Project title:

Technology Upgrading
and
Productivity
Enhancement
of the
Machine Tool Industry
in India

A. CONTEXT
Background
Machine tool industry is the backbone of engineering sector in India and has reached a critical phase
of development. It started with the production of general purpose machine tools under technical
assistance from foreign collaborators in the 50s and has come a long way, particularly after its
liberalization in 1991. From a technologically point of view, the industry has built in-house
capabilities for R&D to facilitate development of new machine tools as well as improvements in the
performance of existing machine tools. There is a special focus on the production of more efficient and
reliable machines to meet the growing needs of machine tools users.
To provide necessary drive for up-gradation and growth of machine tool industry in the era of posteconomic reforms, the Government of India, UNIDO and the Indian Machine Tool Manufacturers
Association (IMTMA) jointly launched a National Programme for Development of Indian Machine
Tools Industry (NPDMI) in 2001, along with other stakeholders. This programme was initially
conceptualized for a period of three years and helped create awareness on market and production
needs of machine tool sector amongst the concerned industry and desired improvements in quality of
machine tools to be able to compete worldwide. The programme aimed also at strengthening the
competitive position of the Indian machine tool industry by enhancing manufacturing capacities,
strengthening its technological and market development capacity, as well as fostering strong linkages
with other SSI sectors giving a pivotal role of machine tools in the industrys drive to become a global
player.
The major objectives of the first phase of this national programme were to:

Ensure substantial growth by enhancing demand for machine tool.

Promote export of the Indian machine tool industry.
Achieve quality level exceeding customer satisfaction and meet international requirements and
standards.
Attain cost leadership.
Go on a technology over drive.
Leverage IT as an enabler for enhanced competitiveness.
Sustain business excellence.
Build up training capacity and develop programmes for sustained growth.

The programme was implemented by IMTMA at the field level and consisted of the following major
programme deliverables:

Select 20-25 companies to be benchmarked against best global players in technology,

quality and cost by 2004.
Double exports of Indian machine tools in 3 years and treble in five.
Achieve high growth in CNC machine tool production.
Maintain and consolidate market share at a consumption rate of 50 %.
Establish strong international linkages with components and sub-system suppliers,
technology sources and markets.

Establish Made in India label in machine tools as the one achieved with software
companies.
Utilize UNIDO expertise in building up world class industry.
Usher in an era of e-commerce in machine tool trade.
Build up capacities for becoming a global market supplier.

This programme facilitated significant achievements during the period 2001-07, which showed growth
and development of the machine tool industry in India:

Increase in production of machine tools from US$115.0 million in 2001-2002 to US$438.0

million in 2006-2007, representing a near 4 times increase in 5 years.
Rise in turnover of CNC machine tools from 1,235 in 2000-2001 to nearly 6,000 in 20062007.
The IMTEX 2007 machine tool show in Bangalore generated orders valued at US$ 250.0
million.
Introduction of high speed machines, as well as machines with linear motors, so as to
bridge the key technology gap.
Facilitation of the Bangalore machine tool cluster operation enabling to support member
companies in technology up-gradation and market development. Replication of similar
programmes in clusters underway in Batala, Ludhiana, Pune and Rajkot.
Technology development plan, namely, Perspective Plan, for 45 units in Ludhiana, Batala
(Punjab), Rajkot (Gujarat) and Bangalore.
Enhanced visibility of the Made in India brand through participation in international
overseas machine tool exhibitions.

Building up and upgrading the unit level in-house capacities, institutional capabilities of IMTMA and
some other institutions such as Institute for Machine Tool Technology, Batala have generated a
multiplier effect of development, leading to horizontal transfer of technology.
However, the industry needs to adopt a visionary approach and aim for a stretched goal of exponential
growth, which must be substantially export driven. In this way, the Indian machine tool could become
a real global player.

Description of sector
Fall in imports of machine tools in recent times is partly attributed to the growing competitiveness of
Indian firms. However, the Indian market is relatively small and manufacturers, in order to stay in the
market, have to look at global market demand and to build up volumes. This issue is of greater
relevance to a large number of enterprises in the sector as well as to tiny and small component
manufacturing enterprises.
Besides the critical issue of building volumes, enterprises have also to upgrade their products and
processes technologically and quality wise for remaining competitive. The machine tool industry is
still facing the dilemma of whether to remain as finished product supplier and face competition from
large volume producers or become sub-suppliers of components and/or sub-systems to Original

Equipment Manufacturers (OEMs). The recent trends in the Indian machine tool industry indicate that
the industry grew at an average rate of nearly 30% in the last three years, from 2004-2005 to 20062007. Taking into account the fact that the total consumption of machine tools in India has grown at
50% in the same period, there is a large scope for the continued advancement of the Indian machine
tool industry, if the required support for up-gradation is made available.
Status of machine tool industry in India
Currently, there are about 160 units in the organized sector and approximately 800 in the tiny and
small-scale sector producing machine tools and related products. These units are engaged in
production of traditional as well as modern machines. The range of machines manufactured in India
includes the following:

Metal-cutting machine tools:

EDMs; machining centres; lathes and automats; boring-milling machines; milling
machines; drilling machines; threading/tapping machines; grinding machines; honing,
polishing and other super-finishing machines; planning; shaping; slotting and broaching
machines; gear-cutting machines and SPMs, among others.

Metal-forming machine tools:

Bending, folding, straightening and flattening machines (including press brakes);
punching and shearing machines; presses and die-casting machines, among others.

Geographically, important machine tool producing locations/clusters include Bangalore, Coimbatore;

Pune, Rajkot and Jamnagar in South India; Surendernagar in Western India and Batala, Jallandhar,
Ludhiana and Faridabad in North India.
Size-wise, the industry structure has changed in the past 5 years as well. From a dominance of
production from a government owned public sector company (HMT), between 2006 and 2007 nearly
70% of production came from 20 mid-sized private sector companies; most of them have become midsized in the past 5 years.

Years

Production
INR mln.

Production
US$

Import
INR mln.

Import
US$

Export
INR mln.

Export
US$

Consumption
INR mln.

Consumpti
on US$

94-95
95-96
96-97
97-98
98-99
99-00
00-01
01-02
02-03

6510
7420
8240
7550
6570
6170
5870
5200
5490

130,330
148,548
164,964
151,151
131,531
123,523
117,517
104,104
109,909

3790
5980
11460
8040
8940
5060
3410
3110
4510

75,875
119,719
229,429
160,960
178,978
101,301
68,268
62,262
90,290

480
200
290
430
590
310
300
480
360

9,609
4,004
5,805
8,608
11,811
6,206
6,006
9,609
7,207

9820
13200
19410
15160
14920
10920
8980
7830
9640

196,596
264,264
388,588
303,503
298,698
218,618
179,779
156,756
192,992

Import
Penetration %
38
45
59
53
60
55
38
40
47

03-04
7970
159,559
9650
193,193
550
04-05
10940
219,019
18200
364,364
526
05-06
13521
270,690
28986
580,300
501
06-07
17315
346,646
46557
932,072
736
Source: Indian Machine Tool Manufacturers Association (IMTMA), New
Delhi

