to
create automotive base. On the other hand, Chennai-Bangalore industrial corridor is a
major region for automotive players in the country
AP has managed to attract INR 25,000 Crore in the auto sector
Deccan Auto has set up a INR 250 Crore facility with a capacity to
produce more than 3,000 buses annually
Steelbird International to set up tyre manufacturing plant in Hyderabad
It will have a capacity to produce 5,000 units per day
Demand Drivers (1/7) 1. Strong Automobile & Auto component Presence
Total estimated market of Automobile is 1,308, 325 to 1,400,000 units in
Telangana & Andhra Pradesh
Total estimated market size of Auto component for FY 2017-18 is INR
20,000 to 21,000 Crore in Telangana & Andhra Pradesh
The market is growing with a CAGR of 10-12% Y-o-Y
M&M invested over INR 300 Crore towards the development of this
new platform of tractors. These were manufactured at Mahindra’s
newest plant located at Zaherabad in Telangana state
Investments and Tie ups
Sources: 1) IBEF report on Auto-components, 2018
2) ACMA and SIAM website; Make in India
Steelbird International to set up tyre manufacturing plant in Hyderabad
It will have a capacity to produce 5,000 units per day
2
Demand Drivers (2/7) Benelli has signed an MoU with Telangana government to set up a manufacturing facility in two phases
It also entered an agreement with AARI1, a subsidiary of Mahavir Group, to market its product range in India and also set up a CKD assembly plant for it in Hyderabad
Chinese electric bus maker BYD is setting up a plant with an investment of INR 200 Crore, partnering the Hyderabad-based Gold Stone Group
The Department of Heavy Industry under FAME-I2 scheme has provided a
subsidy of INR 1 Crore for each bus to Telangana.
UM Lohia Two Wheelers (JV company of UM International and Lohia
Auto), is going to invest INR 250 Crore for manufacturing two-wheelers
and engines
Hyundai Mobis, Is planning to set up a mega campus in Kollur/ Osman-
nagar Cluster in about 20 acres
The company plans to make the campus operational by 2020
Andhra Pradesh also, have a strong presence in - The Automobile and Auto
Components Industry, has a potential for USD 2 billion investment and USD
3.50 billion output
Over half the cylinder liners and clutch plates in India are being produced in
Andhra Pradesh
Isuzu Motors inaugurating its new plant with an investment of
INR 3000 Crore
The plant has a capacity of 50,000 units that can be scaled upto
120,000 units in future
Note: “1” Adishwar Auto Ride India
“2” the Faster Adoption and Manufacturing of Hybrid and Electric vehicles in India
Source: The economics times*, The economics times**, Indian Express
Demand Drivers (3/7) South Korean auto giant Kia Motors pumping in INR 13,000 Crore
in setting up its first manufacturing unit in the country at
Anantapur in Andhra Pradesh
It’s vendors too are queuing up to invest and have lined up
investments worth INR 4,790 Crore in the state
Hero MotoCorp will invest INR 1600 Crore in developing a
Greenfield manufacturing facility in Andhra Pradesh
Spread over 600 acres, with an annual installed capacity of 1.8
million units & will be achieved in three phases
Forging major Bharat Forge has created a component hub in
Nellore district on 100 acres land
Brakes India is planning to invest about INR 100 Crore in
expanding the capacity at Naidupeta
The proposed capacity expansion will add 24,000 tonnes to the
capacity
Ashok Leyland to invest INR 340 Crore on bus making plant in two
phases
Hyderabad is considered as the missile center of India with several
public sector defence labs and missile manufacturing facilities
located here
Telangana is targeting a share of 15-20% market share in the aero-
space and defence sector in India
Major strength of Hyderabad is the presence of 1,000+ (SMEs),
some of which are making parts of missiles, launchers, satellites,
aircraft, submarine and armaments
Some crucial components of inter-planetary vehicle of ISRO’s
Mangalyaan were sourced from the city
2. Hyderabad as New Defence & Aerospace Hub
Source: 1) CII & Yes Bank report on Automotive Industry in Telangana
2) Government of Telangana – Annual report 2017-18
3) TSTPC, Government of Telangana. website
Demand Drivers (4/7)
Proposed Aerotropolis at Bhogapuram
UAV Cluster at West Godavari
BEL facility at Machilipatna
Aerospace and Defence Park at Ananthapuram
Radar Test Bed Facility at Ananthapuram
The State is also planning to set up a larger aerospace and defence park in Eliminedu
and create another aerospace cluster within the National Investments and
Manufacturing Zone in Medak district with an investment of INR 2,500 Crore
in next 3-4 years
DRDO has proposed a Centre of Excellence for smart manufacturing in
aerospace and defence sectors in and around the city. For this, they have
planned invest INR 64,000 Crore by 2025 in Hyderabad
TATA Advanced Systems Limited (TASL) has four units in partnership
with aerospace giants Sikorsky, Lockheed Martin, Pilatus and
RUAG Aviation. They invested INR 4,000 Crore
Defence corridors being planned
Defence park in Eliminedu
Aerospace cluster in Medak district
