Economy Updates

Economy Highlights
  1. The growth of real GDP for the first quarter of 2019-20 was 5.0 per cent as compared to 8.0 percent in the corresponding period of previous year.
  2. The consumer price inflation stood at 3.2 percent in August 2019, as compared to 3.1 percent in July 2019.
  3. The Budget Estimate of the fiscal deficit for 2019-20 has been set at 3.3 percent of GDP, as compared to 3.4 percent in 2018-19 (Provisional Actuals).
  4. Growth of M3 (Year on Year (YoY) basis) as on 30th August 2019 stood at 9.9 percent, as compared to a growth rate of 10.3 percent as recorded in the corresponding fortnight end in the previous year.
  5. The value of merchandise exports and imports(in US$ terms) declined by 6.0 percent and 13.4 percent in August 2019.
  6. India’s current account deficit as percentage of GDP was 2.0 percent in Q1 of 2019-20, as compared to 2.3 percent in the corresponding period of previous year.
  7. Foreign exchange reserves stood at US$ 428.6 billion as on 20th September 2019, as compared to 412.9 billion at end March 2019.
  8. Total production of food grains for 2018-19 is estimated at 285 million tonnes (fourth advance estimates), same as in 2017-18(final estimate).
  9. Index of Industrial Production (IIP) growth during July 2019 was 4.3 percent, as compared to a growth of 6.5 percent during the July 2018.
Quarter wise growth of real GDP and GVA (percent)
  1. Real GDP growth in first quarter (Q1) of 2019-20 is estimated at 5.0 percent, lower than 5.8 percent in fourth quarter (Q4) of 2018-19.
  2. The growth of real Gross Value Added (GVA) is estimated at 4.9 percent in Q1 of 2019-20.
Performance of Eight Core Industries
  1. In August 2019, the production of eight core industries declined by 0.5 percent, as compared to a growth of 4.7 percent recorded in August 2018.
  2. Production of eight core industries grew by 2.4 percent in April-August 2019 as compared to 5.7 percent in the corresponding period of previous year.
Segment Impact on the Machine Tool Industry

Automobile & Auto components

  • The slowdown of the Global Auto industry has reached the machine tool industry, which has hit hard by sales slump, minimal usage of equipment etc.
  • Similarly, adoption of EV vehicles will impact in component specific machine tool manufacturers and suppliers who are at risk with this shift. It is high time for companies to use the economic slowdown to adjust their strategic course.

Defence and Aerospace

  • Since privatisation of defence sector in India, the machine tool industry is revisiting its capabilities and adding new products and solutions to meet the demand.
  • Expected inflow of FDI and overseas companies to make technological collaborations with domestic companies is expected to strengthen the defence and military industry by bringing in the more advanced technology and advanced artillery.

Railways

  • Introducing PPP model in Indian Railways and privatization of trains helps to boost some changes in the Railway sector as a whole, with a positive impact on machine tool industry.

General Engineering

  • Capacity addition in various sectors is driving the demand of engineering segment in India.
  • India may soon get a full-fledged opportunity to increase its exports and narrow its trade deficit. Impacting the engineering sector in machinery, chemical and textile sectors, which are likely to get surplus demand from the global market.

Power (BTG - Boiler, Turbine, Generator)

  • Power sector contributes almost 70-75% to the engineering companies' revenues.
  • The government plans to add large generation as well as transmission and distribution (T&D) capacities in the country, which is expected to impact the machine tool industry on a large scale.

Consumer Durables

  • Indian economy has shown clear sign of major slowdown, in consumer durable sector. The government is expected to throw several surprises to boost consumer sentiments. This segment is a mixed bag and there is no pressure on low priced consumer durables; while high priced products continue to be under pressure, impacting the domestic souring of parts

Mobile Handsets

  • In order to gain a foothold in the global phone manufacturing market worth $467 billion, India will be looking at high value addition manufacturing, instead of plain assembly.
  • The ESDM sector is expected to grow at a CAGR of 20% to reach USD 150 billion by 2020 providing huge opportunities to the machine tool Industry.

Metro Rail

  • Various states getting new metro route approvals, plans to make coaches in India & companies like Alstom scaling up to double the production capacity and introduce latest industrial technologies, all these combined provide good opportunities to Machine tools industry in the near future.

 

Reference

Economic Report, Ministry of Finance

Click here for Budget 2019-20 (Highlights for the Industry)
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