11,011
10,530
10,030
14,734

17070
28567
42005
63137

341,741
571,911
840,940
1,264,004

57
64
69
74

The estimated consumption, production and import of machine tools are as follows:
Table 1: Consumption, production and import of machine tools in India
Although the industry has lost a considerable share of domestic consumption to imports during the last
3 years, the absolute growth of the industry has been one of the highest in its history. This lends
credence to the belief that the Indian machine tool industry can become a significant global player and
carve a niche for itself in the high technology sunrise segment of NC/CNC machine tools.
Performance of Indian machine tool industry
According to the World Machine Tool Output and Consumption Survey (2007), the world output of
machine tools increased 10% over last year to nearly US$60.0 billion. However, Asian countries
increased their output faster than Europe or the USA pointing to a growing shift of machine tool
production to Asian countries. The Republic of Korea and the Province of Taiwan, China occupy the
5th and 6th rank in production and consumption.
The Indian machine tool industry, which dropped to 22nd place in the world production, improved its
ranking to the 18th rank in 2006. In consumption, India ranked the 11th showing a high demand for
machine tools. Considering the strong demand growth prospects over the next 3 years and investments
planned by the industry, the Indian machine tool market could jump up several places in the next few
years. This period opens a golden chance for the industry to reach world leading.

Table 2: Industry performance pattern

70000
60000
50000
40000
30000
20000
10000
0
94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07
Consumption

Import

Production

Source: Indian Machine Tool Manufacturers Association (New Delhi).

The above graphic presentation shows that there has been a marked growth of the industry production
over the last 3 years. The growth rate has been approximately 30% during this period, one of the
highest one recorded by the industry ever. Nevertheless, the growth in demand has been much higher
leading to increased imports which is around twice domestic production now. In other words, there is a
great opportunity for the industry to invest in new capacities to meet strong domestic demand and, at
the same time, look to expanding its export market.

Table 3: Number of CNC machine tools produced

12000
9600

10000
8000
6000
4250

4300

`04-05

05-06

4000
2250
2000

1367

1235

1300

00-01

`01-02

`02-03

0
`03-04

06-07

Source: Indian Machine Tool Manufacturers Association (New Delhi).

The most popular types of CNC machines produced now are CNC lathes, vertical and horizontal
machining centres, wire cut EDM, CNC external grinders and flexible CNC SPMs. In fact, in stand
alone CNC machine tools, the Indian machine tool industry is beginning to realize volume driven
competitiveness. This substantial growth makes CNC machine tools as becoming a sunrise segment.

Table 4: Export of Indian machine tools

800

736

Rs. in million

700
550

600
480

500
400

526

501

360
300

300
200
100
0
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

Source: Indian Machine Tool Manufacturers Association (New Delhi).

Export performance of Indian machine tool industry has not been noteworthy in the past. After 50
years of import substitution mindset, there was a need to look outwards in 2002 (BIMU-2002 and
EMO-2003 participation in Italy) when the exponential growth in the domestic market started. This
has put all machine tool manufacturers in a capacity crunch. Although the demand on machine tools,
particularly in the European market, is increasing, there is simply no exportable surplus, at least for the
time being.. However, progressive companies have not lost site of export advantages and select
companies have even established operations in China and Europe. The principal reasons why exports
have not taken off are:

Indian machine tool industrys preoccupation about domestic market.

Inadequate cost of accessing and developing export markets.
Strong competition from Asian countries such as the Taiwan Province (China) and the
Republic of Korea, among others.

Challenges
Although significant achievements have been visible in the machine tool sector during the last 3 years,
the sector is facing new set of challenges:

Declining tariff barriers resulting in increased imports.

Pressures on profit margins due to keen competition.
Technology obsolescence. This is a relatively recent phenomenon arising from the rapid
development of new technologies in materials, mechatronics and electronics as applied to
machine tools.

Many enterprises are concerned about the future due to increasing pressures of competition. Although
there is confidence for them to meet these challenges, there is some hesitation on their part to move
forward due to the large resources that they need to commit. The major areas of concerns are:

Technology obsolescence: Technology obsolescence in machine tool business is extremely

rapid. Product lifecycles are declining and currently average life cycle is typically 3 years.
Most of the products in the past have been a result of reverse engineering. Unlike the
Japanese and Koreans, the Indian manufacturers have not graduated to the next level of
improvement, that is the technology of reverse engineered products. Thus, enterprises
will have to face the emerging technology challenges.

Higher resource requirement: The restricted availability and the inability to raise
resources are common to all types of small businesses. However, the machine tool, by its
nature, is a high financial outlay driven business. Average product costs are greater,
gestation period of investment is longer, time to market is higher and purchasing systems
are not yet fully matured. This means greater financial resource requirement than the
situation faced in other businesses. This, in turn, puts machine tool enterprises in a
particular disadvantage.

Vendor linkages: The machine tool industry requires a complex level of vendor linkages
for materials, electronics, hydraulics, pneumatics, metallurgy, tribology, measurement,
controls, etc. The list of myriad technology linkages is endless. This requires exceptional
networking capabilities.

Diversity: The business has a very large diversity also. For example, it encompasses a very
wide range of products from standard machines to very complicated special machines. This
highlights the unique complexity of the business, which is more heterogeneous in products
and technology.

WTO: The introduction of WTO regime has needed extensive changes in the approach of
the Indian machine tool industry. As a result, the industry has been affected in some of
their operations, namely:
Strict intellectual property rights, which means end to reverse engineering;
enterprises will have to develop their own products.
Conformance to international standards requires system certification (i.e. ISO) and
product certification (i.e. CE).
Enforcement of environment protection measures will impact heat treaters,
foundries and similar segments.
Modified labor laws and new work culture mean that enterprises will need to
improve their management styles.
Dilution of the role of state enterprises supporting SSI sector (NSIC, SIDBI, SISI,
etc.) and inability of government to intervene in international trade means
individual companies have to stand on their own feet.
Early awareness about WTO and its impact on enterprises is necessary; therefore,
awareness programmes will be needed.
Permanent monitoring mechanism is to be created, perhaps within the Secretariat of
the Indian Machine Tool Manufacturers Association (IMTMA) to analyze the
impact of above mentioned provisions of WTO on regular basis and results
circulated among all member companies.

Perhaps one of the main challenges faced by the machine tool enterprises is the ability to meet the
vastly increased demand of domestic industrial users and, at the same time, be able to supply
international markets, that is, increasing exports. Essentially, this involves:

Covering technology gaps and modernizing the product range, apart from adopting
the latest technologies in production.
Getting into manufacture of volumes to drive economy of scale in order to combat
international competition (from German, Japanese, Korean, US and other
producers).
Capacity building: many units require major investments in capacity expansions.
What should the manufacturing philosophy of the future be? In which
investments should be made?
For all enterprises, market reach is very limited and restricted. The challenge is
how to expand market coverage.

These challenges need to be comprehensively addressed by the Indian machine tool industry for
attaining sustainable competitiveness and improving its global position as an important machine tool
producing country.
Needs of the industry
The growing competition and technological development in machine tools sector are having inevitable
effects on the Indian machine tool industry. This industry is facing typical problems in the emerging
globalization scenario, primarily due to:
Technology:

Innovation is not happening as fast as it should.

Absence of center of excellence for R&D.
Manufacturers sell different designs and the variety of machine are too large.

Markets and volume:

Information concerning domestic and export markets is poor.
After sales service needs to be improved.
Information sharing is poor.
Manpower and skills:

Lack of training including the concept of 5s.