Aerospace & Defence Cluster of Telangana & AP
Existing Players
Investments and Tie ups
Demand Drivers (5/7)
French aerospace and defence equipment maker Safran Electrical &
Power SAS is planning to set up shop in Hyderabad, and has signed a
MoU with the government. The unit will be set up at a cost of INR 52
Crore and is expected to create employment opportunities for 250
people
Adani will start a new plant in Hyderabad to manufacture composite
aero structure in tie-up with Elbit Systems of Israel, with an initial
investment of $15 million, which will go up to $100 million
depending on the order from the government
6 existing airports; 1 major and 3 no-frills airports planned
Eastern Naval Command HQ in Visakhapatnam
Presence of ISRO, Hindustan Shipyard, Bharat Electronics, and other defence PSUs
Upcoming naval shipbuilding facility by Reliance Defence at Rambilli,
Visakhapatnam
Upcoming weapons integration facility in West Godavari district
Dedicated A&D park near Palasamudram, Anantapur district
Missile testing facility planned in Nagayalanka, Krishna district
World-class MRO facility and air cargo complex planned at proposed Bhogapuram
Mega Aerotropolis
Andhra Pradesh
Key Policy Targets 2020 – A & D Industry
Existing Partners
INR 20,000 Crore 5,000 New Jobs
Upcoming Partners
Sources: 1) Telangana & Andhra Pradesh Government website
2) Online article: Telangana today, TSTPC publications
Medha Servo Drivers, a manufacturer of propulsion systems, will
set up a railway coach factory near Hyderabad with an investment
of INR 800 Crore
Pennar Industries received multiple orders aggregating INR 309 Crore,
out of which INR 124 Crore is booked for railways from Integrated Coach
Factory, Modern Coach Factory, etc.; for hydraulics and industrial
components from customers such as Emerson, Endurance,
Firestone, etc.
SCR*The South Central Railway, started MMTS, is planning toaugment the ongoing phase-I services by expanding at a cost ofINR 6 Crore
In phase-II involved an investment of INR 12 Crore
L&T has invested about INR 13,000 Crore of the INR 14,132 Crore elevated
metro rail project under the PPP model & Telangana Government
has invested more than INR 2300 Crore in phase I
In phase II, L&T is planning to invest INR 2500 Crore
For the ease of the consumers, it is planning to open two Metro
shopping malls connectivity at Erramanzil (0.35 million sq.ft) and
at Musarambagh (0.24 million sq.ft)
These will be in addition to the malls already functional at Punjagutta of 0.48
million sq.ft & at Hi-Tec City station of 0.21 million sq.ft.
Demand Drivers (6/7)
3. Investment in Railways
By 2020, Telangana State targets to achieve more than INR 120,000 Crore worth of
IT exports by growing at a CAGR of 16% and create more than 4 Lakh of direct
employment and 20 Lakh of indirect employment
Note: The statistics were provided by
Director of Software Technology Parks of
India (STPI) and Development Commissioner, SEZ)
Launched IoT Policy 2017 to create an atmosphere conducive for IoT specific businesses and manufacturing units to thrive in the State
Attract investments worth 10,000 Crore & generate direct employment
Demand Drivers (7/7)
4. Electrical & Electronics
Key Policy Targets 2020
Attract 160,000 Employment
Sources: 1) Telangana Government Electronics Policy 2017
2) Online article: TSTPC Website
Attract 160,000 Employment
Promoting Telangana as the ideal destination for Electronics Industry through
creation of sustainable ecosystem, making this industry a major contributor to
employment and economy in the State
USD 3 billion Investment
EnhanceProduction to USD 7.5 billion
Growth in IT/ITES Exports %
All India (Projected by NASSCOM) 7 to 9
Telangana 9.32
Launched IoT Policy 2017 to create an atmosphere conducive for IoT specific businesses and manufacturing units to thrive in the State
Attract investments worth 10,000 Crore & generate direct employment
T-Works, Government of Telangana’s initiative, acts as a prototyping centre for
electronics, semiconductors and hardware start-ups
At 250,000 sq. ft., T-Works will be one of the world’s largest hardware prototyping facilities
Phase-1 consists of ~70,000 sq. ft. area and equipment worth INR 10 Crore
The state government has undertaken number of reforms to offer an enabling and
investor- friendly business climate to the investors. Some of the key Ease of Doing
Business initiatives in Telangana include:
Telangana State Industrial Project Approval and Self Certification
System (TS-iPASS) established as a single point for clearances of
industrial set up
Single Window system, combined application form (CAF) with
provision to submit multiple applications in one form, Paperless
application and incentive disbursement
Predefined timelines (max 30 days for processing applications)
with provision for deemed approvals in case of no response
Minimum inspection, maximum facilitation with paperless
application and incentive disbursement
The State has planned industrial park along with anchor units, &
suppliers/vendors park
Mega projects will have to compulsorily set up a suppliers/vendors park
to encourage growth of local ancillaries.
