Elevating Automotive Tooling Excellence – TAGMA
What are the current trends in the Indian automotive industry?
The current trends in the Indian automotive industry showcase robust growth, with impressive sales figures and a promising outlook for the future. One notable trend contributing to this growth is the increasing focus on localization within the automotive sector. This is particularly beneficial for Indian component manufacturers and toolmakers, as it opens up opportunities for increased collaboration and business.
Another significant trend is the rise of electric vehicles (EVs), aligning with the global shift towards sustainable and eco-friendly transportation. The Indian automotive landscape is witnessing a parallel evolution in line with this global trend, making it imperative for the industry to adapt and innovate.
Additionally, the frequent facelifts and new launches in the automotive market are contributing to the demand for advanced tooling solutions. This continuous cycle of product development and enhancement is generating substantial business opportunities for toolmakers, further fueling the growth of the industry.
In essence, the Indian automotive industry is experiencing multifaceted growth, driven by localization efforts, the advent of electric vehicles, and the consistent demand for cutting-edge tooling solutions due to frequent product introductions.
How the emergence of EV will impact the toolmakers business?
The emergence of electric vehicles (EVs) is a significant and welcome development for toolmakers. While it is true that companies focusing on traditional engine and powertrain components may experience an impact, the shift to EVs also brings forth a plethora of opportunities for toolmakers, specifically in the realm of engineering plastics.
As EVs become more prevalent, there is an increasing demand for components made from advanced engineering plastics. This includes a wide array of parts such as interior components, body panels, and various structural elements. Toolmakers are poised to play a crucial role in providing the necessary tools for manufacturing these intricate and precise plastic components.
Furthermore, the battery technology integral to EVs presents another avenue for toolmakers. Tools required for the production of battery-related components and housings are expected to witness a surge in demand. This presents a strategic opportunity for toolmakers to diversify their offerings and cater to the evolving needs of the automotive industry.
In essence, while the emergence of EVs may pose challenges for certain segments, it simultaneously opens up new avenues and demands for toolmakers, particularly in the realm of engineering plastics and battery-related components. Adapting to these changes will be key to thriving in this evolving automotive landscape.
How important is automotive industry for toolmakers
The automotive industry holds paramount importance for toolmakers, both on a global scale and particularly within the Indian context. Globally, it stands as one of the most significant customers for the tooling industry. In my estimation, a substantial portion—more than 60%—of the tooling business is directly associated with the automotive sector.
While it’s true that some toolmakers diversify their focus across various industries, a considerable number remain closely tied to the automotive sector. The interdependence is profound, and the growth of the Indian automotive industry has played a pivotal role in fostering a robust tooling industry within the country.
The intricate and precise components required by the automotive sector necessitate advanced tooling capabilities. As the automotive industry continues to evolve, toolmakers are presented with continuous opportunities for innovation and growth. The symbiotic relationship between the automotive industry and toolmakers underscores the significance of this sector in shaping the trajectory of the tooling industry.
Can you share present state of the Indian tooling industry?
The present state of the Indian tooling industry is notably optimistic, marking an advantageous period for toolmakers across the country. While the automotive sector remains a substantial contributor to the tooling industry, other diverse sectors are also fueling significant demand. Aerospace, packaging, medical, defence, electronics, and white goods are among the sectors that are actively generating substantial business for toolmakers.
Post-pandemic, both the global and Indian tooling industries have demonstrated resilience and sustained growth. In 2021, the global tool room industry attained a valuation of USD 80 billion, underlining the industry’s robust health. Specifically, the Indian tool room industry’s estimated market size currently stands at approximately INR 23,600 crore.
A pertinent observation is that around 34% of the tooling demand in India is met through imports, with a predominant share—about 80%—sourced from key nations such as China, South Korea, Japan, and Taiwan. On the flip side, India contributes to the global tooling market by exporting approximately 15% of its tooling production, with primary destinations being the USA, Spain, Mexico, and Germany.
Within the domestic landscape, Commercial Tool Rooms (CTRs) have experienced a commendable growth rate of approximately 8.1%, showcasing the industry’s vitality. Captive Tool Rooms have also contributed to the growth trajectory with a growth rate of approximately 1.5%, underscoring the dynamic nature of the Indian tooling ecosystem in the face of nearly stagnant import figures.
What are the challenges faced by the Indian toolmakers?
Indian toolmakers confront a spectrum of challenges that have been meticulously outlined in the recent report. Some of the prominent hurdles include:
- Lack of capital funding: While global tool rooms benefit from better access to capital funding, Indian counterparts face challenges in securing easy financing and subsidized loans, impacting their capacity to invest in advanced tooling technology.
- Lack of industry-ready tool room courses: Training programs in Indian Tool Room Training Centers (TRTC) often focus on fundamental machining and mould assembly. However, students often lack hands-on experience with advanced machinery, leaving them less industry-ready for the demands of the field.
- High cost of financing: Expanding into new sectors like aerospace and medical equipment manufacturing is hindered by the high cost of precision equipment acquisition. The expense associated with procuring advanced tooling machinery, equipment, and software for precision tools and moulds poses a significant challenge.
- Lack of outsourcing ecosystem: The dispersed presence of tooling suppliers in India contributes to a low level of collaboration. In contrast, overseas tool rooms strategically position themselves close to design and manufacturing facilities, suppliers, creating an ecosystem conducive to large-scale subcontracting.
- Issues related to concurrent engineering: The outsourcing dynamic often leads to a gap in concurrent engineering. Tool rooms receive projects post the design phase, missing out on valuable input in terms of viability during the design process. Consequently, the design for manufacturability shared with tool rooms may require multiple revisions.
Addressing these challenges will be pivotal in enhancing the competitiveness and capabilities of Indian toolmakers, fostering a more conducive environment for growth and innovation in the industry.
How do you see the future of the Indian tooling industry?
The future of the Indian tooling industry looks exceptionally promising, with growth rates currently in double digits, a trend we expect to continue. Several key factors are driving this robust growth:
Firstly, the Indian manufacturing industry is expanding rapidly, bolstered by substantial FDIs. These investments are fueling advancements and capacity expansions across various manufacturing sectors, thereby increasing the demand for high-quality tools and dies.
Secondly, the Indian government is highly supportive of the manufacturing sector. They have set ambitious targets to increase the manufacturing industry’s contribution to the GDP to around 25% in the near future. This proactive stance includes various initiatives and policies designed to boost local manufacturing capabilities and competitiveness on a global scale.
Additionally, the purchasing power of Indian consumers is on the rise. As more citizens experience increased income levels, the demand for goods and products grows correspondingly. This surge in consumer demand drives manufacturers to expand their production capacities, subsequently elevating the need for advanced tooling solutions.
Furthermore, Indian toolmakers have significantly closed the gap with their global counterparts. The quality and precision of tools manufactured in India now meet international standards, giving many OEMs the confidence to source their tools locally. This shift not only reduces costs but also enhances supply chain efficiency for these OEMs.
In summary, with the convergence of rapid industry growth, supportive government policies, increasing consumer purchasing power, and the rising global competitiveness of Indian toolmakers, the future of the Indian tooling industry is bright and full of potential. I am highly confident that this industry will continue to thrive and play a crucial role in the broader manufacturing ecosystem.