SURVEY REPORT

ON

EXPORT CAPABILITY ASSESSMENT OF INDIAN TOOLING INDUSTRY

For Department of Scientific & Industrial Research (DSIR)

(Ministry of Science & Technology, Govt. of India) Technology Bhawan, New Mehrauli Road

New Delhi - 110019

Technology Management Group

NATIONAL PRODUCTIVITY COUNCIL Lodi Road, New Delhi – 110 003

Phone: 011-24607334, 24690331-3, Fax: 011-24698138, 24615002 Email: ak.dhar@npcindia.org Website: www.npcindia.org

INDEX

Sr. No.

Chapters Page No.

Executive Summary 1

1. Introduction 4

2. General Status of Indian Tooling Industry 7

3. International Scenario 27

4. Survey Analysis and Profiles of Govt. Tool Rooms & Units

37

5. Recommendations 50

Fig No.

Figures Page No.

1. Imports of various Tools by European Union 28

2. % Distribution based on Nature of Tool Rooms

40

3. % Distribution based on Legal Status of Units

41

4. % Distribution based on Small v/s Medium & Large Tool Rooms

41

5. % Distribution based on Foreign Technical Collabouration

42

6. % Distribution based on Employee Strength 43

7. % Distribution based on Types of Tools Produced

43

Anx No.

Annexure Page No.

1. Questionnaire 56

2. List of Units under TAGMA 62

3. Tool Exports of various Countries 2001-05 109 4. Tool Imports of various Countries 2001-05 113 5. Profile of Govt. Tool Rooms & respondent

units 117

1

Executive Summary

1. The total value of export business for the Indian Tool

Industry as a whole, comprising of all types of tools was

Rs. 262746.06 Lakhs1 for the 2005–06 fiscal which is 0.58% of India’s total exports. The percentage growth for the

subsequent year was over 15%. With this trend the expected

exports in 2008–09 would be of the order of Rs.399603.91

Lakhs. This trend offers more challenges and Indian

Industries would have to gear up to their best in terms of

flexible manufacturing methods, high end tool design,

quality management systems, development of better tool

steels, tool testing facilities, delivery schedules and

the corresponding infrastructure.

2. The corresponding import for the Indian Tool Industry in

the year 2005–06 was recorded as Rs.431421.06 Lakhs which

is 0.65% of India’s total imports. The percentage growth

for subsequent year was 21.52%. Going by these figures the

imports for 2008–09 would stand at Rs.774184.77 Lakhs. In

other words there would be an excess import of

Rs.374580.86 Lakhs in 2008-09 not withstanding the

specific requirements; the Indian industries would have to

make up.

3. India is on the path of progress as far as tool

manufacturing is concerned however the progress is slow

when we compare our export and import figures and also our

standing vis–a-vis big players. As we know that all

products owe their shape & size to one or the other tool

and hence tooling industry is aptly called the mother

industry. Any unbalanced growth in this sector can

critically cripple the growth of the manufacturing sector

in India.

4. Sustainable technology development is an important area

for maintaining competitive advantage. Hence efforts need 1-Deptt.of Commerce, Min. of Commerce & Industry, GOI

2

to be made to have a proper linkage at the level of

University and/or Research Institutions for meeting the

technology development requirements of the industry. More

project/schemes need to be evolved with proper funding in

co-ordination with S&T departments like DSIR, CSIR, DRDO,

etc.

5. At present the manufacturing industries are members of one

or the other industry association which number in

hundreds, including state level and district level

associations. This scenario impedes in assessing our

collective strengths and capabilities in Tooling and

Tooling technologies. Under these conditions the

Governmental intervention seems necessary. This may be

done by developing a portal fully devoted towards Tooling

& Tooling Technologies of India by DSIR for showcasing our

strengths and attracting foreign markets. This portal

should be accessible to all types of Tool manufacturers

for enhancing our export capability.

6. India's mould, die & tool industry association - TAGMA

(Tool & Gauge Manufacturers Association) with a membership

of 415 firms needs to play a pivotal role in bringing all

types & classes of tool manufacturers under one umbrella

to have larger stake in helping India become a tooling

destination of world. In turn the association would have a

larger say in voicing concern of the tooling fraternity as

a whole.

7. In the prevailing competitive environment the industry

association TAGMA with the help of exporters association

should formulate institutional arrangements for market

development programs with the help of engineering export

promotion council (EEPC) to reach overseas markets by

arranging shows abroad and providing details to its

members regarding import regulations in various potential

markets.

3

8. In the long term i.e. by 2012, for India to be a global

player the Indian tooling industry needs to thoroughly

change its production and business strategy by focussing

on innovative tool design and project management for

tooling through conceptualisation to commercialisation

approach. This approach involves getting maximum returns

with short tool life cycles.

4

1. Introduction

The advent of human civilisation started with the use of stone

tools, which helped the early man to fulfil the basic

requirements of food, clothing and shelter. The modern day

scenario is a million fold developments over the crude tooling

of past which has made our lives comfortable and improved the

quality of our lives. This is why the tooling is considered as

the mother of all industries. Tooling is a common terminology

used for all types of tools and a Tool Room is defined as the

place where a tool takes its shape right from conception,

design, drawing, prototyping, to its actual manufacture,

inspection, testing, commercialisation and use. A broad

spectrum of tooling is

1.Dies •Dies for Pressing, Stamping, Punching •Dies for Forming •Dies for Forging •Dies for Extruding •Dies for Wire Drawing •Dies for Powder

2.Moulds •Moulds for Mineral Materials • Moulds for Plastics •Moulds for Rubber •Moulds for Casting •Moulds for other Materials

3.Patterns 4.Jigs & Fixtures 5.Standard Parts 6.Precision Machining 7.Special Purpose Machines

As per Department of Commerce, Ministry of Commerce &

Industry, Govt of India the tools have been classified in

about 90 groups.

1.1 Background

1. Globalisation has brought in fierce competition in all the

sectors of national economy. The impact is extreme in the

manufacturing sector owing to developments in the tooling

technology. Building a product whose dimensions are precise to

1/100th of a millimetre requires a mould whose dimensions are

precise to 1/1,000th of a millimetre. The Indian scenario is

the same in view of the growth of the market potential both

domestic as well as international.

5

2. The import for all types of tooling in 2005-06 was

Rs.431421.06 Lakhs and the corresponding exports were of the

order of Rs.262746.06 Lakhs, which is expected to touch

Rs.774184.77 Lakhs and Rs.399603.91 Lakhs respectively in

2008–09.

3. With advancing technologies, demand for more designs and

sophisticated products in the areas of Automobiles,

Electronics, Heavy Engineering, Telecom, Audio & Video

Systems, Consumer durables, Aerospace, Medical Products,

Computers & Peripherals etc. has led to simultaneous demand

for more precision and sophisticated dies, moulds and tooling.

4. With this scenario in mind a Workshop on “India – The

Tooling Destination” was organised by Department of Scientific

& Industrial Research (DSIR) in Mumbai in association with

Technology Exports and Development Organisation (TEDO),

Confederation of Indian Industries (CII) Tool & Gauge

Manufacturers Association (TAGMA) and National Productivity

Council (NPC) in 2005. As an offshoot of that workshop the

present survey was taken up.

1.2 Objective

1. To assess current status of the Indian Tooling Industry vis-

a–vis International scenario.

2. To identify remedial/up gradation measures for giving boost

to this sector.

1.3 Scope

The scope of the study involves Indian Tooling Industry other

than machine tools and hand tools including Commercial and

Captive Tool Rooms.

1.4 Terms of Reference

1. Preparation of status report of Indian Tooling industry.

2. Suggest future strategies and policy measures

3. Compilation of profiles of about 80 tooling units.

6

1.5 Methodology

The following methodology was adopted:

1. Project initiation discussions with the executives of Department of Scientific & Industrial Research (DSIR).

2. Design of a detailed Survey Questionnaire (Attached in Annexure).

3. Presentation on project execution methodology to Project Review Committee (PRC) for their suggestions and comments.

4. Collection of Address Data Bases from TAGMA, SIAM, IMTMA,

ACMA and CII. 5. Design of abridged questionnaire from the detailed

questionnaire as per the recommendations of the Project Review Committee (PRC) (Attached in Annexure - 1).

6. Mailing, response and data entry for the abridged Questionnaire.

7. Mailing of detailed questionnaire to responders.

8. Field Visits & Data Collection for profiling of units

9. Profile preparation

10. Report preparation

11. Submission of draft report to DSIR

12. Project Review Committee meeting

13. Comments on the draft report

14. Final report

7

2. General Status of Indian Tooling Industry

2.1 India is on the path of progress as far as tool

manufacturing is concerned however the progress is slow when

we compare the export and import figures i.e. Rs.262746.06 &

Rs.431421.06 Lakhs1 respectively for 2005–06. As we know that

all products owe their shape & size to one or the other tool

and hence tooling industry is aptly called the mother

industry. Any unbalanced growth in this sector can critically

cripple the growth of the manufacturing sector in India.

2.2 The number of tool rooms under different associations is:

TAGMA – 415, IMTMA – 350, SIAM – 38, ACMA – 370, Govt. Tool

Rooms – 11, Non Members - 208. Other associations numbering 20

with total membership running in thousands have many members

owning tool rooms. These associations are: Indian Foundry

Association, Federation of Indian Export Organisation (FIEO),

Confederation of Indian Industries (CII), Bearing

Manufacturers Association, Association of Small & Medium

Enterprises, Electrical Appliances Manufacturers Association,

The All India Association of Industries, Indian Industries

Association, All India Plastic Manufacturers Association,

Associated Chamber of Commerce & Industry, Punjab, Haryana &

Delhi Chamber of Commerce & Industry, Faridabad Small

Industries Association (FSIA) etc.