Lack of professionalism.

High costs:

No ability to reap benefits of scale.

Prices of machines are high compared to China or the Taiwan Province of China.

High cost of consultants.

High cost of inputs and production.

In 2000, after benchmarking the Indian industry against world markets, the gap in technology and
performance of the machine tool sector were substantial. The NPDM facilitated in identification of
gaps. Large efforts were however needed for bridging the gaps in technology in the machine tools
sector for production of high quality and high performance machine tools in a cost-effective way.
During the implementation of NPDMI, some improvements were visible. A few demonstration units
have come up with production of high quality machines, based upon innovations. Some of the
essential activities for the machine tool industry could not be implemented due to time constraint, in
particular:

Outbound tours for exposure and technology tie ups.

Best practices, studies, seminars and conferences on identified areas.
World market study and seminar on its status.
Demonstration activities and training courses on productivity.
Mechatronics programmes and capacity building in this area.
Technology book on industrial design.
Design courses at Rajkot and Ludhiana.
Marketing strategy study and seminar: DMG and Hass Model.
Technology upgrading SME Cluster at Pune and Surendernagar.
Applied economics: study and seminar.

For small and medium enterprises, it is apparently difficult to meet the technological up-gradation
needs independently due to economic and other constraints. This issue has acquired greater
implications due to WTO challenges. A structured intervention is therefore warranted to facilitate
transfer and absorption of technology to meet the machine tool requirements in the next 5 to 10 years.
Thus, much more needs are to be fulfilled for the machine tool industry to mitigate the effects of
technology obsolescence and remain competitive in the market. The earlier programme established
that:
a. The Indian machine tool industry has the potential to grow to global levels.
b. The market potential and avenues in different world markets such as Europe, the United
States and South-East Asia have been established.
c. The industry has created the desired network for growth and after sales service to further
build up confidence of machine tool users.
Technology gaps and upgrading required
The technology gaps have been identified during implementation of NPDMI. The machine tool
industry now needs to upgrade its products having into account the five cardinal requirements of P-QR-S-T, e.g. Productivity-Quality-Reliability-Service-Technology. The industry must focus on
building machines with the following characteristics:
Productivity:

High speed machining and high RPM spindles.

Fast turrets, linear motors (to minimize non-machining time).
Single hit machining.
MT for lean and cellular manufacturing.
Rapid tool change.
Cost effective automation.

Quality:

Increased accuracy in production (CPK, CPM, etc.).

Reliability:

Enhanced reliability in operation (MTBF and MTTR).

Low maintenance requirements (TPM).

Service:

Remote diagnostics.
Autonomous condition monitoring.

Technology:

Higher level of IT application and integration.

Reconfigurable machining systems and machines.

The machine tool designs need to adopt the latest concepts and technologies to bring out machines of
international standards:
a. Dry machining/minimum quantity lubrication: Reduction or elimination of coolants in
machining in order to reduce environmental and cost burdens.
b. Hard machining: Machines capable of turning, milling and otherwise machining
components in the hardened state. Such machines are becoming the vogue in
international practice.
c. Complete machining: Integration of various machining processes such as turning,
milling, drilling/boring, gear cutting and grinding in a single machine to finish the work
piece in one set-up. They are often called multi-tasking machines.
d. Micro-machining: Metal- and non-metal-cutting processes for generation of
miniaturized components partially having geometric dimensions in the sub-millimeter
or micron range.
e. Linear direct drives: Replacing conventional ball screw drives; these incorporate linear
motors directly moving machine members. It results in higher dynamic response and
accuracy.
f. Rapid prototyping: Rapid realization of prototypes and pre-production series of new
products for geometrical and functional testing.

g. Internal high-pressure forming: Generation of complex geometries from a single work

piece by using high hydraulic pressure.
h. Near-net shape forming: Generation of the final contour of a work piece as to shape,
dimensional accuracy and surface quality, in a single forming process. This reduces
machining considerably and results in material savings and cost reduction.
i. Lasers in material processing: Laser machining, welding and heat treatment are
bringing new flexibility to part design and construction. Laser machining also provides
fast production rates and avoids costly tooling.
j. Improved operations resulting from more capable CNC that can download instructions,
use remote diagnostics, show cycle progress at the machine visually, contour more
accurately and manage the entire machining process with little intervention. Modern
CNC systems can trouble shoot, self correct and alert operators to unusual conditions to
keep the machining process going.
k. Metal-forming machines: Some modern technologies include die less forming, hydro
forming and magnetic pulse forming, among others.
Supporting technologies and inputs: The up-gradation of machine tools can only be done if the
industry adopts the latest technologies supporting product design and development.
a. The design and development process should simultaneously be upgraded to adopt:
Latest 3D CAD/CAE techniques.
Digital prototyping and testing.
New materials for machine tool construction.
These inputs will improve product performance and reduce development cycle time.
b. Components: The industry depends entirely on imports for all critical components:
linear guide ways, spindles, motors, controllers and CNC systems. This is a potential
weakness, as these components constitute a substantial input. There is a need to develop
enterprises which will manufacture these components. This requires technology inputs
and development support.
c. Manpower: Like other industries, the Indian machine tool industry is facing difficulties
in attracting manpower. This is mainly due to the opportunities available to diploma
and degree holders in the IT and ITES industries. There is also a high attrition rate in
the industry.
One of the primary focus areas in NMPDI 2 is to develop a programme to attract
manpower to the machine tool industry and then to train, retain and develop them as
they grow.
A career in machine tools has to be structured and sold to potential employees and followed up with
appropriate training programmes covering all functions from design to dispatch, in particular:

Design using latest CAD/CAE techniques.

CNC programming and operation.
Fixturing and tooling.
Instrumentation and testing.
Mechatronics technology and training.
IT enabled troubleshooting and servicing.
IT in manufacturing: from shop floor to top management.

The SWOT analysis of the Indian machine tool sector has indicated opportunities and also helped in
pinpointing the weaknesses to be addressed. There are several improvements/new developments that
have to be made by the Indian machine tool industry. Fortunately, the technology trends are clear and,
therefore, it should not be difficult to achieve these targets in a specific time frame. However, one
current trend is unmistakable and acknowledged that the competition at global markets can be
achieved through application of new technologies and innovations and won through technological
networks and cooperation partnerships, instead of individual efforts of enterprises.
Strategy
If the Indian machine tool industry is to continue its growth path, it has to formulate and implement
the strategy based on the application and diffusion of new technologies and innovations and best
international management and practices into product and market development. Given the large
diversity of the industry, it may be advisable to select the areas, in which the industry will concentrate
its efforts. Having done so, the effort should concentrate on developing and marketing products, which
are suitable for both export and domestic markets with some changes dictated by local conditions and
needs. The technology level and product standards should not differentiate between domestic and
export markets. The P-Q-R-S-T content should be internationally benchmarked and serve all markets.
With these objectives in view, the industry may lay greater focus on the production and marketing of
the following product groups and machines:
a) Metal cutting group

CNC lathes, turning and turn-mill centres.

Vertical and horizontal machining centres.
Grinding machines (conventional & CNC).
Sawing and cut off machines.
Electric discharge machines (EDMs).

b) Metal forming group

Forming and deep drawing presses.

