Manufacturing Today Web-Seminar on – "Awaiting the Transformation”

VDMA india

Three months ago, who knew a mysterious virus could send almost the entire world under some form of lockdown and affect billions of lives & businesses. The ongoing lockdown has put a lot of strain on the manufacturing industry, which contributes almost 20% of the GDP. Of this, 50% is contributed by the auto industry.

Even prior to the lockdown, the auto industry was not in a great shape, with sales down by more than 15% and production cuts of the order of 5 to 10% or more. In the unorganised industry, the situation was much worse, as the uncertainty would impact smaller organisations with lesser retentive power, due to their lower profitability.
The machine tool industry is getting mixed signals from the industry. The onslaught of electric vehicles, stress on increasing localization, improved technologies and innovations, are only some of the battles they are fighting.

As we stagger the emergence to normalcy and discover ways to deal with the economic consequences that will follow, India must be prepared with an economic reconstruction plan to revive different sectors of the economy. When we talk about revival of the economy post lockdown, the role of manufacturing sector and revival of the activities of the MSME are essential.

In moment of crisis, it is useful to sometimes visit the wisdom of the past. Some 2300 years ago, Chanakya wrote this insightful nugget which strangely enough is relevant to our present dilemma. He said “The root of wealth is economic activity and the lack of it brings material distress. In absence of fruitful activity, both current prosperity and future growth are in danger of destruction”. In our present context, the message is clear – the government must resolutely fight the pandemic but also allow the economy which has moved from ICU to ventilator to revive.




In this context, Manufacturing Today, organized a Webinar on – "Awaiting the Transformation” on Thursday, May 28, 2020. The panel discussion session was moderated by Mr. Rajesh Nath, Managing Director, VDMA India and joined by esteemed panelists as follows:

Mr. Indradev Babu, MD, Ucam India
Mr. Ravi Raghavan, MD, Bharat Fritz Werner (BFW)
Mr. Gururaj D Patil, MD, Emag India
Mr. Jay Shah, MD, Tungaloy India
Mr. Rajiv Gandhi, Sr. ED Production, MSIL
Mr. S. M. Vaidya, VP & Business Head, Godrej Aerospace

Mr. Rajesh Nath commenced with talking about the stimulus package of the government of Rupees 20 Lakh crores, which talks about Atmanirbhar Bharat or self-resilient India. The Vocal for Local is a concept that has long been prevalent in the manufacturing industry. To this Mr. Indradev Babu added that the government is now pushing to create emotion amongst the consumers and customers to buy more domestic products. These policy measures will not create any immediate demand, it will likely take some time, may be a quarter or so.



The COVID-19 pandemic has hit manufacturers in an unexpected and unprecedented way. For the first time in modern manufacturing history, demand, supply and workforce availability are affected globally at the same time. The market is in a flutter. Probably the highest ever instance of unpredictability. To this Mr. Gururaj Patil said that the automobile industry has been experiencing changes major like the BSIV to BSVI transition and e-mobility. Mr. Rajiv Gandhi called it a double whammy situation today for the automobile industry, because of the major technological advancements leading to cost additions and with the covid-19 crisis on top of that. In such a situation a prediction is even not possible.
Mr. Gandhi added that due to the virus and the social distancing requirement, the shared mobility drive may now shift and people may start buying their personal cars. This may increase in demand in the entry level cars and used cars. However on the other side with the salary cuts and the job losses, the desire to buy will get balanced by the capacity to buy.

Moreover, as the country moves towards the adoption of Bharat Stage 6 (BS6) emission norms, the future of machine tool companies would change. The engine technology has to be changed. So there will be a lot of re-tooling with concomitant demand for machinery. And at the same time, ‘light-weighting’ needs are there. Wherever possible, the re-design must lead to lower weight. These are the major opportunities.

It’s one of the ways to get better fuel efficiency; essentially, the machines have to be better and steadier, and the tools that you need for cutting, grinding, etc. have to be different and better. All these require better machines. So, the upgrade that is needed in the quality of the machines, the demand for new machines to serve various sectors such as space and defence, along with changes that are required to meet the BS6 emission norms are potential prospects.

The Aerospace and Defence (A&D) market in India is estimated to reach around $70 billion by 2030 and the momentum was expected to further pick up with improving infrastructure and government thrust. Now with the impact of COVID, the airline and travel industry have been severely impacted. Probably the highest ever instance of unpredictability in the aerospace industry. However, Mr. S. M. Vaidya said that government has ambitious plans for ISRO and DRDO. Although satellites are in good numbers across India, the share in global market is just 6%. This poses a lot of opportunities in the defence sector. And so a lot of thrust has been given to these sectors in the stimulus package also.