2.3 Good Die, Mould & Tooling contribute greatly to the value

addition of the product. Owing to late recognition of this

aspect, the Indian Tool industry could not flourish and we

continue to import new design tools in large numbers.

2.4 With a cue from the other countries such as US, Japan,

Germany and China, India was able to form an apex association

of Die, Mould & Tool manufacturers called TAGMA (Tool & Gauge

Manufacturers Association) in 1990. Though the association is

contributing its bit for making India a good tooling

destination, we still have a lot to do to surpass others.

Details of the association are given in their website

8

www.tagmaindia.org List of members of TAGMA is given in

Annexure – 2.

2.5 At present the manufacturing industries are members of one

or the other industry association(s) in India which number in

hundreds, including state level and district level

associations. This scenario impedes in assessing our

collective strengths and capabilities in Tooling and Tooling

technologies. Under these conditions the Governmental

intervention seems necessary.

2.6 Government promoted tool rooms

With the accelerated growth of industries, particularly in the

field of engineering, requirements of sophisticated tools have

increased tremendously. The developments in tooling technology

are primarily left with individual organisations with no

national agenda or curriculum. In particular, it is difficult

for small-scale industries to get quality tools due to non-

availability of tool room facilities of their own and

inadequate commercial tool rooms in the country. To fill the

growing gap between demand and supply of tools, the Govt. of

India promoted several tool rooms (11) in technical

cooperation with Government of Germany, Denmark and

Switzerland, to cater to the tooling requirements of small-

scale industries besides providing trained manpower in the

field of tool design; tool making and other allied engineering

trades.

The Government promoted tool rooms are located across the

country. Most of these tool rooms fall in the large and

medium category tool rooms. In addition to design,

development & production of tooling, these institutions

provide short & long term training programmes in different

skills and consultancy to meet the specific needs of the

Indian industry. The profile of these Tool Rooms is given in

Annexure - 5.

9

2.7 Central Institute of Plastic Engineering & Technology

Central Institute of Plastic Engineering & Technology (CIPET)

is one of the pioneering institutes in India established by

Govt. of India, in Plastic Technology catering to design and

skill development programmes.

2.8 Tooling Industry is broadly composed of two types of Tool

Rooms – Captive Tool Rooms and the Commercial Tool Rooms.

While the captive ones cater to its own requirements of its

own unit(s), the commercial ones cater to the domestic as well

as global requirements.

2.9 Commercial Tool Rooms (CTRs) are further classified into

Organised and Unorganised sector. Organised sector consists

mainly of tool rooms in the government and private sector.

They can be further divided into three categories based on

their sales turnovers.

Large – Annual Turnover > Rs.10 Crores

Medium–Annual Turnover in the range of Rs.1–10 Crores

Small – Annual Turnover < Rs.1 Crores

Large CTRs account for over 60% of CTR turnover while as

medium ones account for over 20%.

The major manufacturing players can afford latest captive tool

rooms while the non-major players have to heavily rely on

commercial tool rooms.

Tool rooms can also be classified on the basis of type of

equipment installed and product specialization.

2.10 Markets

I. The exports for all types of tooling accounted for

Rs.262746.06 Lakhs1 for the 2005–06 fiscal which is expected to

grow to Rs.399603.91 Lakhs by 2008–09 based on an average

growth of about 15% per annum.

II. The figures are not impressive since our corresponding

imports are on a higher side e.g. the all tooling component

import for the 2005–06 fiscal was Rs.431421.06 Lakhs which is

Rs.168675 Lakhs more than exports for 2005–06. At this rate

1-Deptt.of Commerce, Min. of Commerce & Industry, GOI

10

India would loose valuable foreign exchange to the tune of Rs.

1686750 Lakhs or 0.17 billion rupees within 10 years. III. As per International Trade Centre under UNCTAD / WTO the

Indian Import and Export (2001–2005) for Product Group No. 695

“Tools for Use in the hand or in machines” was

Year 2000-01 2001-02 2002-03 2003-04 2004-05India–Exports (USD ‘000) 176,716 191,943 243,680 290,030 404,572

India-Imports (USD ‘000) 91,482 113,992 136,426 204,076 278,554

India ranks 19th under exports out of 163 countries and 27th

under imports out of 171 countries. Table indicating tool

exports and imports by various countries of the world for the

above group is given in Annexure 3 & 4. From this table it can

be seen that India’s exports are mere 8% as compared to

Germany, 13% as compared to China, 24% as compared to ROC

(Taiwan), 47% as compared to Korea, 61% as compared to

Singapore and so on. This trend offers more challenges and

Indian Industries would have to gear up to their best in terms

of flexible manufacturing methods, high end tool design,

quality management systems, development of better tool steels,

tool testing facilities, delivery schedules and the

corresponding infrastructure.

IV. The two major user segments are Electronics and

Automobiles followed by Electrical. The share of plastic

moulds has risen considerably approx. 33%. This rise is

attributed to the increased usage of plastics in Automobiles,

Electrical, Electronics, Consumer durables etc.

V. The Indian tooling requirements besides being met from the

domestic tool rooms are also met from large imports. Imports

as a percentage of total tooling requirements is highest in

the plastic products industry. This is mainly due to the need

for complicated moulds and easy availability of standard

Moulds abroad. Electrical & Electronics also has a high

11

proportion of imports. Dependence on commercial Tool Rooms is

relatively higher in the Auto ancillary and consumer durable

segments.

VI. In–house (captive) tooling is high in the Automobiles,

Electrical, Electronics and Defence areas, some of these being

dominated by public sector undertakings and large private

firms who traditionally believed in manufacturing their own

tooling and components and have built in-house facilities. In–

house tooling production is expected to be 50% higher than the

corresponding imports, for 2004-05 which was Rs.835,851.00

million2 for the six categories of vehicles namely Two & Three

wheelers, Jeeps & Utility vehicles, Passenger cars, Light

Commercial Vehicles(LCV’s), Medium & Heavy Commercial

Vehicles(M&HCV’s) & Tractors.

VII. With the entry of global players there are many new

additions of models to the existing cars, commercial vehicles

and two wheelers. The auto ancillary industry manufacturing

the entire range of components for the domestic automobile

industry has posted a turnover of Million USD 12,000 for 2005–

06 which is expected to touch Million USD 15,000 for 2006–073

with export component of Million USD 2930 constituting about

20% of the output.

2.11 Exports

I. Auto component exports rose from $330 million in 1997-98 to

$1800 million3 in 2005-06. With 21.5 percent CAGR, the figure

is expected to cross $2.6 billion by 2007.

II. Over the past two years, 7 Indian component manufacturers

have won the coveted Deming Prize, one of the highest awards

on TQM (Total Quality Management) in the world.

III. Of the total auto-component exports, developed markets

such as the US and Europe together account for 56 percent,

Asia accounts for 27 percent and Africa accounts for 11

percent of the export earnings.

12

IV. Despite the relatively small share of Asia in the global

pie, India is trying hard to raise its 2–SIAM Website, 3-ACMA

potential. During 2003-04, auto component exports from India

crossed the $1billion mark and the Automotive Component

Manufacturers Association (ACMA) has predicted that this

figure will touch the $5 billion level by 2010.

V. According to a recent study by Frost and Sullivan, exports

are expected to grow at a compound annual growth rate of 21.5

percent to touch $2.57 billion during the period 2003 and 2009

as outsourcing from the country is fast catching up.

However the industry has to catch up fast with Good Designs,

Economies of Volume Production and Quality production. The

auto ancillary industry consists of the following product

segments (as classified by the Automotive Component

Manufacturers Association – ACMA)

Engine parts: Piston rings, Pistons, Engine Valves, Gaskets, Carburettors, Fuel Injection Pumps

Transmission& Steering Parts Transmission Gears, Steering Gears, Clutch Plates, Axles, Wheels, discs

Suspension and Braking Parts Leaf Springs, Shock Absorbers, Brake assemblies

Electrical Parts Spark plugs, Starter motors, Generators, Distributors, Voltage Regulators, Flywheel, Magnetos, Ignition coils

Equipment: Dashboard instruments, Headlights, Horns, Wind screen wipers

Others Fan Belts, Sheet Metal parts, Pressure Disc

2.12 Commercial Tool Rooms

I. The tool rooms are primarily constituted of the In–house

(Captive) Tool rooms and the Commercial Tool rooms. The rapid

growth of the engineering industry has led to the need for a

variety of tooling and related products. Commercial Tool Rooms

(CTRs) are more than 60 years old and supply tooling on a

commercial basis to a variety of industries and operate as

independent companies. A few tool rooms specialize in design

13

of tooling for end users. Government promoted tool rooms also

provide training courses related to tool design and tool

making in addition to manufacture of tooling. There are more

than 600 CTRs in the country. These exclude over 1000 small

units, which are more in the nature of machining shops.

II. Tool rooms are mostly located in regions of end use

industry concentration. CTRs of more recent origin are

offshoots of end user industries i.e. established by personnel

from end user industries. Growing demand for tooling and easy

availability of semi-skilled personnel prompted establishment

of a large number of small scale industries who had the

capability to manufacture simple low value tooling. This led

to proliferation of small ‘tool rooms’ in the industrial belts

around the country, which has contributed to slower growth of

tool rooms with sound capabilities.

III. Some key tool room locations include Bangalore, Chennai,

Coimbatore, Delhi, Faridabad, Hyderabad, Mumbai and Pune.

Government promoted tool rooms are located in areas with

concentration of small-scale industries. However, their reach

extends beyond these regions. Unorganised players have a

presence at almost all industrial locations around the

country.

