Bangalore: Gildemeister AG, the euro 1.6-billion ($2.3 billion) German maker of turning and milling equipment, is planning a production facility in India to meet the growing demand for machine tools by a vibrant domestic manufacturing industry.

"We have earmarked an initial budget of euro 10 million (Rs.590 million) to set up a manufacturing base in India to roll out a range of CNC (computer numerically controlled) metal-cutting machines, lathes and tools/dies, with an installed capacity of 400 units per annum," Gildemeister board member Thorsten Schmidt told IANS here.

"As our machines can be used for dual-use technologies, we are waiting for clearance from the German government to go ahead with our India plans, including transfer of technology. We hope to set up the plant by 2009-10," he said.

The Bielefeld-based company has short-listed Bangalore, Pune and Delhi as possible locations for setting up the production facility and prepared a blueprint for building a modular plant for capacity expansion in future.

In the run up, Gildemeister has floated its Indian subsidiary - DMG India - to set up a technology centre in Bangalore, with an upfront investment of euro 7 million (Rs.413 million) to provide customised solutions to its customers in the Indian sub-continent and South Asia.

"The technology centre will have multiple operations ranging from showcasing our products and services to existing and prospective customers, a bonded warehouse for spares and components, a state-of-the-art training facility to impart specialised skills to engineers of our customers using our latest CNC machines," Schmidt said.

With prospects of India emerging as a manufacturing hub for capital goods and a plethora of electronic gadgets in the ICT (information and communication technologies) segment, Gildemeister is looking for a first-move advantage in setting shop before its German, Japanese and Chinese rivals plan similar production bases in India.

"Though we have been present here since 1999 through distributors, a sustained growth of 20-25 percent over the last five years has given us good volumes to justify a manufacturing base in India for consolidating our business and expanding market share in the face of stiff competition from Indian and other overseas players," Schmidt noted.

During calendar year (CY) 2007, the company sold 180 machines as against 100 machines in 2006. It has an order book to ship about 250 machines till date during this year (CY 2008), valued at euro 35 million (Rs.2.07 billion). Revenue from India sales was euro 27 million (Rs.1.6 billion) in CY 2007.

The company has supplied machines to about 6,000 customers over the last eight-nine years and had repeat orders from many among them.

Incidentally, some of Gildemeister's Indian customers such as L&T, Godrej & Boyce and Tata Industries cater to aerospace and defence industries, where its machines/tools can be used for dual-use purposes.