This model can greatly benefit the automobile sector which is dependent
on the auto-ancillary units for their operational differences
Initiatives and Policy Support by Government (1/4)
Government Initiates for End User segment
1. Automotive
Note: The statistics were provided by
Director of Software Technology Parks of
India (STPI) and Development Commissioner, SEZ)
Initiatives and Policy Support by Government (2/4)
Established T-Works Automotive Prototyping center,recognized as India’s largest Prototyping Center
It have a dedicated wing for prototyping & soft toolingof automotive components/ assembly
Industry partnership in the same will be invited fromAuto OEMs and large component manufacturers
A Mobility Engineering Cluster is at planning stageand is being built with Industry partnership tofacilitate development and testing of futureautomotive technologies such as Electric Vehicles (EVs)and other emerging automotive technologies
It will house a state of the art infrastructure and technology base is envisaged to establish a globalbenchmark in Automotive Design, Development,Testing and Validation facility
EV Cluster - A mega Automotive Park with global standard infrastructure is currentlyat planning stage and is expected to commence by mid 2018
It will be spread over 1500-2000 acres catering to EV & EV component manufacturingfor two wheelers, cars, buses & trucks will be integrated with the Automotive Park plan
Source: 1) CII & Yes Bank report on Automotive Industry in Telangana
2) Government of Telangana – Annual report 2017-18
3) TSTPC, Government of Telangana. webiste
Telangana government is preparing a policy for Defence and Aerospace sector
The Telangana government has taken a number of initiatives to develop a Defence & Aerospace segment by developing an exclusive Hub, Aero Skills Academy in collaboration with Aerocampus Aquitaine, France and Aerospace Incubation Centre in collaboration with IIT, Hyderabad
Initiatives and Policy Support by Government (3/4)
PATENT COST
CAPITAL SUBSIDY
INTERNATIONAL FAIRS
OTHER TAXES AND DUTIES
QUALITY CERTIFICATION
VAT/SGST/CST
WATER SUPPLY
2. Defence & Aerospace
Source: Andhra Pradesh Automobile & Auto Components Policy 2015-20
CAPITAL SUBSIDY
PATENT COST
QUALITY CERTIFICATION
INTERNATIONAL FAIRS
OTHER TAXES AND DUTIES
WATER SUPPLY
VAT/SGST/CST
Capital Subsidy for Auto Clusters and ASMC developers – 50% of fixed capital investment in building and common infrastructure (maximum of INR 20 Crore)
Fiscal Incentives provided
75% reimbursement, subject to a maximum of INR 25 lakh
50% reimbursement, subject to a maximum of INR 5 lakh for MSME units
50% reimbursement of cost of participation in international fairs upto INR 5 lakh.