2.13 Product profile

I. The volumes of plastic moulds have increased substantially

in recent years. Industries that have switched from Press

tools to Plastic moulds (Automotive, Consumer durables) are

growing at a relatively rapid pace. CTRs in turn are toeing

this line and moving into Plastic moulds in a big way. Small

tool rooms, however, continue to be active in Press tools and

Jigs & Fixtures since large proportion of intricate tools are

being imported by users or manufactured in-house. The basic

ones are cheaper to source locally.

II. A few large tool rooms have the capability to manufacture

intricate plastic and die casting moulds and sheet metal tools

14

(progressive & compound). However, majority of the tool rooms

in other categories can manufacture only simple tools and

medium sized moulds. This lack of capability is reflected in

the practice of major users relying on imports and in-house

capability to source critical tooling.

III. Most CTRs do not appear to have a high degree of

specialization in any specific area due to inadequate volumes

for the end user industry. The manufacturing encompasses the

entire range of tooling depending on the capacity and demand.

This has led to the general feeling that Indian CTRs are more

suited for simple tooling rather than complex tooling for

critical applications. This is also evident by the practice of

MNCs and large Indian corporates who have invested in modern

tool room facilities in house or rely on imports for critical

tooling. This is in direct contrast to the international

practice of outsourcing most tooling.

IV. However, of late, the trend appears to be that most tool

rooms with sophisticated facilities are moving towards high

precision plastic moulds in terms of product specialization to

meet the growing demand from industries such as Automobiles,

Consumer durables and Electronics. Some examples are CTRs

which concentrate on tools for stamping for electric motors,

tools for pressing auto components, moulds for plastic pipe

fittings, injection moulds for TV components, etc. Even these

are yet to achieve the degree of specialization required for

complicated dies/moulds or to compete with far eastern Tool

Rooms on delivery and freedom from re-works.

2.14 Facilities

I. Current technology levels across CTRs in India are not as

high as that in the West & Far East as most CTRs have low

levels of product specialization. Due to the wide range of

tooling required and the extent of rework of tooling, the

delivery lead times in the industry are fairly high. This has

resulted in high imports in case of precision tooling. Most

15

large and many medium tool rooms are equipped with

sophisticated machines like EDMs, wire cutting machines, jig

borers, 3 axis and in some cases even 5 axes CNC milling

machines, high speed milling machines capable of machining

hardened dies etc. The standard room is equipped with adequate

electronic and mechanical measuring instruments/gauges,

optical profile grinders and in some cases 3 co-ordinate

measuring machines.

II. In high end CTRs, CAD/CAM systems equipped with high end

software (IDEAS, UNIGRAPHICS, PRO-E, C-MOULD, CAMAND, PRO-

CAST, MOULDFLOW, AUTOCAD, AUTOSURF, MASTERCAM, VISI-CAM, G-

CAM, TEBIS & FANUC) for 3-D solid modelling, analysis and

generation of 3-5 axes machining programmes loaded on high

resolution Pentium PCs and graphics workstations is in use. In

addition, the other software capabilities include plastic flow

simulation analysis, and optimisation of metal casting

parameters. It is perceived that optimum use of these

techniques could improve lead times and quality. Indian CTRs

are picking up newer techniques such as ‘Rapid tooling’,

‘Rapid prototyping’, ‘Skin modelling’ and ‘Stereo

lithography’, which are more widely used in other countries.

III. Teams of well-trained and experienced design engineers

are present in most large tool rooms. However, most tool rooms

face problems in retaining trained manpower that appear to

switch jobs frequently or migrate to other countries in search

of better opportunities. Most large and several medium scale

tool rooms have state of the art machinery for manufacturing

tooling. Sophisticated machines are mostly imported

particularly in the large & medium tool rooms.

2.15 Customer focus

Historically, tool rooms have had a diffused marketing

strategy. Medium and small tool rooms catered to local

companies within a region while, larger firms had wider reach

(customers on a national basis or even foreign customers).

16

Most of the CTRs were dependent on customer referrals rather

than reaching out to customers to expand business.

However, this trend appears to have reversed in recent times

with newer tool rooms taking the initiative to focus on select

user segments with a view to generate volumes and achieve

higher levels of standardization and capacity utilization in

the long run. Most modern tool rooms have their own marketing

cell with personnel who concentrate on business development.

Most of these tool rooms are focused on automobiles,

electronics and consumer durables industry. The need for such

a focus has been felt with CTRs facing over capacity, low

profit margins and downtrends in select industries.

2.16 Delivery schedules and lead times

Lead times typically run to 2 – 3 months for tooling of

different types.

2.17 Pricing

I. It must be stated that the cost composition varies with the

type of tooling – a large bulky tool heavy with material cost,

a large intricate tool with high machining cost, tool from a

large Tool Room high on overheads etc. are some of the

examples of the predominant cost components of different

tooling.

II. Most tool rooms quote on a cost plus pattern. The mark up

is around 25% over their direct costs. The machine hour rates

charged for various machines are listed below for the years

2000 and 2006.

Rate / Hr (Rs.) Sr. MACHINE Survey 2000 Survey 2006

1 CAD Design 100 – 500 400 – 700 2 CNC Lathe 300 – 700 500 – 900 3 CNC Milling 400 – 700 800 – 1200 4 CNC Milling/Die Sinker 500 – 800 800 – 1500 5 CNC Wire Cut 250 – 700 400 – 1000 6 Cylindrical Grinder 50 – 200 250 – 400 7 Conventional Milling 40 – 200 250 – 300 8 Die Sinker 400 Shaping 20 – 60 OBSOLETE 9 Drilling Machine 20 – 30 50 – 100

17

10 Surface Grinder 50 – 250 200 – 400 11 EDM 250 – 800 450 – 1200 12 Tool & Cutter Grinder 40 – 70 50 – 100 13 Conventional:70 14 Heat Treatment 20 – 30 Vacuum

Furnace:250/Kg 15

Jig Boring 10 – 450 Conventional : 300 – 400

16 --- CNC:1000 – 1500 17 Jig Grinding 200 – 600 OBSOLETE 18 Lathe 20 – 80 80 19 Manual Design 30 – 250 350 20 Optical Profile Grinder 80 – 150 CNC: 500 – 600 21 Profile Projector 150 – 200 200 – 250

2.18 Tie-ups and collabourations

Traditionally, tie-ups in this industry were restricted to

government promoted ventures. In the recent past, the tendency

towards specialization has led to tie-ups and collabourations

of CTRs with companies abroad. However, this phenomenon is

true for small number of tool rooms only. More specifically,

the tie-ups are more in the medium scale sector than others.

This trend is expected to continue with several tool rooms

drawing up plans for collabourations or having already

identified partners for the same in the future. Tool rooms,

which go in for such tie-ups/collabouration, do so with the

aim of starting to follow the international practice of

specialization. They generally have sophisticated equipment

and skilled personnel and are able to export tooling either to

the collabourators or to third world markets.

2.19 Brief of Large, Medium & Small Tool Rooms

I. Large Tool Rooms

a) There are more than 250 large CTRs. They have good

infrastructure & sophisticated facilities including precision

machinery & design capabilities and are characterized by high

investment levels (Rs.10 – 30 Crores), wide reach (national &

international) and a customer base encompassing major

automobile, consumer durable players among others. Their

18

investments have been made in phases over the years and thus

several of these CTRs enjoy a relatively higher

Turnover/investment ratio of (1.6). These tool rooms supply

intricate (high precision) tooling to the user industries.

b) Facilities

Most of these larger CTRs have sophisticated machinery and

does bulk of the precision work in house. They have CNC

turning machines, milling machines, boring machines, CNC wire

cutting machines, jig boring and jig grinding machines. Not

all of them however have optical profile grinders. Most of

these machines are imported. The standard room is normally

equipped with machinery such as 3 co-ordinate measuring

machine, profile projector, electronic & mechanical measuring

instruments etc. Most of the tool rooms in this category have

tool design capabilities in addition to testing facilities.

They have a separate designs department. One or two tool rooms

have rapid proto typing system. Several large tool rooms have

undertaken expansion and modernization programmes in phases

over the past few years.

c) Sub-contracting

The operations normally sub-contracted are rough machining

milling, turning, grinding and heat treatment. More than 70%

of those requiring heat treatment outsource due to the

specialized nature of the activity, while around 30% have in-

house facilities for the same. Since, the size of tooling

differ, hence there is no optimum size of furnace. Around 20%

of large CTRs also subcontract precision machining when their

own facilities are overloaded.

Sub-contracting is based on price, reach and delivery times

rather than specialization. Large CTRs often (over 30%) sub-

contract ‘low value adds’ activities to reduce costs. Smaller

tool rooms and machine shops undertake sub-contracting

activity to utilize capacity and resources. Most of the sub-

contractors are in the unorganised sector, have only a few

19

machines and undertake work of all types from all quarters.

They lack in the technical & financial strength to organize

themselves to a higher and focused level of operations.

Large tool rooms mainly focus on Plastic moulds and simple

Press tools & Dies. Tool rooms in India have the capability to

manufacture moulds of more than 10-ton size; the other tools

manufactured are Die Casting Dies and Jigs & Fixtures. Most

large tool rooms are moving away from simple low value tooling

that requires lower skills and less precision work to high end

precision tools. A few large tool rooms are also moving to

component and sub-assembly production since end users of

components are more and more reluctant to deal with too many

and insist that one vendor must take responsibility for

components and their tooling. Further, since most CTRs have to

undertake trial production of components in order to

demonstrate their tooling, the necessary machines (at least

one) exist with them. They could therefore leverage their

existing machinery to integrate vertically and provide value

added services to their customers.

