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Indian Engineering Industry Analysis

October, 2014

Capital goods and engineering turnover in India is expected to reach US$ 125.4 billion by 2017 from US$ 57.6 billion in 2012, while the electrical equipment market size is forecasted to touch US$ 105 billion by 2022 from US$ 24.2 billion in 2011. Also, the Indian telecom equipment market is expected to grow over two times by 2020.

The Indian engineering sector is divided into two major segments - heavy engineering and light engineering. Indian engineering exports stood at US$ 62.3 billion in FY14 while it registered a compound annual growth rate (CAGR) of 10.8 per cent over FY08-14. Transport equipment is the leading contributor to engineering exports accounting for 32.5 per cent of the total engineering exports in FY13, followed by machinery and instruments with a share of 26.8 per cent.

The Government of India has de-licensed the engineering industry and 100 per cent foreign direct investment (FDI) has been permitted in the sector. The government has also eliminated tariff protection on capital goods and reduced custom duties on a range of engineering equipment. It launched the National Manufacturing Policy with the aim of enhancing the sector's share in gross domestic product (GDP) to 25 per cent within a decade and creating 100 million jobs by 2022.

With increasing demand for engineering goods in a number of sectors such as defence, civil nuclear and automobiles, the engineering industry in India have plenty of scope for growth in the years to come.

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