The Indian engineering industry accounts for 27 per cent of the total factories in industrial sector and represents 63 per cent of the overall foreign collaborations. The country is increasingly attaining global recognition especially for its low-cost, high-tech frugal innovation technology, according to a World Bank study named ‘Unleashing India’s Innovations’. International companies are outsourcing industrial engineering design tasks to India in sectors like semiconductors, automotive hybrid technologies, next-gen routers in telecom, power generation equipments, aerospace, avionics and consumer electronics, besides setting up research and development (R&D) centres in India.
A recent economic survey has noted that India has better scientific research institutions and the industry contribution towards R&D has been increasing over the last few years. The country has been ranked much ahead of its peers when it came to market knowledge, technology and creativity.
India’s focus on innovation and its unique strengths in knowledge industries have made it one of the largest R&D centres for many of the top notch US companies including General Electric, Honeywell, and IBM, stated Nirupama Rao, India's ambassador to the US. She also said that India has become a key global hub of new world trade routes and trading arrangements and has contributed significantly in the establishment of new supply chain networks, thereby emerging as one of the fastest growing markets in the world.
Engineering exports during April-December 2012-13 stood at US$ 45.33 billion.
Mr Anand Sharma, the Commerce and Industries Minister, has recently stated that India is identifying newer markets along with strengthening its base in key markets of the US and Europe to meet the set target of US$ 125 billion by 2013-14 for engineering exports.
The miscellaneous mechanical and engineering industries’ sector-wise foreign direct investments (FDI) inflows from April 2000 to January 2013 was calculated at US$ 2, 305.40 million, as per the Department of Industrial Policy and Promotion (DIPP).
Government Initiatives
The Indian Government has recently clinched a multi-million-pound deal with Britain wherein Global Innovation and Technology Alliance (GITA) sponsored by the Indian government’s Department of Science and Technology and UK’s Technology Strategy Board (TSB) will support UK and Indian businesses and academics in joint R&D and innovation projects over a three-year period.
These programmes, to be focussed on key areas like energy and healthcare, will strengthen bi-lateral links between the two nations and facilitate international partnerships between businesses.
Road Ahead
A recent report released by Nasscom and Booz & Company has stated that availability of skilled talent pool coupled with a shortage of engineers in the developed markets, Indian engineering service providers are expected to witness immense growth in the times to come.
Flexible business models, shorter product life cycles of engineering companies, decreasing time to market and flexibility in offering end products are certain factors that provide an edge to the Indian engineering companies.
Indian engineering research and development (ER&D) market is expected to add to future growth with automotive, consumer electronics and telecom contributing by over 50 per cent to off-shoring revenues by 2020, wherein the ER&D outsourcing industry is poised to reach US$ 37- 45 billion by then. This will be about 35 per cent of the overall ER&D market, which is estimated to reach US$ 118 billion by 2020. Currently, Indian ER&D market is pegged at around US$ 10.2 billion.
The growth would be propelled by the development in sectors such as chemical, medical and automotive. In addition to that, the Government is anticipated to encourage engineering in India through investments in infrastructure development in 2012-17 in telecom and energy and construction sector, the report added.
Exchange Rate Used: INR 1 = US$ 0.01842 as on March 21, 2013
References: Press Releases, Media Reports, Department of Industrial Policy and Promotion (DIPP) statistics.