Punches & dies manufactured by such tool rooms are mainly

simple and a few progressive types. Plastic moulds are mostly

Injection moulds for engineering plastics, blow moulding and

thermosetting plastics. Die-casting dies are mostly for

pressure die-casting. Tool rooms promoted by the government

and a few private sector tool rooms also specialize in

providing tool design and consultancy services apart from

manufacture of tooling.

d) Quality

Over 70% of the large CTRs have ISO 9000 and some have QS 9000

certification. An equal number are moving towards one.

Quality is benchmarked by consistent adherence to tolerances.

Rejection rate is in the range of 1.5-3%. They have written

quality control procedures and inspection sheets.

20

e) Customer segments

Large tool rooms have a major chunk of their business coming

from automotive and Electronics industries. Auto ancillary,

Consumer durables and Electrical also account for significant

proportions. Huge capacity additions and frequent model

changes over the past few years by the user industries has

driven demand for high quality tooling. Most CTRs have long-

term relationships with their customers. The user industries

tend to split the work between 2 - 3 CTRs.

f) Resources - Raw Material

Most large CTRs purchase imported steels from the agents of

the following companies located in India such as Assab -

Sweden, Daido - Japan, Nachi - Japan, Buderus – Germany,

Bohler – Austria, Thyssen – Germany, Alpine – Austria etc.

Around 10% of the companies also import these steels directly.

Others purchase the steel from local traders as and when

required. Raw material is generally tested while purchasing

and CTRs insist on test certificates.

Outsourcing is mainly done by the major like DME, Vishal,

Zyfix Equic, Kalyani, Presto, Industrial Punches, and India

Mould Bases. In cases where the customer insists on a superior

product or when the CTR belongs to a group of companies,

imports are done. Some sources for import are Hasco -

Singapore, Mastip – New Zealand, Watlow – US, IEM Springs –

US, Spinal Springs – Italy, Pi-tech - Italy, etc. Imported

components include hot runner systems, Mould heater, Hot Spree

Brush, Cartridge heater, Die springs, and Ball gauges

g) Resources - Manpower

The number of personnel in industry varies from a low of 40 to

as high as 1200. Graduate Engineers are recruited for design

and production management. People trained by NTTF, CIPET,

GTTC, CITD, Indo-Danish, Indo-German Tool Rooms etc are taken

as toolmakers. ITI trainees are employed as machinists.

21

II. MEDIUM TOOL ROOMS

a) Medium tool rooms would be about 400, who have established

tool rooms in the recent past. These CTRs have made higher

upfront investments during start-up and have a relatively

lower ‘Turnover-Investment’ ratio (0.4). They have moderate

infrastructure consisting of fewer precision machinery than

large CTRs, have capability to produce precision tooling and

have good reach being mainly regional.

b) Facilities

Investment levels vary from Rs. 2.5 - 10 Crores. Typical

machinery includes Spark erosion, Wire cut EDM and relatively

fewer CNC machines than large CTRs. Few of these tool rooms

also have tool testing and heat treatment facilities available

in-house. They have a separate design department with CAD, CAM

facilities. About 80% subcontract heat treatment jobs while

the rest have in-house facility. Precision machining is

subcontracted by about 35% of medium CTRs while about 40%

subcontract roughing, turning and milling too.

c) Product range

Medium scale CTRs manufacture Plastic moulds, Punches & Dies

that accounts for 55-60% of the total turnover. However, the

capacity of moulds is relatively lower (<6 ton) as compared to

large CTRs. Component manufacturing accounts for 10 - 12%

while Jigs & Fixtures account for 8 – 9% of the turnover.

Medium scale tool rooms also appear to have shifted focus to

Plastic moulds and precision machining in recent times.

d) Customer profile

Medium scale tool rooms also have automotive and consumer

durables as their key customer segments. Electrical,

electronics and plastic product industry constitute other

significant segments. Increased demand for these products is

driving demand for high quality tooling. Lead times vary from

1 to 3 months.

22

e) Quality

Only a few CTRs have ISO 9000 certification. Quality is

benchmarked by consistent adherence to tolerances. The

rejection is quite high – varies from 2% to 10%.

f) Resources - Raw material

Around 25% of CTRs use only imported steel. An equal number

use both imported steel as well as local steel. Purchase of

imported steel is from local traders and direct imports are

rare. The raw materials are checked for their conformance to

the specifications only when the value of purchase is high. In

other cases, certificates are considered to be sufficient.

g) Standard components

Instances of in-house manufacturing are higher as compared to

large CTRs. Imports are rare and done mainly for springs, pins

and hot runner systems. A medium CTR employs around 20 - 150

employees. There are one or two exceptions with around 600

employees. Engineers are required for design department and

production management function. Toolmakers are recruited from

NTTF, CIPET, GTTC, CITD, and ITI trainees are employed as

machinists.

III. SMALL TOOL ROOMS

a) Small tool rooms would comprise of over 800 players with

local presence, limited infrastructure & facilities, low

investment levels (<Rs.2.5 Crore), limited market reach and a

few local customers. These tool rooms produce moderate quality

tooling with lower precision requirements. These tool rooms

mainly compete on the basis of price with other tool rooms.

These cater to all types of industries.

b) Facilities

These tool rooms in this category generally do not have

sophisticated testing facilities. Typical infrastructure

includes conventional machines. These outsource precision

machining and heat treatment. Generally no separate manpower

for design & development. In about 75% of the cases the tool

23

drawings are provided by the customers. A set of typical

machinery installed at a small CTR is given below.

Machine Size Qty. CNC Wire Cut 400 X 300 2 Jig Boring 400 X 250 2 Cylindrical grinder K 1300 - 300 2 Milling machine 5 Surface grinder 10 - 18 2 Lathe machine 6 ft. 1 Drilling machine 1

c) Product range

Small tool rooms mainly produce relatively simple Punches and

Dies and undertake conventional machining activity accounting

for 45-50% of turnover. In addition, small plastic moulds

contribute 20%, Jigs & Fixtures 15% and component

manufacturing around 8 - 10% of the turnover. Many small tool

rooms offer tooling with wider tolerances and cater to select

clientele. The main focus of these tool rooms is to maximize

capacity utilization. Some small tool rooms undertake sub-

contracting activity to utilize capacity and resources.

d) Quality

Very few small CTRs have quality certification. There is no

separate Quality Assurance department either. Quality is

benchmarked by tighter tolerances. Of those who require heat

treatment, more than 85% outsource heat treatment facilities,

more than 60% precision machining and about 35% of rough

machining.

e) Customer segments

Ordnance and Aerospace (Others group) have high captive

production. However, they sub-contract some machining and

since, small tool rooms have machining facilities, they

account for around 20% of their turnover. Other significant

segments are Automobiles and Electrical.

f) Delivery schedule and lead times

Lead-time varies from 15 days to 3 months.

24

g) Resources - Raw Material

Around 20% purchase imported steels from agents. Over 80%

purchase steel from local dealers. In certain cases, customers

provide the steel themselves. Testing of raw material for

adherence to specifications is infrequent and consequently

reliance on certification by the supplier is high.

h) Standard components

Small CTRs completely outsource standard components either

from national or local players. At times, the customers supply

the components.

i) Manpower

The number of employees ranges from 8-50. Diploma engineers

and Graduate engineers are employed for design and production

departments. NTTF trainees are employed as toolmakers and ITI

trainees are recruited and developed as machinists.

2.20 CAPTIVE TOOL ROOMS

The facilities available in most in-house tool rooms do not

show segmental variations. However large captive tool rooms

have sophisticated state of the art equipment and they are

capable of producing all their requirements including

precision tooling. Tool rooms attached to smaller companies

are generally more for maintenance work. Tools manufactured

would depend on the segment and their needs. Imports are high

in precision machining. Precision Captive tool rooms tend to

sub–contract low level machining work. Sometimes even testing

and quality control is done from outside. About 40% of such

tool rooms get the heat treatment work done on contract basis.

Automobile industry is one of the largest consumers of tooling

in the country. The overall requirement of tooling in this

industry is put at more than Rs. 20,000 million. Cars and two

wheelers constitute the largest segments respectively.

The tooling requirements are planned well in advance by most

of the companies by a centralized production planning and

control department. Critical tooling is usually manufactured

25

in-house or imported. Most automobile manufacturers have made

huge investments in tool rooms.

2.21 UNORGANISED SECTOR

Estimated at above 2000 units, these are machine shops mainly

catering to sub-contracting activity, but call their work

centres as tool rooms. These players are characterized by low

investments (< Rs.35 lakhs) and have a localized presence –

mainly clustered in pockets around Bangalore, Chennai,

Coimbatore, Hyderabad, Kolkatta, Mumbai, Pune, Delhi,

Faridabad, Ghaziabad and some parts of Punjab. These are

typically ‘one man show’ that function like small workshops

and do jobbing work at highly competitive prices, providing

low technology tooling such as simple sheet metal tools and

machining operations like turning, milling & shaping. These

tool rooms cater mostly to select industries located within a

geographic region and have no specialization in terms of

product range or industries served. Most of them can be

classified as jobbers. The annual turnover range of such tool

rooms is Rs.5 - 20 lakhs.

Unorganised players are active mainly in Jigs & Fixtures and

subcontracting work. These account for over 70% of their

turnover. The tooling manufactured by these tool rooms are of,

relatively, lower quality & precision and meet the

requirements of select price conscious users.

2.22 Future Markets

The total market (imports exports) based on the trend of 2005–

06 & 2006-07 for all types of tooling is expected to be more

than Rs.1173789 Lakhs in FY 2008 -09. However considering the

new market potential which Indian industries could tap the

figure would be almost the double. Auto and electronics will

continue to be the major users. Tooling mix however is

expected to change. Plastic moulds would see an increased

usage. The survey analysis has identified the following

26

percentage production of various tools which is an indicator

for the product mix required in the future.