Punching, notching and nibbling presses.
Bending and shearing (press brakes).

c) Accessories

Chucks and work holding devices.

Cutting tools, tool holders and tooling.
Fixturing.
Multi-tool heads, angle heads, etc.
Index and rotary tables, etc.

As a part of the strategy, information was disseminated amongst the industry to understand the
emerging trends and needs of machine tool users during implementation of NPDMI. The industry has
realized the following aspects with a fair degree of clarity:
a. General purpose machines (GPMs) do not seem to be items of major imports into the
target markets. Being of low price and technology, these may not be viable in the longrun. At the same time, simple items like sawing and cutting off machines have high
potential in world markets but the Indian manufacturers have not focused on this
product.
b. Metal forming machines: They form a very significant group in world machine tool
trade. The Indian machine tool industry seems to have totally ignored this market
segment.
c. CNC turning and machining centres: These are fundamentally volume driven and
price sensitive in their standard versions. Economies of scale can be achieved only by
volume manufacture of these machines. There is a large target market for these
machines, provided Indian producers manufacture these machines in volumes.
d. The area of grinding machines is fundamentally technology driven with many subelements that constitute overall product performance. However, these machines do not
have a high volume and are not so price sensitive. Performance overrides all other
considerations. The proposed technology is very advanced.
e. Special purpose machines (SPM): There is a substantial market for SPMs, which are
highly engineered products and are component specific (auto parts). The Indian
machine tool industry has acknowledged strengths and capabilities in this field. The
Indian made SPMs can be highly price competitive compared to those produced in the
United States and Europe. There is no competition from Asian countries. The current
technology of SPMs uses machining centre modules in many applications and is,
therefore, easier to engineer and build. This is an untapped area and holds high
potential for the export market.
With world production increasing and product zones shifting, India is positioned to export these
machines provided they are manufactured with focus on export markets rather than domestic markets
alone.
Based upon the above analysis, the machine tool industry in India needs further support for the
development and production of following group of products for both domestic and international
markets:
a. General purpose machines and plastic processing machinery for domestic market as well as
for targeted developing countries.
b. Stand-alone NC/CNC turning machines with targets on Indian, the United States and
European markets.
c. Machining centers. Focus should be on building up production volumes in order to boost
exports.
d. Grinding machines for India and targeted European and Asian markets.
e. Presses and metal forming equipment for India and Asian markets.

f. EDMs, sawing and cut-off machines and accessories and developing them on a targeted
product basis for global market coverage.
g. Special purpose machines (SPM): This is an untapped area and holds high potential for
export market, besides the strong domestic demand.
During the three year implementation of NPDM-Phase I, identification of products and targeted
markets has been accomplished. The type of features needed to be built into the machines have been
identified and also adopted in certain cases. The design capabilities of the enterprises have been
partially upgraded. However, the other critical aspects of cutting development time, production costs,
specialization in manufacture of components, sub-assemblies and modules and total reliability still
need to be addressed more comprehensively. The development of machine tool industry, therefore, has
to be based upon a systematic approach applicable for each of the following aspects:
a.
b.
c.
d.
e.
f.

Selection of product group and features to meet domestic and export needs.
Machine tool design using the latest CAD/CAE techniques.
Machine tool components standardization.
Specialization in machine tool components/sub-assemblies production.
Integration of clusters for input sourcing.
After sales service network.

In addition, for enhancing competitive strengths and manufacturing capabilities of the enterprises, it
will be imperative to focus on the following:
a. Specialization in the production of machine tool components.
b. Use of reliable and improved manufacturing practices for in-house machining
of machine tool castings and other machine tool items to ensure in-built quality and
accuracy of components. This is absolutely critical for the overall performance and
reliability of the machine tools, particularly for high speed machining operations.
c. Expansion of machine tool and machine tool components manufacturing capacity to meet
the growing demand of the machine tools, both in the domestic as well as overseas markets.
d. Capacity building for components, sub-assemblies and controls in the areas of:

Measurement and sensors.

Motors, drives and controls.
Automation and robotics.
Machine tool elements and components.

Thus, the major focus of the programme would be on development and expansion of machine tool
components as well as machine tool manufacturing base in tune with the emerging technological needs
of the machine tool users. This will help tapping the growing potential, both in domestic and export
market, leading to establishment of Indian machine tool industry as a global player for production of
modern, reliable and efficient machine tools.
Conducive environment for up-gradation and development

The duty on the machine tools has been consistently reduced from 110% to 7.5% in consonance with
WTO obligations. Thus, no QRs (quantitative restrictions) are applied to machine tools and, therefore,
it is not an issue of significance in this industry. The industrial policy for investment and technology
up-gradation has been generally liberalized since 1991. Avenues for free investment without prior
approval have been created.
Machine tool industry is completely free from any controls. Foreign companies can set up a plant
anywhere (outside urban limits) with 100% equity and managerial control without having to obtain
permission for it. With introduction of VAT from 01/04/2005, a large part of multiplicity of tax
problem may be solved making cross border trade within India without hassles and excessive tax
burden. A comprehensive bill the Indian patents act has been promulgated conforming with
requirements under TRIPS (Trade-Related Aspects of Intellectual Property Rights) of WTO.
There is abundance of skilled manpower, availability of basic raw materials, rising class of technical
entrepreneurs and component manufacturing capabilities (foundry castings) tooled up
machines/complex custom built machines in India. Therefore, by addressing issues concerning low
volume operations, process capability and the five cardinal principles of P-Q-R-S-T, the performance
of Indian machine tools enterprises can be greatly improved. In this efforts, a greater focus on
increased exports is needed for the long-term viability of the expanded industry.

B. REASONS FOR ASSISTANCE FROM UNIDO

UNIDO, the only one specialized agency for industrial development in the UN system, has been
working with governments, business associations and individual companies to solve industrial
problems for more than 40 years. Within these years, it has become the worlds most experienced
industrial problem solver. In many fields, it has rightly earned a reputation as a neutral, honest broker
playing a vital role in building up partnership, cooperation and coordination. This is particularly
important in the rapidly changing global economic and highly competitive environment.

The reputation as an honest broker has been won through:

More than 40 years experience of bringing together eminent experts, governments,

institutions and industry to find solutions for problems in technology transfer and investment.
Identification of technology sources and investors and mobilization of funds for projects and
industries.
Transfer, acquisition and adaptation of new technology and innovations.
Matching needs of donors and recipients with benefits for both sides.

