The Indian engineering sector is of strategic importance to the economy owing to its intense integration with other industry segments. Development .in sectors such as infrastructure, power, mining, oil and gas, refinery, steel, automotives, and consumer durables are driving demand in the engineering sector. Major foreign players are also confident and have big expectations from the Indian engineering segment as it enjoys a comparative advantage in terms of manufacturing costs, market knowledge, technology and creativity.
The total exports of Indian engineering sector stood at US$ 56.7 billion during FY13 and are anticipated to grow to US$ 125 billion by FY14. Exports from the engineering segment have registered a compound annual growth rate (CAGR) of 12.6 per cent over the period FY08-13 wherein transport equipment is the leading contributor to engineering exports.
The Indian Government also plays a crucial role in developing the engineering section of the economy. The engineering industry has been de-licensed and enjoys 100 per cent foreign direct investment (FDI).
The engineering sector is one of the major contributors to the country's total merchandise shipments. The US and Europe together account for over 60 per cent of India's total engineering exports.
Engineering exports mainly include transport equipment, capital goods, other machinery/equipment and light engineering products like castings, forgings and fasteners.
The Ministry of Commerce and Industries has set a target of shipping US$ 125 billion worth of engineering goods by the end of 2013-14. Indian engineering companies are scouting for newer markets (like Latin America, Africa etc.) for exports along with strengthening their base in the US and Europe.
Engineering goods represent India's third-biggest export sector which rose 2 per cent in August 2013. Engineering exports are projected to cumulatively expand by 22 per cent in September-December 2013 to US$ 21.5 billion against US$ 17.1 billion last fiscal.
The miscellaneous mechanical and engineering industries’ sector-wise FDI inflows from April 2000 to July 2013 were calculated at US$ 2.48 billion, as per the Department of Industrial Policy and Promotion (DIPP).