Moulds – 18%, Die Casting Dies – 14%, Jigs – 13%, Press Tools

– 11%, Fixtures & Gauges – 9% each, Special Cutting Tools &

Forging Dies – 6% each, Mandrels & Thread Rolling Dies – 4%

each, Others – 6%.

27

3. International Scenario

3.1 After the United States, Japan is the world's second

largest supplier of moulds and dies and is the world's largest

exporter of moulds and dies. The International Special Tooling

& Machining Association (ISTMA) an international association

representing 25 special tooling and machining associations

throughout the world including India represent over 8,000

companies (excluding the Indian list) and over $40 billion

U.S. dollars in annual sales. ISTMA World is in charge of the

central coordination and organization of all international

activities. United under this roof are the following regional

sections.

• ISTMA Americas • ISTMA Europe • ISTMA Asia / FADMA 3.2 The world trade (import & export) for 2004 of Industrial

moulds is represented in the figure on the next page. It can

be seen that the 5 major exporting countries in the order of

their exports are – Japan, Germany, Italy, Canada & USA and

the 5 major importing countries based on the value of imports

are – USA, China, Mexico, Germany & Japan.

3.3 In other words the major exporting countries also have

some import component, generally low tech, and low cost

tooling components. The import export bar Chart for India

would be very similar to that of China based on the available

import export data but it is not represented in the chart

since no official data is sent to ISTMA from India.

3.4 As per ISTMA the tooling landscape is changing

continuously with new regional and global competitors coming

on the scene, new regional dynamics taking place, more complex

partnerships and global competition, new markets and new

marketing and commercial skills coming up.

3.5 The technologies are changing in terms of Fast

Prototyping, Hybrid moulds, Multi-material moulding and in-

28

mould assembling, Micro and Nano scales, New Materials, High

speed 6+ axis machines.

3.6 Mould makers face a brave new world of highly competitive

environment at the regional / global levels demanding new

skills. It is felt that 2/3rd of the requirement of moulds by

OEM’s and multinationals would be made in East Asia and other

low cost countries. The European and US mould makers will

compete for the remaining 1/3 of high precision and high

complexity moulds on a basis of concurrent engineering,

certified quality, integrated and innovative services and also

advanced technologies.

3.7 The tool making industry in Europe comprises of about

10,000 companies mainly SME’s employing about 2 lakhs people

with yearly sales of about 20 billion Euros (Source ISTMA

Report – Spain). The imports by European Union are presented

below in Fig.1

Year

Fig.1: Imports of various tools by European Union 3.8 The Tool Industry general scenario in US & Europe is given below: I. USA

• Trend 2005 versus 2004: o Tool & Die +8% o Moulds +8% o Special Machines +15% o Precision Machining +13%

Million Euros

29

o Aerospace +14%

II. Canada • 80% located in southern Ontario • Impacted by strong Canadian dollar and globalization • Western provinces expanding with aerospace, oil, gas and

mining • Shortage of highly skilled people

III. Germany • Output +60% in 10 years, versus +20% for overall industry • Last two years a total 3 to 4% decline • Dependent on the automotive industry • Main exports to: Switzerland, USA, Czech Republic, China • 2004 production

a. Dies 4.2 billion Euro b. Injection Moulds 1.6 billion Euro c. Die cast dies 0.2 billion Euro

IV. Switzerland • Similar to Germany • Slowdown started 1Q05 • Capacity utilization = 87.9% • Turnover equals 459.6 million Euro • Export ratio: 78.2% • Exports to the U.S.: up 4.3% • Number of companies: 510 • Margins down

V. Italy • Business conditions generally rated good • Losing business due to large companies shifting to

Eastern Europe & Far East • Keen price competition from China

VI. Great Britain • Output and orders slow • Margins under pressure • Domestic market for dies and Moulds equals 450 million

52.9 million export • Insufficient number of apprentices • Fighting for better government support

VII. Portugal • Mould industry margins eroding • 11% of production is consumed domestically • Exported worth 335 million Euro, up slightly • French market up, U.S. market down from 3rd to 5th • Competitive in niche markets for highly complex Moulds

VIII. France • Mould production worth 1 billion Euro • Employees 9,000 • 1/3 Exports, 1/3 Imports

IX. Spain • OEMs moving to emerging countries • Trading companies offering tools from emerging countries

30

• Exports: dies off, Moulds steady • Imports: dies up 69%

X. Finland • Growth registered: +20% • Delays are of the order of two to three months • Russian market is strong and is becoming the major

trading partner • Mainly selling to domestic customers • Skilled labour is available but not in the needed locations

XI. Czech Republic • Dependent on automotive sector • Generally reduced interest in technical jobs. Most recently moderate improvements due to ease of finding jobs and high average earnings

XII. Slovenia • Sales equals 121 million Euro • Export = 72 million Euro

XII. Hungary • Lack of understanding of our industry. Concerned about: tax, regulations, energy costs, etc. • Currently healthy, but expecting slow-down due to

stagnation in Germany, especially in the auto industry • Cost going up and increasingly tough competition from

China • Companies that are busy are typically specialists/experts

in the field • Severe reduction in the number of apprentices • Loss of skilled workers due to retirement • Need government incentives to invest and train

XIV. Estonia • Going quite well • All companies rating business conditions good or at least

fair • Average order backlog 11 weeks • Sales up 10% versus '04

An overview of exports (Value in USD) by various countries during 2001 – 2005 for the product group 695 (Tools for use in hand or in machines) as compiled by International Trade Center (UNCTAD/WTO) is given in Annexure - 3. 3.9 Asia's Mould & Die Industries are represented internationally through its apex association - FADMA (Federation of Associations of Die & Mould industry in Asia) comprising of 11 Member Associations namely: 1. China Die & Mould Industry Association (CDMIA) 2. Indonesia Mould & Dies Industry Association (IMDIA) 3. Japan Die & Mould Industry Association (JADMA) 4. Korea Die & Mould Industry Cooperative (KODMIC) 5. Malaysia Mould & Die Association (MMADA) 6. Die & Mould Association of Pakistan (DIEMAP)

31

7. Philippine Die & Mould Inc. (PDMA) 8. Singapore Precision Engineering & Tooling Association

(SPETA) 9. Thai Tool & Die Industry Association 10. Chinese Taipei-Taiwan Mould & Die Industry Association

(TMDIA) 11. Tool & Gauge Manufacturers Association of India (TAGMA)

3.10 The Tool Industry General Scenario in Asian Region I. Japan Demand based production & ordering of specific products, which

require special skills to make, have been common practices in

Japan's mould and die industry. This has nurtured specialized

small shops, which have become the industry's backbone. These

shops have built long-running business ties with particular

customers. This has allowed the industry to accumulate the

skills that are attuned to the needs of customers. Yet, as

product life cycle becomes shorter, customers are demanding

higher precision, speedier delivery, and lower pricing. This,

coupled with the increasing difficulty of attracting new

workers, has made the mould and die industry's operating

environment more and more difficult. One of the important

reasons that have made the industry's future precarious is the

shifting of production to other Asian nations.

90% of Japan's mould and die industry comprises firms whose

number of employees is 20 or less. Compared with the Japan

Machine Tool Builder's Association's membership of

approximately 100, that of the Japan Die & Mould Industry

Association (founded in 1957) is much larger at 573. As annual

sales of both industries stand at 1 trillion yen each, the

average size of firms in the mould and die industry is

smaller. The industry's largest firms employ several hundred

workers on average. These include Ogihara, Ikegami, Showa

Seiko, Kuroda Precision, Miyazu, and Mitsui High-tech.

The remaining smaller firms employ 20 workers or less. The

Japan Die & Mould Industry Association consists of the

headquarters and the three branch offices in charge of

Eastern, Western and Central Japan, respectively. The

32

Association is a non-profit organisation, operated on a

voluntary basis.

CAD Usage

CAD changes the way moulds and dies are made. More and more

customers tend to supply drawings electronically rather than

physically. At present, roughly ten Japanese moulds and die

manufacturers engage actively in development of the market

Asia-wide. The connections these manufacturers have

established with customers by sharing CAD systems are weak.

Their Asian competitors, are much more familiar with CAD they

rarely produce physical drawings. The customers participate in

design-in sessions by using CAD communication and electronic

mail. In some cases, even the revision or finalization of

drawings is handled electronically via CAD. Communication is

Japanese manufacturers' weak point. Mould and die making shops

in particular have difficulties keeping pace with the growing

moves to build CAD-based connections with the U.S.

At present, it still is better for Asia (excluding Japan) to

import moulds and dies from Japan. Making a given mould takes

100 hours in Japan, while it takes 300 hours in Asia. In

Japan, the owners of many mould-making shops have entered the

trade as apprentices.

II. ROC (Taiwan) The Taiwan Mould & Die Industry Association (TMDIA) was

founded in 1990. Its membership exceeds 900. The number is

estimated to reach 4,000-5,000, if smaller non-member firms

were included. Taiwan's mould and die industry's workers

number 100,000. Mr. Terry Kuo (Kuo Taiming), chairman of Hon

Hai Precision Industry, and former TMDIA chairman, qualifies

as the world's 100 wealthiest individuals. TMDIA's present

chairman, Mr. William H. Chi operates the world's second

largest stapler maker, after Max. Most of the Taiwanese

technical personnel have been educated in the United States,

and hence no difficulties in operating CAD/CAM programs.