Its services are customized and have been designed to be easily integrated into packages that will
address specific country needs.
In the technology area, UNIDO is transferring its rich global experience in building up awareness
concerning new technologies and innovations and providing the countries with access to technology

sources and relevant technical support services to manage technological change for enhanced
productivity and competitiveness of local manufacturing industry. Today, such assistance has
increasingly been focused on bridging the technological advances with investment and other funding
sources at the industrial marketplace as well as with fast growing market and consumer demand on
new products and services.
Its assistance aims also at strengthening technological capability and technology transfer mechanisms
for further sustainable development, advising on ways and means to manage the technological change,
providing support to networking arrangements and fostering international cooperation and partnership.
It includes the formulation and implementation of national policy and strategy so that to provide these
processes with friendly environment, fiscal incentives and relevant policy regulations.
In all such projects and programmes, UNIDO has demonstrated its experience, competence and
capacity enabling to develop and implement concrete activities with main focus on industrial
knowledge-based development. This particular project is expected to lead to further activities calling
for independent advice on technical assistance, investment promotion, technology transfer, acquisition
and adaptation as well as on the development and application of new technologies and other related
support services.
While implementing the projects/programmes, UNIDO also makes available its tools, methodologies,
manuals, guidelines and training kits, which allow the counterparts to apply the best international
practices in different areas of investment and technology promotion and transfer enabling to manage
technological change in global economic environment and rapid technological pace. In addition, it
also uses the services of its other International Technology Centres (ITCs), Investment and
Technology Promotion Offices (ITPOs) and newly established Centres for South-South Industrial
Cooperation (UCSSIC) as a new global mechanism for building up partnerships with other institutions
and enterprises in both public and private sectors worldwide.
UNIDO Integrated Programme of Cooperation between the Republic of India and UNIDO (20082012)
The UNIDOs Country Service Framework (CSF), finalized in 2002, in cooperation with the
Government of India, specified the industrial sectors, functional areas, and states of India where future
UNIDO activities should be focused. The on-going Country Programme of cooperation between the
Republic of India and UNIDO (2008-2012) has also identified investment and technology promotion
as one of UNIDOs priority area. It includes the support to technology upgrading and rehabilitation of
small scale enterprises, human resource development and skills upgrading, environmental
sustainability of industries and attraction of foreign direct investment as key focused areas for the
implementation of the above-mentioned large country programme.

C. THE PROJECT
Introduction

The machine tool industry is now making huge investments to expand their production base for
meeting the growing domestic and overseas market. Sizable orders received during international
machine tool exhibitions in Italy and Germany in recent years have provided the much needed impetus
for tapping the export potential. The general growth in economy has opened new ways for further
technological development of machine tool enterprises. Machine tool industry is also critical for the
industrial development of the country.
This sector is on the threshold to channel flows of technology into the engineering sector. The growth
of over 30% experienced in the past 3 years makes feasible a continued growth of at least 20% during
the next 5 years, this is subject to the strengthening of the existing institutional framework for
development and up-gradation of manufacturing enterprises. According to WTO compatible
environment, the manufacturing units do not have the option of reverse engineering due to WTO
obligations and have necessarily to adopt innovative developments to keep pace with technology.
The programme intervention is needed for further strengthening the Indian machine tool industry in
such areas as: volume operations, process capability, quality and reliability, cost cutting and R&D
base. This 2nd phase project will particularly aim at enabling enterprises in adopting technological
advancements identified during the 1st phase. Some of the issues emerging out of the 1st phase outputs
need to be pursued on priorities, which include the following:

Production of identified machines for targeted markets.

Improved specifications of the machines to facilitate rapid rates of metal removal, lower
tool change time, higher spindle speeds, etc.
Improved aesthetics of the machine tools, including effective chip evacuation for removal
of chips.
Reduced mean time between failures and mean time to repair.
Reduction or elimination of coolants in machining.
Adoption of new and improved machine tool features for enhanced productivity.
Integration of various machining processes for single hit machining.
Adoption of linear direct drivers.
Use of lasers in material processing.
Adoption of the latest IT practices in the complete production process.

The adoption of these technological aspects necessarily requires structured exposure, training,
expertise, handholding and other support leading to appropriate investments for production of machine
tools based upon technological innovations. The enterprises are in no position to individually access
the technologies for availing the benefits of technological developments to remain competitive. The
export of machine tools invariably requires a team approach to reduce the marketing cost. The
enterprises normally operate on rather low volumes and would, therefore, require technology-led
interventions to assist in their development and growth.
The proposed machine tool programme is necessarily required for commercial adoption of
technological advancements identified during the 1st phase to ensure accrual of benefits to enterprises
to be able to face global competition in the machine tools sector.
C.1 Objective of the project

To further strengthen the competitiveness of Indian machine tool industry, particularly its SME sector,
in order to achieve cost-effective production of high quality machine tools through technological upgradation of manufacturing base and market development. This would lead to the development,
growth and increase of world market share of the Indian machine tool industry and help the Indian
Government achieve sustainable growth of this sector.
Target Beneficiaries
The target beneficiaries are facing problems due to obsolete technology and lack of institutional
support for new product and market development, testing, managing technological change and other
technical support services on continuing basis. Therefore, the target beneficiaries for this
demonstration project will be:

MSMEs that compose the Indian machine tool industry.

The Indian Machine Tools Manufacturers Association (IMTMA).
Machine tools clustered already enterprises in Ludhiana, Batala and Jullundhar in the Punjab
State (25 enterprises), Rajkot and adjoining regions in the Gujarat State (25 enterprises),
Bangalore in the Karnataka State (25 enterprises), Pune in the Maharastrta State (20
enterprises), Coimbatore and other regions in the Tamil Nadu State (20 enterprises).
Institutional capacity of the Institute of Machine Tool Technology (IMTT), which will be
strengthened for sustained development and growth of this sector.
The governments of states through the enhanced competitiveness of manufacturing sector,
which results in economic growth of the region and improved living conditions.
Other relevant state and national institutions and individual enterprises, which will be
strengthened for reaching out and providing technical support services to machine tool
enterprises.

C.2 The UNIDO Approach

Project strategy and institutional co-ordination arrangements
UNIDO, in partnership with IMTMA, will implement the Phase II of the machine tool technology
upgrading programme within the framework of this project. To achieve these goals, UNIDO will make
available its tools, methodologies, competence and long-term expertise in technology and investment
promotion, capacity building and technical support services so that this industrial sector could grow
and perform on a sustained basis at a later stage.
UNIDO ICAMT will co-finance this project in line with its modality of operation, in particular
ICAMT will act as a hub to enhance technological performance of manufacturing industry through
wide range of services, including enhancement of firm level productivity, demonstration and diffusion
of new technologies, human resource development programmes, etc. In this specific project, ICAMT
has plaid already a constructive role in the development and implementation of the 1st Phase of the
project and in the formulation of its 2nd Phase. It will support the implementation of this phase what

includes financial support in order to speed up the start up of the implementation and will bring in the
best international practice and expertise.
In addition, the operational links with UNIDO International Technology Centres (ITCs), Investment
and Technology Promotion Offices (ITPOs), network of SPXs, UNIDO Field Offices and newly
established Centres for South-South Industrial Cooperation (ICSSIC) will be pursued in order to use
their capacity and networks for technology sourcing and investment promotion opportunities as well as
to acquire best international practices and expertise in managing these matters.
The project strategy will specifically aim at strengthening the machine tool industry in India through a
number of following focused approaches. In particular, the project will:

Act as a catalyst in public-private partnership development and provider of technological

support services.
Provide industry with information and know-how on latest manufacturing technologies and
best international practices in managing technological change.
Link product development technologies with production technologies at the manufacturing unit
level.
Establish links between the Indian enterprises and those in the industrialized and developing
countries and countries with economies in transition.
Upgrade technological capacity at a unit level followed by skill enhancement and market
development. There should be a relevant ratio between the promotional activities, technology
upgrading and market development.
Address issues related to technology transfer focusing on manufacturing technologies and
innovations at SME level.
Adopt new and innovative approaches to technology upgrading of the existing clusters in order
to improve their manufacturing competitiveness.
Increase the use of ICT in machine tool industry.
Leverage on strengths gained from the past experiences and apply best practices in new
projects.
Leverage on strengths of networked and cooperating institutions and organizations.