To this Mr. Ravi Raghavan added that a lot of private companies have come into defence equipment manufacturing. The ordinance factories starting talking with these private players for an open cooperation, showing a mindset change in the organizations and the industry is a huge opportunity for the sector.

Indian automotive industry supports employment of more than 3.7 crore people (directly and indirectly) and contributes 7.5 percent of India’s GDP and a whopping 49 percent of manufacturing GDP with a large economic multiplier impact. The sector was already “facing an unprecedented challenge with 18 per cent degrowth last year”.

Wuhan is one of China’s so-called “motor cities", Indian auto industry is highly dependent on Chinese parts. About 27% of the roughly $17.5 billion worth of component imports into India comes from China. Now due to COVID, disruption has become order of the day.

Supply chains are experiencing an unprecedented level of shock, especially for manufacturers that rely on long and inflexible supply chains from a limited set of suppliers in South Asia. Mr. Gandhi said that Covid-19 is an eye opener for the automotive industry. It shows how interdependent and vulnerable we are as an industry. This is the situation where industry, government and academia have to work together, which can only take us out of the adversity. 

Suppliers, on the other hand, need to seek to establish a more diversified client base and more localized customers across multiple geographies. Functions, digital tools and processes that can help manage supply chain risk, accuracy and flexibility will ramp up across the industry, leading to faster digitization of supply chains.
As governments and multi-nationals seek better insights into the complexities of supply and distribution chains for critical goods, digital tools will help better inform policy and business decisions. Greater visibility and coordination across the supply chain will enable better collaboration with a wider base of suppliers, ultimately driving decoupled, highly efficient—and more resilient—supply  chains.

Challenging times are excellent opportunity to question certain accepted ways of doing things.  As Winston Churchill said: Never let a good crisis go to waste. The government has pushed through some crucial reforms which because of varied reasons and perhaps political compulsions, were earlier not possible The aerospace industry requires precision parts and components. Be it Make in India or Atmanirbhar Bharat -Indigenization of defence manufacturing has been stressed on. To this Mr. Vaidya told about the Technology Development Fund (TDF), which has been established to promote self-reliance in Defence Technology as a part of the 'Make in India' initiative. It is a programme of MoD (Ministry of Defence) executed by DRDO meeting the requirements of Tri-Services, Defence Production and DRDO. The scheme encourages participation of public/private industries especially MSMEs so as to create an eco-system for enhancing cutting edge technology capability for defence application.

Mr. Vaidya added that India as companies are looking at shifting base from China, India is the next big country with the relevant infrastructure and manpower. As the government is focusing on bringing land and labour reforms, the industry should also come forward and start the investments, recruitment and training.

A study by Japanese investment bank Nomura found that 56 companies relocated production from China between April 2018 and August 2019, out of which only three came to India. Two companies went to Indonesia, eight to Thailand, 11 to Taiwan and 26 to Vietnam. This again poses the immense scope for India but shows that more needs to be done to attract FDI into India.

Technology innovation plays a key role in any industry.  It is essential for manufacturers to upgrade their product range and come out with new models. Highlighting the endeavours from EMAG side, Mr. Patil said that EMAG has been constantly investing in R&D. Starting only as a machine tool company, they now have 6 technology innovation centers across India. Mr. Jay Shah added that Tungaloy has been investing 10% in R&D. It is imperative, that technology is only going to survive in the difficult times and it is the right time to encash from the opportunity, the crisis has provided.

Mr. Shah further added with the increasing demand in medical, food and pharmaceutical sector, tractor manufacturers, tablet making machine manufacturers, die and mould manufacturers for plastic and FMCG, mobile tower manufacturers and ventilator manufacturers would have growing demand for the machine tool and cutting tool industry.

Additionally, at a time when people are looking for cost-effectiveness in manufacturing, digitisation of data, complex manufacturing system, advanced machine tools, implementation of SAP / ERP / PLM, IoT, networking, smart factories, smart cities, real time data requirement in smart network have invited a situation which is addressed by Industry 4.0 only hence going to be a technology that will drive and shape our future. Mr. Babu added that it a misnomer that industry 4.0 increases the cost of manufacturing. Conditional monitoring and remote monitoring has hardly any cost, but has huge benefits.

While concluding Mr. Nath said that Covid-19 could significantly speed up the trend of moving from traditional static organizational structures towards dynamic team forms, with people working in flexible groups with shifting  membership, often from different locations, to address particular challenges and referred to a quote from the German physicist Georg C. Lichtenberg which he felt was very apt when to the discussion on transformation; “I cannot say whether things will get better if we change; what I can say is they must change if they are to get better.”

VDMA India thanks the experienced and reputed panelists, who shared their views on several topics and would also like to thank all the attendees which were more than five hundred. We also compliment Manufacturing Today for organizing this web-seminar so efficiently.