33

Taiwan's manufacturers are connected to their customers in the

U.S. through the medium of CAD. Clusters of smaller shops have

developed. Shops are specialized in each step of the

manufacture process, and are linked horizontally. In this

system, investment efficiency is better than if shops

individually invest in all machinery to handle all steps of

the manufacturing process. In many instances, the owners of

shops forming a group are related by blood. The main family

orchestrates the division of operations, such as grinding,

within the group. In Japan, shops tend to operate

independently and with many different types of machines. In

South Korea, groups are pyramidal. Samsung does business only

with Samsung. Mould and die making training institutions have

been mushrooming. There are some instances where an

institution whose current enrolment is 6,000-10,000 enlists a

new intake of 3,000.

III. Hong Kong Until ten or so years ago, Hong Kong had remained the mould

and die-making hub of Asia. Following the return to Chinese

sovereignty, Hong Kong's mould and die industry weakened

dramatically as it has shifted production to China. The

disappearance of the border has made technical exchanges

easier, triggering an influx to Shenzhen and Shanghai of

manufacturers seeking to take advantage of cheaper labour.

Engineers have remained in Hong Kong. Many shipments from Hong

Kong to China come from Taiwan. 42% of Taiwan's total exports

are channelled via Hong Kong to China. Hong Kong's trading

houses have shown themselves reliable import agents for China.

Hong Kong is trying to change from a manufacturing hub to a

financial centre.

IV. China China's mould and die industry is the world's largest in the

total numbers of firms and workers. The number of workers

exceeds 400,000, most of them employees of state firms.

However, nearly all State-operated shops are bankrupt with

34

only township and village-operated shops remaining operable.

While pay is a 20th that of Japan, moulds cost a 10th as much

as in Japan. This indicates that the efficiency is lower. The

quality of products is also poor.

V. Singapore Singapore's mould and die industry is represented by the

Singapore Precision Engineering and Tooling Association.

FADMA's secretariat is also located there. Singapore is

enthusiastic about promoting the industry. Singapore plays a

vital role in the manufacture of state-of-the-art moulds and

dies. The government has been guiding the industry's

development. As the manufacturing sector lacks workforce, the

industry finds it almost impossible to increase the production

volume significantly. It may become Asia's technical education

and training centre. One prominent training institution is the

Institute of Technical Education. Government, universities and

the industry work in cooperation. Chinese language ability is

seen as a competitive advantage in business.

VI. Malaysia The government has been steering the mould and die industry's

development in the same way as Singapore. The industry is

given top priority under the government's industrial policy.

However, the government tries to promote too wide a range of

industries, from automobiles to communications, to give the

industry the support it needs. The manufacturing sector's

labour shortage constitutes a bottleneck.

The automotive industry, Malaysia's key industry, suffers from

high cost and quality problems as too much emphasis on the

promotion of “Proton” hampers competition. The industry

operates only on a small scale, so it has to depend on imports

from Japan and other nations to procure moulds and dies.

Proton's local procurement rate is 85% as calculated in the

number of components used, however the actual rate is

significantly lower. In another key sector, the electronics

industry, which is centred upon the manufacture of ICs,

35

suppliers of moulds and dies are overly concentrated in the

Penang district. While demand for moulds and dies for home

appliances exceeds supply, domestic products cannot compete

with imports in either pricing or quality. The market for

precision moulds for pressing is under-supplied, as suppliers

are limited to only one or two Japanese manufacturers. There

is a large number of mould and die manufacturers, and a number

of industry associations. Prominent mould and die manufacturer

associations are based in Selangor (automotive sector) and in

Penang (electronics sector). Many mould and die manufacturers

are operated by Chinese that are rarely supported by the

government, which adopts a bumiputra-oriented policy. The

industry associations are not organized nationally, and have

trouble taking concerted steps.

VII. Thailand The Thai Tool & Die Industry Association was founded in 1994.

The number of Thailand's mould and die manufacturers is

estimated at 400. Too many industrial sectors have emerged at

the same time and workers change jobs too readily, factors

that has made it difficult for the mould and die industry to

accumulate technology. Unfortunately, the prosperity of a

nation is also linked to the growth of mould and dies

industry. Furthermore, high tariffs are imposed on imports,

despite the fact that the industry cannot grow without being

exposed to competition. The tariff rate has been raised to 35%

(as an emergency safeguard) to reduce/avoid imports. The

automotive sector already has all essential support, including

indigenous mould manufacturers and Japanese suppliers; hence

further investment in the support sector is not needed in the

immediate future. A source of greater concern is the outcome

of efforts to establish a system of mutual supply of parts

within the ASEAN region, as SAFTA's creation calls for

international division of labour. Following the slump in

domestic demand, the automotive sector has been trying to

36

become more export-oriented. How far and smoothly this will

progress remains to be closely monitored. The transfer of

technology and the providing of business management guidance

are needed for local Thai manufacturers. Currently, the

electronics sector faces even more difficult hurdles. Thailand

is highly likely to become the world's HDD supply base. This

will be possible only if the number of suppliers of precision

moulds and dies increases.

VIII. South Korea The Korea Die and Mould Industry Cooperative have membership

of 300 firms. The total number of the Nation’s mould and die

manufacturers is estimated at 1,700. Controlled by the

financial conglomerates, the mould and die industry has little

room for growth. This might make the nation's recovery from

the economic crisis all the more difficult. ROC (Taiwan) is

more recession-resistant because its machine tool and mould

and die industries are stronger.

IX. The Philippines The Philippine Die and Mould Association have a membership of

90 firms. These manufacturers' main products are IC moulds and

connector moulds. Precision moulds for use in the electronics

sector are in extremely short supply. Difficulties are likely

to arise if mould and die manufacturers switch customers.

Isuzu Motor experienced trouble when it launched an engine

plant, because all suppliers were solely those of IC moulds.

The root of this problem appears to lie with the ways in which

institutions provide technical education and training.

37

4. Survey Analysis & Profiles

4.1 By 2008-09 the total value of Indian tooling

business comprising of its imports and exports is expected

to be more than Rs.1173789 Lakhs and the growth would

continue steeply in line with the growth of the industrial

goods and services.

4.2 The world tooling business is currently at 40

Billion Dollars and is expected to grow at the rate of

more than 20% annually. With this rate the tooling

business is going to double every four years. Is India

geared for this level of tooling activity. This double

challenge for the Indian tooling industry would require

dedicated approach.

4.3 A close look at the Indian Tooling industry reveals

that the sector is moving towards a tougher competitive

environment. Within the Asian context the threat is also

from low cost suppliers such as Republic of China whose

tooling export business is 75% more than India as per

International Trade Center report.

4.4 The main cost components of tool making comprise of

design, raw materials, manufacturing, inspection & testing

and transportation. Out of these the critical cost is that

of Raw Materials which in most cases is imported. As a

result the overall cost of the tool is higher compared to

some of the Asian competitors.

4.5 Indian R&D efforts are lacking towards development

of better quality raw material (tool steel) and inspection

& testing facilities. No information has been received on

new patents.

4.6 At present the Indian manufacturing industries are

members of one or the other industry association which

number in hundreds, including state level and district

level associations. This scenario impedes in assessing our

collective strengths and capabilities in Tooling and

38

Tooling technologies. This is amply clear from the reports

of various international bodies on Tooling such as ISTMA

(International Special Tooling Manufacturers Association),

FADMA (Federation of Die & Mould Manufacturers

Association) wherein they report “No Data Available from

India”.

4.7 The apex association of Die & Mould manufacturers in

India i.e. TAGMA(Tool & Gauge Manufacturers Association)

has just 415 members on its rolls today which is small

considering number of manufacturing units and members

affiliated to various associations. Considering membership

of other associations having tooling as likely component

in their manufacturing operations the figure could have

been more than 3000 members.

4.8 The liberalization polices initiated during the 90s

gave a boost to development of the Indian industry

including tooling. A larger spectrum of moulds, dies and

tool manufacturing companies has been incorporating modern

production techniques; spending moderately on improved

tool designs, besides making a dent in untapped export

markets worldwide, however focused approach, plan and

policies by the Govt. towards tooling sector needs review

vis-à-vis other countries.

4.9 Based on the response from 58 units (list given at

page no. 39) to the questionnaire survey the following

observations are made. Also the various issues facing the

industry have been mentioned later.

a) The age of units varied from 6 years for the recently

commissioned units to about 70 years for the old unit.

b) The tooling industry principally comprises of

Commercial and Captive Tool Rooms. While as the number of

captive tool rooms is larger than the number of commercial

tool rooms, their operations are focussed for their

internal usage of tooling.

