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).
PDO is a leading exploration and production company in the Sultanate and accounts for over 70 per cent of the country’s crude oil production and almost all of its natural gas supply.
The scope of work includes project management, residual process design, detailed engineering, procurement, fabrication, construction, commissioning, and performance testing of the CDSP of the DCU for BPCL.
Jyoti Structures is a Mumbai-based, mid-sized company, specialising in power transmission, distribution and EPC projects.
Dr Manmohan Singh, the Prime Minister of India, has revealed the country's new Science, Technology and Innovation policy which aims to increase the number of full time equivalent of R&D personnel in India by at least 66 per cent of the present strength in five years.
Alongside, the National Policy on Electronics (NPE) proposes to set up more than 200 Electronic Manufacturing Clusters in India while the Government of India (GoI) has proposed to create an electronics development fund of US$ 2 billion to promote innovation, intellectual property, R&D, nano electronics and help commercialise made-in-India products.
The chip design and embedded software market in India is estimated to reach US$ 55 billion by 2020, as per the targets set by NPE.
In addition to that, the Government plans to give an impetus to engineering in India through investments in infrastructure development in 2012-17 in telecom, energy and construction sector, as per a report by Nasscom and Booz & Co.
Management consulting firm Zinnov has stated that India may soon have its first US$ 1 billion-product engineering services company, proving the country's strategic position in the field. Though the report did not disclose the name of the company which would reach this milestone, it said Wipro, HCL Technologies, Tata Consultancy Services, Tech Mahindra and Infosys are 'significantly large' in this segment. These five companies account for most of the R&D activities outsourced to India.
The report further mentioned that Indian engineering service providers enjoy a crucial position, with about 23 per cent of the overall engineering and R&D outsourcing pie. India's exports in the R&D and product engineering segment are currently valued at US$ 16.3 billion and are poised to grow exponentially over the coming years.
Exchange Rate Used: INR 1 = US$ 0.01598 as on September 27, 2013
References: Press Releases, Media Reports, Department of Industrial Policy and Promotion (DIPP) statistic.