In this context, the present project will extend the Phase I objectives and programme activities and
play an important role in continuing management of technological change through facilitating the
sourcing, selection, assessment, transfer and application of new manufacturing technologies to
machine tool sector of India. It will also enhance the trust between the participating in the project
institutions, enterprises and government agencies and increase the opportunities for further
technological cooperation and partnership between India and other countries.
Industry as the stakeholder of the project
The Indian Machine Tool Manufacturers Association (IMTMA) is one of the most active and
professionally managed institutions in the country. Almost all the important machine tool
manufacturers are members of this association and participate in its activities very actively. The
association has the experience of organizing developmental and promotional activities including
management development and technical training programmes. In addition, IMTMA has also agreed to

contribute with 30% of the programme outlay for this project having considered that this is a demand
driven programme, which would lead to its acceptance by the entire cross section of the machine tool
industry.
Institutional backup
The institutional capacity of IMTMA was fully utilized during the implementation of NPDMI phase I
project. It facilitated the integration of IMTMA with the location specific major machine tool
manufacturers associations in the Punjab, Gujarat and Karnataka States of India. The strengthened
institutional back up of IMTMA and the Institute for Machine Tool Technology in Batala is an
effective arrangement for horizontal transfer of technology, particularly amongst the small scale units.
Furthermore, such institutions as the Central Manufacturing Technology Institute (CMTI) in
Bangalore, the Central Institutes of Tool Design in Hyderabad and the Small Industries Service
Institutes in every state of the country offer institutional support for research and development,
information dissemination and training programmes enabling to meet the needs of enterprises.
Special consideration
The main goal of this project is to place the machine tool industry of India on the worlds map of
technology suppliers, thus supporting economic development of SMEs in the country. The machine
tool sector is a labour intensive industry in India and the developments of this sector will, therefore,
not only lead to enhanced exports but would also create more jobs and sustainability in other industrial
sectors.

Coordination arrangements
The project will be implemented and coordinated by UNIDO within the framework of its ICAMT
project and Integrated Cluster Development Programme (ICDP). The project will also be linked to
other UNIDO ongoing projects and programmes on technology transfer, investment promotion and
partnership development. In particular, strong coordination in the implementation of this project will
be done with the UNIDO Regional Office in New Delhi and within the framework of the Country
Programme of cooperation between the Republic of India and UNIDO for 2008-2012 being
implemented now.
C.3 RBM code and thematic area code
The relevant RBM codes are CD.13 Competitive Manufacturing and Enterprise Upgrading for Trade
Enhancement and CD.14 Technology Management. The thematic area code is TCB Trade
Capacity Building.
C.4 Expected outcomes, outputs and activities
UNIDO technical support services/expertise will be focused on providing the sector with access to
new technologies and innovations enabling to develop new product range and use advancements in
technology and best international manufacturing practices for enhancing the competitive position of

the machine tool industry. Its assistance will also aim at strengthening technological capability and
technology transfer mechanisms for further sustainable development, advising on ways and means to
manage the technological change, providing support to networking and funding arrangements and
fostering international cooperation.
Expected outcomes of the project and national strategic goals

Production processes improved and technology upgrading of the participated in the project
MSMEs accomplished, in particular:
Annual growth of at least 20-25% (for participated in the project enterprises).
Export growth of 50%.
Production of machine tools competitive with their counterparts in the world.
Professional management of machine tool enterprises.
Annual growth of 100% in manufacturing machine tool components.
Technical, managerial and market development capacities of MSMEs and related
stakeholders increased for further sustained growth.
Model for further technology upgrading developed and verified for replication across the
country.
The envisaged deliverables and milestones of the project

Approximately 500 specialists trained on machine tool design techniques.

The exports of enterprises participated in the programme will be enhanced by up to 50%
per year.
The project would play an important role in attributing overall growth of the industry at
20% per year through increase in production of components and accessories.
The number of produced CNC machines would grow by 35% per year.
At least 15 distinctively new types of machine tools or those with considerable technology
leap will be designed, developed and introduced to the market comparing to this status at
the IMTEX 2004.

Immediate Objective 1
To benchmark technology and new product needs at the global market and the existing status of the
Indian machine tool market and manufacturing technology base.
Output 1 for Immediate Objective 1
The production of reliable and high productive machines following global trends increased by 20 per
cent and CNC machines by 50 percent in the target beneficiary enterprises (please see p. 19).
Activities for the Output 1-1
No.

Activities

Activity Start/
End Month

Responsibility

Remarks

1.

2.

Identification of technology needs

after appropriate exposure in the
international and export markets.

01/30

Technology mapping of the machine

tool industry and documentation of
technology gaps in the Indian
industry vis--vis technologies in the
developed countries.
06/24

5
6

Development of machine tool design

and features to suit the needs of
machine tool users based upon
emerging technology practices.
Sourcing of technology features for
adoption within the WTO framework
(this is generally an expensive option
and at times affects the viability of
the enterprise).
Workshops and training programmes
on mechatronics.
National and international
seminars/conferences on technology
trends to facilitate adoption of
emerging technologies costeffectively in different aspects of
machine tool production.
Institutional training of personnel on
skills, technology absorption and
machine tool applications.
Financial packages for up-gradation
of machine tool enterprises for each
major cluster / location.
Delegation of machine tool
manufacturers on exposure on
developments in technology in
different countries.

01/36

12/36

01/36

IMTMA,
other Periodical
related
review
of
associations
technological
needs
is
critical.
IMTMA,
other This will be
related
coupled with
associations,
dissemination
UNIDO
of
documented
information to
facilitate
adoption
of
required
technology
and features in
different
clusters.
IMTMA,
other Periodic
related
interaction
associations,
with
user
UNIDO
industries
UNIDO, IMTMA, Patents
and
other
related licensing
associations,
Government
UNIDO
UNIDO, IMTMA

03/30

UNIDO
03/30
UNIDO
06/30
UNIDO
03/30

Different
technology
groups in each
conference.

10

Outbound missions to encourage

technological alliances.

03/30

UNIDO

Immediate Objective 2
To facilitate manufacturing the efficient machine tools based upon improved designs and technology.
Output 1 for Immediate Objective 2
At least 15 distinctively new types of machine tools produced, as per new and updated design and
processes.
Activities for the Output 1-2
No.

Activities

1.

Verification of machine tool designs

using latest CAD/CAE technology.

2.

3.

Machine tool design programmes for

in-house design capacity building.
Training of designers in CAD/CAE
techniques.
Documentation of good
manufacturing practices for
production of machine tool
components including machine tool
castings and fabricated items.
Training programmes to facilitate
exposure on good manufacturing
practices and their adoption by
selected units to demonstrate the
viability of options in different
clusters.
Standardization of machine tool
components and promotion of use of
standard components / items in
machine building for enhanced
productivity and efficiency.
Half yearly interaction meetings
amongst machine tool manufacturers
and suppliers of machine tool
components, sub-assemblies and
other inputs to review the desired
changes in design and technology for
production of machine tools.