39

LIST OF COMPANIES WHO RESPONDED TO THE QUESTIONNAIRE 1. Asna Enterprise 2. Machine Tool Prototype Factory

3. Associate Tools 4. Advance Cooling Systems P. Ltd

5. Cemech Tools Limited 6. Polychem Enterprises

7. Central Tool Room 8. Sridevi Tool Engineers Pvt. Ltd.

9. Chitram Engineering Pvt Ltd. 10. Wendt India Limited

11. Deep Plastic Industries 12. Central Institute of Plastics Engineering & Technology

13. Edic Dies& Moulds Engrs(P) Ltd 14. Stuser Tools Pvt. Ltd.,

15. Elscint Automation 16. D.K. Engravers

17. G Plast Private Limited 18. Renuka Auto Crank

19. Indo German Tool Room 20. Elemec Industries

21. Lavingia Enterprise 22. Somnath Forging

23. Liba Enterprise 24. Miranda Ansaw Pvt. Ltd

25. Metal Craft Industries 26. Anand Airline Accessories

27. Motor Industries Co. Ltd 28. Kinetic Engineering Ltd

29. Prabha Industries 30. Wood Shape Works

31. Raj Alimento Industries(P) Ltd 32. Gold Aids

33. Rollano Dies & Tools Pvt. Ltd. 34. Hindustan Automation

35. Sansha System Ltd. 36. Aniruddha Wire Cut Tools

37. Sescoi India Solutions Pvt. Ltd

38. Alliance Techno Crafts

39. Shree Ganesh Engineering 40. Indian Tool Mfrs Ltd.

41. Siddha Engineering 42. Subhash Engineering Works

43. St.Joseph's Technical Institute

44. IDEMI

45. Sunikh Precision Pvt.Ltd 46. B Joy Engineering Works

47. Tech Tools 48. Electro Plastic Pvt Ltd.

49. Tools and Instruments Company 50. Om Sai Moulds & Plastics

51. Universal Machine Tools Mfg.Co 52. Onkar Dies Pvt. Ltd.

53. Vasantha Tool Crafts (P) Ltd. 54. Addison & Company Limited

55. Vora Industries 56. Central Tool Room, Ludhiana, Punjab

57. Yogesgwar Engineering Pvt Ltd. 58. Rockwell Automation India Ltd.

40

The response from such captive tool rooms has been poor

generally on account of the amalgamated structure and

revenues along with the principal product, hierarchical

constraints etc. The distribution of the response received

is depicted in Fig. 2.

Commercial86%

Captive9%

Others5%

Commercial Captive Others

c) The percentage distribution of the units based on their

legal status is depicted in Fig. 3. with corporate

accounting for 35%, followed by Partnership &

Proprietorship at 29% and 24% respectively.

d) Tool rooms have also been classified on their nature of

operations i.e. Small Tool rooms, Medium & Large Tool

rooms. Their distribution in terms of % is given in Fig.

4. The small tool rooms constitute 62% while as medium &

large comprise 38%

Fig. 2 - % Distribution of Nature of Tool Rooms

41

35%

29%

24%

7%

5%

Corporate

Partnership

Proprietorship

Pvt

Others

62%

38%

Small Medium & Large

Fig. 3 - % Distribution of Units based on their Legal Status

Fig. 4 - % Distribution of Units based on their Nature of Operations – Small v/s Medium&Large

42

e) The survey revealed that the numbers of foreign technical

collabourations are few in numbers. In terms of percentage it

is only 12%. The pie chart depicting the share of

collabourations and otherwise is given in Fig. 5.

f) Tool rooms generally have low but highly skilled manpower.

The survey included mapping of manpower which was done in four

categories

i) Units employing less than 25 employees

ii) Units employing 25 – 50 employees

iii) Units employing 50 – 100 employees and

iv) Units employing greater than 100 employees

The % distribution for all categories is given in Fig. 5. g) The production tooling generally comprises of Jigs,

Fixtures, Gauges, Press Tools, Die Casting Dies, Moulds for

different applications (Plastics, Rubber, Mineral materials,

Casting, Other materials), Forging Dies, Mandrels, Thread

Rolling Dies, Special Cutting Tools etc. The survey identified

the pattern of tooling production keeping in view the demand

both domestic and international. This pattern is depicted in

Fig. 7 as percentage of different categories of tooling.

88%

12%

Collaboration No Collaboration

Fig. 5 - % Distribution of Units having Foreign Technical Collaboration

88%

43

<25 Employees 48%

25 - 50 Employees16%

50 - 100 Employees11%

>100 Employees25%

<25 Employees

25 - 50 Employees

50 - 100 Employees

>100 Employees

1 3 %

1 4 %

9 %

1 1 %

9 %

1 8 %

5 %

4 %

3 %

6 %

8 %

J ig s

F ix tu re s

G a u g e s

P re s s T o o ls

D ie C a s t in g D ie s

M o u ld s

F o rg in g D ie s

M a n d re ls

T h re a d R o llin g D ie s

S p l. C u tt in g T o o ls

O th e rs

Fig. 6 - % Distribution of Units & Employee Strength

Fig. 7 - % Distribution of Tools Produced

44

4.10. The Questionnaire survey has also revealed the following

Issues being faced by the Industry

I. High Capital Investment

Tool rooms are capital intensive. A medium sized tool room

would cost around Rs.100 – 120 million. This is due the fact

that the tool room machinery requires high precision and

accuracy features.

II. Quality

Frequent changes in product drawings and consequently tooling

specifications while tool manufacture is in progress leads to

tool quality and delivery schedule problems. The wide range of

work, which an Indian tool room is forced to undertake, also

leads to quality problems. This brings in the phenomena of low

volumes – low specialisation – low quality approach.

Quality issue is also related to the training and development

of skill for the work force. Additionally in absence of any

worldwide standards for the raw materials, design,

manufacturing, surface finish, safety features etc also lead

to product quality problems.

III. Technology

A general opinion about the Indian Tool Rooms is that the

technology employed lags behind the Western countries and also

some countries in the Asian Block such as Korea, Taiwan,

Malaysia, and Singapore. This is untrue as far as some of the

good tool rooms are concerned but the majority of the picture

seems to be correct. The same is true of the latest software’s

such as CAD / CAM, 3 D Modelling, Rapid Prototyping etc.

although the Indian Tool Rooms are picking up on this front

too.

IV. Operational Issues

These include the lack of proper infrastructure –

transportation, raw materials, standard components, sub

contracting, high manpower turnover and lack of economies of

scale. In addition to these, constraints due to inadequate

45

design – design for ease of manufacturing, design for

maintainability, design for safety, design for jigs and

fixtures, design for less cycle time operation are the

critical operational issues being faced by the total industry

as a whole.

V. Competition from Imports

With liberalisation, imports have become easy and these are

partly affecting the Indian Tool Rooms owing to some duty

structures. The major issue with respect to imports is the

high cost of imported raw material (different grades of steel:

High Carbon High Chromium, Hot Die Steel, Tool Steels, High

Carbon Steels, Mild Steels etc.) for tool manufacture thereby

offsetting the cost of the finished product.

VI. Lack of Database

Due to lack of proper database the tool room industry is not

in a position to clearly identify the various benchmarks vis-

à-vis the foreign suppliers. The good work done by our tool

rooms also does not get proper publicity for attracting more

markets & clients as a result of lack of national level

database. Information sharing among the association members is

also very poor purely from the commercial point of view.

VII. Training / Educational Courses

The industry – institution interface is lacking. Not many

institutions are offering advanced tool design courses. Any

courses have to be specific to the industry requirements. It

would be appropriate to involve the major industries and the

industry associations while formulating the training

curriculum by various training institutes offering courses in

Tool Design & Manufacture.

VIII. Availability of Export Market related information

The study has identified that due to lack of proper

information regarding export market and simple procedures and

documentation, our tool designers and manufacturers are not

able to enhance their export capability.

46

IX. Employee Turnover

Another major issue of CTR’s and captive tool rooms is the

turnover rate of skilled manpower. Tool designers and

toolmakers from India are considered competent by tool rooms

abroad. The trend is more for 3 – 5 years experience in

plastic mould making industries. Salaries levels vary

depending on experience of the personnel bur are definitely

much higher than the Indian companies.

X. Comments on Export Capability

Based on the Questionnaire survey the response by some of the

industries on their export capability is given as under:

Sr Company Comments on their Export Capability 1. Vasantha Tool

Crafts (P) Ltd i) Can export engineering plastic moulded components used in electrical, electronic engineering in addition to caps and closures ii) Can design & manufacture 2-plate, 3 plate split modules, fully hot runner and semi hot runner moulds.

2. Associate Tools Confident to meet export requirements 3. Deep Plastic

Industries Can make high quality Ball pen mould, which would be import substitute and it, can be exported also.

4. Central Tool Room

i) Largest service provider of RP facilities in India. The services can be exported. ii) Good machinery & expertise is available for making injection moulds, press tools, Die casting dies, Jigs Fixtures & Gauges

5. Chitram Engg.(P) Ltd

Willing to export step by step

6. Prabha Industries

We have good understanding of Europeanstandards & requirements

7. Metal Craft Industries

Our capabilities are comparable to Japanese; Italian & Korean tool makers with definite cost advantage.

8. Vora Industries Good capability to produce quality tools, help needed in market research, visits with delegations and participation in exhibitions.

9. Tools & Instruments Co.

Lot of scope for electronic industry punches manufactured on latest CNC machines. Credit facilities needed.

10 G Plast (P) Ltd Have integrated facility as one Stop

47

shop service provider. 11 Stuser Tools (P)

Ltd i) Capable to meet Quality requirements ii) Need to identify prospective buyers

12 Liba Enterprise Can produce good quality moulds at short notice.

13 Tech Tools Want info on export markets 14 Machine Tool

Prototype Factory

Core competency in design & manufacturing of special purpose machine tools for defence production; can be used for exports as well.

15 Anand Airline Accessories

Need to know our customers

16 Miranda Amsaw (P) Ltd

Marketing assistance needed.

17 Dran Engineers (P) Ltd

Need Simplified Import Export procedures

18 Gold Adis Need Contacts abroad, Details on Trade Fairs, Exhibitions, responsible Govt Agencies

19 Subhash Engg. Works

Link between buyers & sellers to be expanded

20 Indian Tool Manufacturers

We are exporting cutting tools and want to maintain a lead.

21 Choice Precitech India (P) Ltd

40 – 50% turnover is exported. We want to know more markets.

4.11 Profiles of Govt. run & Commercial Tool Rooms

The survey analysis also included collecting details of products and profiles of the units. These include 11 Govt supported tool rooms and 76 private units listed below, whose details are given in Annexure 5. Out of these a few responded to our Questionnaire survey as well.

