The year 2022 saw a balanced growth for the industry starting on a high at the start and tapering down a bit in the second half of the year. 

Numbers showed that Indian economy had fully recovered in 2021-22 from the Covid shock with growth in GDP in FY22 being 1.5 per cent higher than the last pre-pandemic year (2019-20). The growth momentum continued in FY23. GDP was estimated at Rs 75.02 trillion in the first half (H1) of 2022-23, showing a growth of 9.7 percent compared to Rs 68.36 trillion in H1 FY22. India's merchandise exports in H1 FY23 rose 16.96 per cent to $ 231.88 billion against $198.25 billion in the same period last year.

However, there was a fall in exports of engineering goods as a result of slowdown in Europe (due to Russia-Ukraine war) and China (due to Covid related restrictions). In September, engineering exports recorded a 10.85 per cent fall whereas in cumulative terms, in H1 FY23, it has exhibited a meagre rise of only 1.15 per cent, according to EEPC India. Decline can be attributed to about 60 per cent fall in iron and steel exports - a major contributor to the export kitty - in September and a 15 per cent export duty on iron and steel products applicable since May 21, 2022.

The latest numbers seem to be in line with forecasts made by various global agencies; however, experts believe that India will be much less impacted by the global slowdown as compared to many advanced economies. According to a recent Morgan Stanley report, India’s share of manufacturing in total gross value added (GVA) is expected to increase to 21 per cent by FY32 from 15.6 per cent in FY22. Major contributors to this rise will be engineering goods, chemicals, electronic parts and automotive components. 

For example, global automakers are increasing allocation to Indian suppliers after losing nearly 8 million units of production - equivalent to two years of India’s annual sales - due to Covid-related supply disruptions. No wonder Indian auto component industry, with a turnover of Rs 4.20 trillion ($56.5 billion), registered a growth of 23 per cent in 2021-22 over the previous year. Sales growth was carried forward in 2022-23 with the industry recording a turnover of Rs 2.65 trillion ($33.8 billion) in H1 FY23 - up by 34.8 per cent over the first half of FY22. With vehicle sales across all segments, reaching the pre-pandemic levels and moderation in the supply-side issues (such as availability of semiconductors and high input raw-material costs), the auto components sector witnessed a steady growth in both domestic and the international markets in H1 FY23. Exports of auto components grew by 8.6 per cent to Rs 790.33 billion ($ 10.1 billion) in H1 FY23 from Rs 687.46 billion ($ 9.3 billion) in H1 FY22.

The surge in auto component sales bodes well for machine tool manufacturers in India, for whom auto industry is the largest customer. During FY 2021-22, Indian machine tool production reached around Rs 93.07 billion - registering a 40 per cent year-on-year growth. With the green shoots being evidently visible, business prospects of metalworking companies is expected to improve further as they gear up to participate in IMTEX 2023 (considered to be the Kumbha Mela of machine tools industry).

Wish you all a prosperous 2023!