Activity Start/
End Month
01/36

03/30

01/30

01/36

03/30

Responsibility
IMTMA, other
related
associations
UNIDO, IMTMA,
other related
associations
UNIDO, IMTMA,
other related
associations

UNIDO, IMTMA,
other related
associations

IMTMA, other
related
associations

UNIDO

06/36

Remarks

Identification of gaps in supply chain

in terms of range, quality and
quantity.
Workshops on initiatives and support
for capacity creation for manufacture
of critical components for CNC
machines.

IMTMA, UNIDO
03/24
UNIDO
03/30

Design
and
development of
critical
components

Output 2 for Immediate Objective 2

Cost effective production of efficient and high quality machine tools for domestic and export market
achieved.
Activities for the Output 2-2
No.

Activities

1.

Documentation of prevalent
transaction costs in machine building
vis--vis desirable cost for
optimizing cost of production and
CE certification of machine tool
enterprises, including documentation
of needs of CE certification and
other quality requirements in the
buyer countries.
Verification of casting practices to
reduce waste and use of excessive
material, etc.

2.

Documentation and training on

improving appearance and
operational conveniences in the
machine tools and productivity
improvement.
Training on good management
practices for enhancing efficiency in
operations.
Exposure programmes for
cooperation amongst enterprises for
specialization and evolving
strategies for in-house production
and outsourcing of machine tool
items.
Clustering of machine tool
enterprises at different locations for

Activity Start/
End Month

03/24

01/24

Responsibility

IMTMA,
other Cost analysis
related
and
associations,
comparison
UNIDO
with
best
foreign
companies

IMTMA,
other
related
associations,
UNIDO
UNIDO

01/12

UNIDO
03/36
UNIDO, IMTMA
03/36

03/30

Remarks

UNIDO

10

reducing input costs, overhead costs,

marketing costs.
Strengthening networking with SSI
sector for sub-contracting and
outsourcing.
Buyer seller meetings for
procurement of machine tool
components, sub-assemblies and
other inputs.
Publishing of a directory of machine
tool components, sub-assemblies and
other input suppliers / importers /
manufacturers.
Online linkages with machine tool
input suppliers.

UNIDO
03/30
UNIDO
03/30
IMTMA, UNIDO
12/36

12/30

UNIDO

Immediate Objective 3
To increase share of domestic and global market through support to the Indian machine tool industry
enabling to become an important player in the export market.
Output 1 for Immediate Objective 3
Increased exports of machine tools by 50% in the target beneficiary enterprises (please see p. 19).

Activities for the Output 1-3

No.

Activities

1.

Documentation of marketing trends

and needs of machine tools in the
domestic and global markets.
Assessment of machine tool
consumption and production in the
domestic and global markets,
including regular updating of
customer database.
Survey and identification of target
markets for the type of machine tools
manufactured by Indian machine
tool industry.
Inward mission of distributors and
dealers from target countries.
Participation in domestic exhibitions
like IMTEX, NTMS, IIFT, Tooltec,

2.

4
5

Activity Start/
End Month

Responsibility
UNIDO

01/24

01/30

03/30

12/30
06/36

UNIDO, ITMA,
related
associations

IMTMA, related
associations,
UNIDO
UNIDO, IMTMA
UNIDO, IMTMA

Remarks

etc.
6

10

11

12

13

14

Participation in international
exhibitions in Europe, the United
States and China.
Development of an action plan for
bringing improvements and changes
in the machine building, machine
features, displays, marketing
approach, etc. after participation in
each national and international
exhibition to ensure improved results
in the next exhibition.
Publishing of a common and unit
specific brochure in print and CD for
participation in each domestic and
international exhibition.
Networking with dealers in different
countries for long term marketing
and after sales service.
Creating a directory of machine tool
manufacturers with basic details for
each major group machine tools.
Brainstorming workshops on
domestic and international marketing
strategies.
Training programmes on business
excellence, marketing and use of IT
in marketing, both for domestic and
overseas markets.
India Brand Image building
workshops and meets in the overseas
market during international
exhibitions and interaction meets
with the dealers.
Delegation of machine tool
manufacturers for exposure on
market trends in the international
market.

UNIDO, IMTMA
03/36
IMTMA, related
associations,
UNIDO
01/24

UNIDO, IMTMA
12/30
UNIDO
06/36
UNIDO, IMTMA
12,30
UNIDO
03,24

Develop a
concept

UNIDO
01,30

03,30

IMTMA, related Develop

associations,
Made of
Government,
India brand
UNIDO
UNIDO

03,36

Immediate Objective 4
To build up institutional capacity for continuing training and formulation and implementation of
development programmes needed for machine tool industry for its sustained growth.

Output 1 for Immediate Objective 4

Institutional linkages for continuous upgrading of machine tool enterprises and applied research and
development carried out.
Activities for the Output 1-4
No.

Activities

1. Strengthening of IMTT Batala for

conducting regular training
programmes on the needs of machine
tool industry.
2. Strengthening of IMTMA for
providing facilitation services and
conducting technology related and
design development programmes on
sustainable basis.

3. Development of an annual training

calendar for machine tool industry at
different locations with support of
existing institutions.
4. Tie up with institutions for developing
specialization in the machine tool
sector.
5. Development of linkages with R&D
agencies for sponsored research output
and moderation of available
technologies as per specific needs of
machine tools industries.

Activity Start/
End Month

Responsibility

Remarks

UNIDO, IMTT
06/30
UNIDO, IMTMA

01/30

03/24

06/36

Develop
Design
School, Tech.
Div,
Productivity
and
Mechatronics
School at
IMTMA

UNIDO, IMTMA,
IMTT

UNIDO, IMTMA,
IMTT,
related
institutions
UNIDO

01/36

Immediate Objective 5
To prepare industry to meet the emerging global challenges and strategic plan designed. This plan will
be subject to modification due to national strategy and global trends.
Output 1 for Immediate Objective 5
A self-sustainable model for sustained growth of the machine tool sector developed, proven and
become ready for its replication across the country.

Activities for the Output 1-5

No.

Activities

1.

Development and implementation of

an action plan and a vision 2020 for
the Indian machine tool sector.
Two workshops on emerging
challenges in the machine tool
industry every year.
Workshop and training in survival
and excellence in post WTO era.
Workshops on institutional support,
including financial avenues, for upgradation.

2.

3
4

Activity Start/
End Month
03/30

03/36
06/30

Responsibility
Government,
IMTMA, related
associations
Government,
IMTMA, related
associations
UNIDO
UNIDO, I

03/30

Remarks

C5. Timeline of activities

Outputs/Activities
1
Output 1-1: Production of reliable and high productive
machines following global trends by 20 per cent and
CNC machines by 50 percent.
1. Identification of technology needs after appropriate
exposure in the international and export markets.
2. Technology mapping of the machine tool industry and
documentation of technology gaps in the Indian industry
vis--vis technologies in the developed countries.
3. Development of machine tool design and features to suit
the needs of machine tool users based upon emerging
technology practices.
4. Sourcing of technology features for adoption within the
WTO framework (this is generally an expensive option and
at times affects the viability of the enterprise).
5. Workshops and training programmes on mechatronics.
6. National and international seminars/conferences on
technology trends to facilitate adoption of emerging
technologies cost-effectively in different aspects of machine
tool production.
7. Institutional training of personnel on skills, technology
absorption and machine tool applications.
8. Financial packages for up-gradation of machine tool
enterprises for each major cluster / location.
9. Delegation of machine tool manufacturers on exposure
on developments in technology in different countries.
10. Outbound missions to encourage technological
alliances.