1. Central Institute of Tool Design, Hyderabad 2. Central Tool Room & Training Centre (CTTC), Bhubaneshwar 3. Central Tool Room & Training Centre (CTTC), Calcutta 4. Central Tool Room, Ludhiana, Punjab 5. Indo Danish Tool Room (IDTR), Jamshedpur, Jharkhand 6. Indo German Tool Room, Aurangabad, Maharashtra 7. Indo German Tool Room (IGTR), Indore, M. P. 8. Indo German Tool Room (IGTR), Ahmedabad, Gujarat 9. Tool Room & Training Centre (TRTC), Guwahati, Assam 10. Central Institute of Hand Tools, Jalandhar, Punjab 11. Hand Tool Design, Development & Trg. Centre, Nagaur, Raj. 12. Abhijeet Dies & Tools Private Ltd 13. Adept Polymers Private Limited 14. Alpha Industry 15. BPL India Limited 16. Brakes India limited 17. C.K.Moulds & Dies (Pvt) Ltd. 18. Carl Zeiss India Pvt. Ltd

48

19. Chitram Engineering Pvt. Ltd. 20. Classic Moulds & Dies 21. Conex Avio Auto Pvt. Ltd. 22. Dankel Tech 23. Devu Tools Pvt. Ltd. 24. Dietech India Pvt. Ltd 25. Electro Plasts Private Limited 26. Elemec Industries 27. ELTA Tools & Dies 28. Esteem Industries 29. Filtrum Tools & Components Pvt. Ltd. 30. Fine Components & Tools Private Limited 31. Fine Dies & Moulds (India) Pvt. Ltd. 32. Hasco India Pvt. Ltd. 33. Hindustan Automation 34. Horizon Industrial Products (P) Ltd. 35. Hrithik Tools Pvt. Ltd. 36. Incite Cam Centre 37. Industrial Punches Rabourdin Pvt. Ltd. 38. JAII Maruthi Tools (P) Ltd. 39. JBM Auto Limited 40. Jekuma Tools & Guages Pvt. Ltd. 41. Jyoti Plastics Works Pvt. Ltd. 42. Kalyani Mould Base Pvt. Ltd. 43. Karthigeya Moulds & Dies Pvt. Ltd. 44. Kay Dee Enterprises 45. Kennametal India Limited 46. Ketki Dies & Tools Pvt. Ltd. 47. Kinetic Engineering Limited 48. Kowski Toolings 49. Lakshmi Designers 50. Mahindra & Mahindra Limited 51. Mastercraft Engineers Pvt. 52. Metal Craft Industries 53. Metals India 54. Minda Huf Limited 55. Motor Industries Co. Ltd. 56. M-Tech Industries 57. NTTF Industries Limited 58. Onkar Dies Pvt. Ltd. 59. P.H. Polyplast 60. Precision Punches & Dies 61. Premauni Tools 62. Prince Design-N-Tooling Technology Pvt. Ltd. 63. PROTEKZ 64. Raut Engineering Pvt. Ltd. 65. Renata Precision Components Pvt. Ltd 66. Renuka Auto Crank 67. Sandhar Steady Stream Tooling Pvt. Ltd. 68. Sansha System Ltd. 69. Savitri Automation 70. Sermo Arrk India Limited 71. Servotronics 72. Shri Gajanana Industries (I) Pvt Ltd. 73. Sridevi Tools Engineering Pvt. Ltd.

49

74. Suhner India Pvt. Ltd. 75. Sunikh Precision Pvt. Ltd. 76. The Supreme Industries Limited 77. Tata Motors Ltd 78. Tool and Instruments Company 79. Toyama Electric Limited 80. Ultra Engineers (unit II) 81. Vanula Tools & Moulds Pvt. Ltd. 82. Vasantha Tool Crafts Pvt. Ltd. 83. Vipul-S Plastocrafts Pvt. Ltd. 84. Vishal Precision Products Pvt. Ltd. 85. Vrindavan Engineering Works 86. Welmech Engineering Company Pvt. Limited 87. Yeshshree Press Comps. Pvt. Ltd.

50

5. Recommendations

1. Considering the fact that by 2008-09 the total value of

Indian tooling business comprising of its imports and

exports is expected to be more than Rs.1173789 Lakhs and

that the growth would continue steeply in line with the

growth of the industrial goods and services, offers more

challenges and Indian Industries would have to gear up

adequately to match this challenge.

2. Besides the above home front scenario the world tooling

business currently at 40 Billion Dollars and expected

growth rate at more than 20% annually is another major

challenge which could be adequately countered through

flexible manufacturing technique, high end tool design,

quality management systems, development of better tool

steels, tool testing facilities, delivery schedules and

the corresponding infrastructure.

3. The threat from low cost suppliers such as Republic of

China has to be met with a multipronged approach such as

technology up gradation, improved tool designs, adopting

cost effective production processes, training & testing

facilities, low cost indigenously produced quality raw

material at par with market trends and more importantly

rationalization of the import duties on the raw materials.

4. Indian R&D efforts need to be aimed towards development of

better quality raw material (tool steel) and inspection &

testing facilities. DSIR may initiate suitable R&D

projects with National Metallurgical Labouratory for

development of indigenous better grade tool steels.

5. In order to showcase collective strength of Indian Tooling

industry it is recommended that the Department Of Commerce

and Industry bring out data on tooling under three main

categories i.e. i) Machine Tools ii) Hand Tools and

iii) Die & Mould (Jigs, Fixtures, Gauges, Press Tools, Die

Casting Dies, Moulds, Forging Dies, Mandrels, Thread

51

Rolling Dies, Special Cutting Tools etc.) and allocate HS

codes accordingly.

6. In order to bring all tool manufacturers (whatever their

affiliations, with whatever association they are

affiliated, whether commercial or captive, large, medium

or small, organised or unorganized) under one umbrella,

it is recommended that DSIR develop a portal fully

devoted towards Tooling & Tooling Technologies of India,

wherein registration would provide the units with

certain concessions e.g. Free Energy Audit for the Unit

etc. This would help generate vast amount of valuable

data on our tooling capability and attracting foreign

markets. This portal should be accessible to all types

of Tool manufacturers for enhancing our export

capability.

7. TAGMA (Tool & Gauge Manufacturers Association) needs to

play a pivotal role in bringing all type of tool

manufacturers under one umbrella to have larger stake in

helping India become a tooling destination of world. The

association would have a larger say in voicing concern

of the tooling fraternity as a whole.

8. There are 100 million highly educated people, and their

work ethics are especially strong. India has the

potential to grow as a net exporter of moulds and dies.

9. Of late, some of the tooling units are undertaking

forward integration by which they are able to

manufacture components for which they make tooling. This

is a logical conclusion for others to follow as well.

10. The large units have the benefit of advanced technology

compared to the small units, a large number of which

still depend on traditional and obsolete technology. It

would be appropriate for such industries to approach

financial institutions such as SIDBI to modernise from

time to time. TAGMA could hire expertise for a group of

52

industries in finalising modernisation plans with

benefits accruing to a larger group.

11. Indian tooling industry’s future growth prospects solely

depend on how fast the sector can reposition itself

considering the trends in global markets and technology.

12. The swiftness with which the major players catch up with

the rapid changes both internally and externally and

also at the vendor level will determine the success in

the medium term growth.

13. In the long term by 2012, to be a global player the

Indian tooling industry needs to thoroughly change its

production and business strategy by focussing on

innovative tool design and effective project management.

14. Department of Commerce, Ministry of Commerce & Industry,

Govt. of India have formulated Codes (HS Codes

classification) for giving import and export figures on

quarterly, bi-annually and annual basis. The codes need

further streamlining keeping in view the large spectrum

of tooling that has emerged over the years.

15. Testing of mould is an important aspect before releasing

it for commercial use. It is difficult for smaller units

to have adequate testing facilities thus hampering

export potential. It would be necessary to have common

facilities for such testing based on industrial cluster

approach.

16. As of now there is little evidence to suggest any

serious impact either on the tool-manufacturing units as

a result of WTO, so far as the domestic market is

concerned. But due to severe competition globally the

Indian players have to be ready for any WTO

interventions in future.

17. In the prevailing competitive environment the industry

association TAGMA with the help of exporters association

53

should formulate institutional arrangements (co-

operatives) for market development programs with the

help of engineering export promotion council (EEPC) to

reach overseas markets by arranging catalogue shows

abroad and providing details regarding import

regulations in various potential markets.

18. In the above venture banks/financial institutions may

also extend financial support. The main purpose of these

cooperative bodies could be to fetch competitive prices

for the products. This may be undertaken by adopting a

cooperative approach with the backing by the Government,

especially for warehousing facilities and selling in

export market, with a common brand name.

19. In the emerging competitive scenario the tiny, small

and medium establishments need to be redefined in terms

of investment limits of Rs. 1 crore, Rs 5 crore and Rs.

10 crore respectively. Also to have vibrant small &

medium units, a special category may also be formed

with investment limit of Rs 10-15 crore with

encouragement to raise equity capital including foreign

equity, if required to supplement institutional

finance.

20. Sustainable technology development is an important

area for maintaining competitive advantage. Hence

efforts need to be made to have a proper linkage at the

level of University or/ and Research Institutions for

meeting the technology development requirements of the

industry. More project/schemes need to be evolved with

proper funding in co-ordination with S&T departments

like DSIR, TEDO, CSIR, DRDO, etc.

21. In the competitive environment acquiring international

certifications and standards (e.g., environment,

energy, quality standards, etc.) both in products and

54

processes has become a minimum requirement. Appropriate

incentive schemes with required funds must be made

available to attain and upgrade the existing standards

and norms. Institutions like the Bureau of Indian

Standards (BIS), National Productivity Council may be

involved to continually engage in the quality

improvement programs and enforcing the standards.