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Engineering Industry in India

September, 2013

Brief Introduction

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.

Design & Engineering- Key Developments and Investments

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).

  • Kirloskar Brothers Ltd (KBL)’s subsidiary SPP Pumps has launched its most advanced facility at Atlanta, USA, embarking the inauguration of KBL’s seventh manufacturing facility worldwide. With an outlay of US$ 6 million, the new plant is equipped with latest engineering, testing and training set-up and has an annual installed capacity of 2,500 units. With the opening of the new facility, SPP Pumps expects its production capacity to increase by 30 per cent and the turnover to reach US$ 40 million over the next three years.

  • Meanwhile, L&T has been appointed for an engineering, procurement and construction (EPC) project worth about US$ 250 million by Petroleum Development Oman (PDO). The project, which is scheduled to be completed in 39 months, involves the Yibal-Natih gas reservoir in Oman and is considered to be of strategic importance for L&T.

    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.

  • Bharat Petroleum Corporation Limited (BPCL) has awarded a Rs 700 crore (US$ 111.88 million)-contract to Dubai-headquartered Essar Projects Limited ( EPL) for Engineering, Procurement, Construction and Commissioning as well as commissioning assistance (EPCC) of the Coke Drum Structure Package (CDSP) of the Delayed Coker Unit (DCU) at the BPCL Kochi Refinery for the Integrated Refinery Expansion Project.

    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.

  • AION Capital Partners, a joint venture (JV) between Apollo Global Management (a leading assent management company) and ICICI Venture (one of India's oldest private equity players and an arm of the largest private sector bank), has made an investment of Rs 300 crore (US$ 47.94 million) in Jyoti Structures,

    Jyoti Structures is a Mumbai-based, mid-sized company, specialising in power transmission, distribution and EPC projects.