1st year
2
3

2nd year
2
3

3rd year
2
3

Output 1-2: At least 15 distinctively new types of

machine tools produced, as per new and updated design
and processes.
1. Verification of machine tool designs using latest
CAD/CAE technology.
2. Machine tool design programmes for in-house design
capacity building. Training of designers in CAD/CAE
techniques.
3. Documentation of good manufacturing practices for
production of machine tool components including machine
tool castings and fabricated items.
4. Training programmes to facilitate exposure on good
manufacturing practices and their adoption by selected units
to demonstrate the viability of options in different clusters.
5. Standardization of machine tool components and
promotion of use of standard components / items in
machine building for enhanced productivity and efficiency.
6. Half yearly interaction meetings amongst machine tool
manufacturers and suppliers of machine tool components,
sub-assemblies and other inputs to review the desired
changes in design and technology for production of
machine tools.
7. Identification of gaps in supply chain in terms of range,
quality and quantity.
8. Workshops on initiatives and support for capacity
creation for manufacture of critical components for CNC
machines.
Output 2-2: Cost effective production of efficient and
high quality machine tools for domestic and export
market achieved.
1. Documentation of prevalent transaction costs in machine
building vis--vis desirable cost for optimizing cost of
production and CE certification of machine tool enterprises,

including documentation of needs of CE certification and

other quality requirements in the buyer countries.
2. Verification of casting practices to reduce waste and use
of excessive material, etc.
3. Documentation and training on improving appearance
and operational conveniences in the machine tools and
productivity improvement.
4. Training on good management practices for enhancing
efficiency in operations.
5. Exposure programmes for cooperation amongst
enterprises for specialization and evolving strategies for inhouse production and outsourcing of machine tool items.
6. Clustering of machine tool enterprises at different
locations for reducing input costs, overhead costs,
marketing costs.
7. Strengthening networking with SSI sector for subcontracting and outsourcing.
8. Buyer seller meetings for procurement of machine tool
components, sub-assemblies and other inputs.
9. Publishing of a directory of machine tool components,
sub-assemblies and other input suppliers / importers /
manufacturers.
10. Online linkages with machine tool input suppliers.
Output 1-3: Increased exports of machine tools by 50%
1. Documentation of marketing trends and needs of machine
tools in the domestic and global markets.
2. Assessment of machine tool consumption and production
in the domestic and global markets, including regular
updating of customer database.
3. Survey and identification of target markets for the type of
machine tools manufactured by Indian machine tool
industry.

4. Inward mission of distributors and dealers from target

countries.
5. Participation in domestic exhibitions like IMTEX,
NTMS, IIFT, Tooltec, etc.
6. Participation in international exhibitions in Europe,
United States and China.
7. Development of an action plan for bringing
improvements and changes in the machine building,
machine features, etc.
8. Publishing of a common and unit specific brochure in
print and CD
9. Networking with dealers in different countries for long
term marketing
10. Directory of machine tool manufacturers with basic
details for each major group machine tools.
11. Brainstorming workshops on domestic and international
marketing strategies.
12. Training programmes on business excellence, marketing
and use of IT in marketing, both for domestic and overseas
markets.
13. India Brand Image building workshops and meets in the
overseas market during international exhibitions and
interaction meets with the dealers.
14. Delegation of machine tool manufacturers for exposure
on market trends in the international market.
Output 1-4: Institutional linkages for continuous upgradation of machine tool enterprises and applied
research and development carried out.
1. Strengthening of IMTT Batala for conducting regular
training programmes
2. Strengthening of IMTMA for providing facilitation
services and conducting technology related and design

development programmes on sustainable basis.

3. Development of an annual training calendar for machine
tool industry
4. Tie up with institutions for developing specialization in
the machine tool sector.
5. Development of linkages with R + D agencies for
sponsored research output and moderation of available
technologies as per specific needs of machine tools
industries.
Output 1-5: A self-sustainable model for sustained
growth of the machine tool sector developed, proven and
become ready for its replication across the country.
1. Development and implementation of an action plan and a
vision 2020 for the Indian machine tool sector.
2. Two workshops on emerging challenges in the machine
tool industry every year.
3. Workshop and training in survival and excellence in post
WTO era.
4. Workshops on institutional support, including financial
avenues, for up-gradation.

C.7 Risks

Different segments of the industry may derive varying degree of benefits

depending upon their absorption capability.
Outlook of beneficiaries could be different.
Some may keep pace, some may lag behind.

However, with proper review mechanisms, these risks can be minimized.

D. MONITORING, REPORTING AND EVALUATION

The monitoring, reporting and evaluation of the project will be done in line of the UNIDO
rules and regulations. A Steering Committee will be created, as in the 1st phase of the project,
under the chairmanship of the Joint Secretary, DIPP, Ministry of Commerce and Industry,
Government of India, to oversee and monitor this programme. The following organizations
shall be represented in the Steering Committee:
UNIDO.
Department of Industrial Policy and Promotion (DIPP).
Development Commissioner (Ministry of Micro, Small and Medium Enterprises).
Department of Heavy Industry, Ministry of Commerce and Industry.
Small Industry Development Bank of India (SIDBI).
Indian Machine Tools Manufacturers Association (IMTMA).
Machine tool associations of major clusters in Punjab, Gujarat and Bangalore.
Central Manufacturing Technology Institute (CMTI), Bangalore.
Government of Punjab, (IMTT, Batala).
The project will be subject to review by the Steering Committee established for the project.
The Steering Committee may appoint an independent agency to assist it in the project
evaluation, if necessary, according to UNIDO rules and regulations. The mid-term project
Performance Evaluation Report will be prepared at the end of the 1.5 years so as to enable
mid-course correction, if it is felt necessary. The final project Performance Evaluation Report
will be prepared at the end of the 3 years within the six months prior to the completion of the
project.
E. PRIOR OBLIGATIONS AND PREREQUISITES
The project shall be deemed to have commenced as soon as the Government of India and/or
IMTMA organizes funding.
Both, the Government of India and UNIDO will ensure the support of its counterpart
agencies. These agencies will cooperate with each other through appointed project authorities
(ICAMT in the case of UNIDO). UNIDO will also make sure that its Field Office in New
Delhi as well as its Investment and Technology Promotion Offices (ITPO) and International
Technology Centres (ITC) in other countries will be involved in the implementation of
project objectives and, in turn, this project will provide substantial inputs to overall UNIDO
operations in the country.

F. LEGAL CONTEXT
The present project is governed by the provisions of the Revised Standard Technical
Assistance Agreement concluded between the United Nations and Specialized Agencies and
the Government on 31 August 1956 and amended on 3 October 1963, at New Delhi, India.
These provisions are applicable to the present project by virtue of the Declaration of the
Government appended to the Project Document, accepting the application of the abovementioned agreement to the present project.
G. CONCLUSION
The project analysis shows that the Indian machine tool industry has the potential and
inherent ability to embrace the changes required. It also outlines that intervention at this stage
is both required and will make a significant and measurable difference to the industrys
prospects. This in itself makes this project eminently implementable with good chances of
success.