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 13.7 per cent year-on-year during April 2018-January 2019.
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. India’s engineering exports reached an all-time high in FY19, surpassing the US$ 80 billion mark. Engineering exports grew 6.32 per cent year-on-year to US$ 81.02 billion in FY19. Engineering exports reached US$ 6.49 billion in April 2019.
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 98,204 and 78,109 units of construction equipment in 2018 and 2017, respectively. Construction equipment sales are expected to grow further 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$ 3.58 billion during April 2000 to March 2019.