The Indian engineering sector is divided into two major segments - heavy engineering and light engineering. The turnover of capital goods industry in India is estimated at US$ 70 billion in 2017 and is expected to grow to US$ 115.17 billion by 2025. Likewise, electrical equipment production is expected to reach US$ 100 billion by FY 2021-22 from US$ 27.3 billion in 2017-18. The electrical equipment industry grew 19.1 per cent year-on-year between April-September 2018.
Comparative advantage vis-à-vis peers in terms of manufacturing costs, market knowledge, technology and creativity has been a driving force for engineering exports from India. Engineering exports from India grew 16.81 per cent to US$ 76,204.38 million in FY18 from US$ 65,239.19 million in FY17. Exports during April 2018-February 2019 stood at US$ 71.86 billion and are expected to touch US$ 80 billion for FY19.
As of 2017, India was the world’s eighth largest consumer of machine tools globally. Production of machine tools in the country grew 25.7 per cent y-o-y to Rs 7,293 crore (US$ 1.13 billion) in 2017-18, while exports reached Rs 355 crore (US$ 55.08 million). Production is forecasted to increase to Rs 9,000 crore (US$ 1.40 billion) in 2018-19.
Construction equipment industry recorded sales of 78,109 and 66,613 units of construction equipment in 2017 and 2016 respectively. Construction equipment sales are expected to grow to 99,115 in 2018 and further increase to 110,815 units by 2022. Construction equipment market is projected to reach US$ 5 billion by FY20 from around US$ 4.3 billion in FY18.
Companies engaged in the engineering sector are virtually on a roll. Capacity creation in sectors like infrastructure, power, mining, oil & gas, refinery, steel, automotive, and consumer durables has been driving demand in the engineering sector. Separately, the approval of significant number of special economic zones (SEZs) across the country and the development of the Delhi Mumbai Industrial Corridor (DMIC) across seven states is expected to further bolster the engineering sector.
With 100 per cent Foreign Direct Investment (FDI) allowed through the automatic route, and initiatives like ‘Make in India’, major international players have entered the Indian engineering sector due to significant growth opportunities available. Miscellaneous mechanical and engineering industries have received FDI inflows worth US$ 3.56 billion during April 2000 to December 2018.