No entry tax and octroi duties; reimbursement of stamp duty, transfer duty
50% of the price of existing industrial supply tariff for the initial 5 years
100% CST reimbursement for 10 years
Gross VAT/SGST reimbursement on sale offinished goods for 20 years
Concessional VAT/SGST rates on input & capital goods @ 5%
75% reimbursement of Gross VAT/SGST for 10 years from the date of commercial production
1. Tax Incentives
Net VAT/CST/SGST reimbursements for MSME and large A&D units shall be as per the new Industrial Development Policy 2015-20
100% exemption from Entry Tax on ‘Plant & Machinery and capital goods’ for an initial period of 3 years (or policy validity period, whichever is earlier) from the date of commencement
For aircrafts which are brought in specifically for MRO in Andhra Pradesh,
100% reimbursement of VAT/CST/SGST on all input material (excluding Aviation
Turbine Fuel)
2. Capital Subsidy
Anchor unit subsidy of INR 10 Crore each shall be offered to first 10 aerospace and/or defence OEM enterprises established during the policy period
3. Patent Cost/ Quality Certification cost reimbursement
Government will provide financial assistance limited to 75% of the cost, subject to a maximum of INR 25 Lakh for obtaining patent registration and
50% of all charges, subject to a maximum of INR 5 Lakh paid for obtaining quality certification
4. Promotion of Defence Public Sector Units and R&D Centers
R&D investments in defence above INR 10 Crore would be eligible for
a 10% subsidy on investments subject to a maximum of INR 10 Crore
per investment
Initiatives and Policy Support by Government (4/4)
Fiscal Incentives provided:
1. Tax Incentives
Net VAT/CST/SGST reimbursements for MSME and large A&D units shall be as per the new Industrial Development Policy 2015-20
100% exemption from Entry Tax on ‘Plant & Machinery and capital goods’ for an initial period of 3 years (or policy validity period, whichever is earlier) from the date of commencement
For aircrafts which are brought in specifically for MRO in Andhra Pradesh,
100% reimbursement of VAT/CST/SGST on all input material (excluding Aviation
Turbine Fuel)
2. Capital Subsidy
Anchor unit subsidy of INR 10 Crore each shall be offered to first 10 aerospace and/or defence OEM enterprises established during the policy period
3. Patent Cost/ Quality Certification cost reimbursement
Government will provide financial assistance limited to 75% of the cost, subject to a maximum of INR 25 Lakh for obtaining patent registration and
50% of all charges, subject to a maximum of INR 5 Lakh paid for obtaining quality certification
4. Promotion of Defence Public Sector Units and R&D Centers
R&D investments in defence above INR 10 Crore would be eligible for
a 10% subsidy on investments subject to a maximum of INR 10 Crore
per investment
Why Hyderabad as a Destination for OrganizingExpos on Machine ToolWhy Hyderabad?
Hyderabad is a MICE capital of India and an emerging center for automotive cluster..
Currently there are 9 Exhibitions held in automotive space in India, and out of which
4 are held in South, as automotive business thrives there
As per SIAM, by2020 Indian vehicle production will touch 46 million units and auto
component revenues will increase several fold. South India will contribute at least a
third of this output
Some of the major user industries present in the region are Yamaha, Allison
Transmission,Turbo Energy, Titan Automation, Simpson, Roots, Hyundai Motor India,
Ford India, TVS Group, Royal Enfield, Hero MotoCorp , BMW India, Daimler, Mitsubishi,
Renault-Nissan plant, Ashok Leyland, TAFE, Caterpillar India, Wabco India, Wheels
India, Federal Mogul, Rane, Visteon, Takata, BorgWarner Thermal Systems, Ennore
Foundries, etc
Hyderabad is the missile center of India with home to public sector defence labs and
missile manufacturing facilities
Hyderabad is a well connected location for Exhibitors as well as Visitors
A. Road connectivity: The density of notified national highways in Telangana is
2.90 km/100 sq.km against the national average of 2.84 km/100 sq.km
B. Strong railway connectivity: The State also has an integrated railway network
with railway terminals such as - Nizamabad, Mahbubnagar, Kamma Reddy,
Bodhan, Jedcherala, Gadwal and, Balanagar
C. Access to world class airport facility: Rajiv Gandhi International Airport (RGIA),
Shamshabad is one of the largest 7 modern airports in India
D. Government of Telangana has entered MoU with Ministry of Civil Aviation and
Airports Authority of India for development of small airports at Kothagudem
and Warangal
E. Government of Telangana is ranked no 1 in Ease of Doing Business given by Department of Industrial Policy & Promotion (DIPP) and World Bank
Contact: Sambit Kumar Mund | +91 7337518888
HYDERABAD INTERNATIONAL TRADE EXPOSITONS LTD.
Trade Fair Office Building, First Floor, HITEX Exhibition Centre, Izzat Nagar, Hyderabad- 500084
Phone: 91 40 23112121/22 | Fax: 91 40 23112124 | Email: [email protected]
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