Introduction
Engineering is the largest industrial sector in India and accounts for 3.53% of the country's Gross Domestic Product (GDP). The country's engineering sector comprises manufacturing iron, steel, related products, non-ferrous metals, industrial machinery, automobiles, auto components, and other engineering products. The key goods exported under the industrial machinery category are IC (Internal combustion) engines and parts, industrial machinery for dairy, food processing, textiles, industrial machinery like boilers, parts, machinery for injecting molding, valves, and ATMs.
India became a permanent Washington Accord (WA) member in June 2014. It is now part of an exclusive group of 17 countries that are permanent signatories of the WA, an elite international agreement on engineering studies and the mobility of engineers. India's engineering sector has witnessed remarkable growth over the last few years, driven by increased investment in infrastructure and industrial production. In 2019, the government announced an investment of Rs. 100 lakh crore (US$ 1.5 trillion) in infrastructure development over the next five years. In the Interim Union Budget 2024-25, the government greatly pushed the infrastructure sector by allocating Rs. 11,11,111 crore (US$ 133 billion) to enhance the transport infrastructure. The engineering sector is an important component of the broader manufacturing sector, and the share of engineering products in overall manufacturing output is quite significant. It is also a highly organized sector dominated by large players employing over four million skilled and semi-skilled labor.
Export Trend
The engineering goods export of India had a share of 25.22% out of the total exports during the financial year 2023-24 from the country, as the exports jumped to US$ 109.22 billion as compared to US$ 106.93 billion during the last financial year 2022-23. In FY25 (until June 2024), the exports of engineering goods stood at US$ 27.66 billion. The impressive growth in Engineering Goods exports in recent years has largely been due to the zero-duty Export Promotion Capital Goods (EPCG) scheme of the Ministry of Commerce & Industry which forms part of the Foreign Trade Policy (FTP) of the Government of India.
Exports of capital goods contributed about half of the total engineering exports from India. Primary iron, steel, and its products exports accounted for 21.63%, while Non-ferrous metals and products exports contributed 12.61% of India's engineering goods exports in 2022-23. 17.53% was composed of exports of industrial machinery, 10.24% of exports of electrical machinery, 20.31% of auto and auto parts, and the remaining 17.68% by miscellaneous items, including exports of aircraft, spacecraft and parts and ships, boats, and floating structures.
The iron, steel, and products exports of India were valued at US$ 23.16 billion in 2022-23, witnessing a decline in growth of 27% over the previous year. Among the key products exported from non-ferrous metals and products made of non-ferrous metals, aluminum and products exports were the highest at US$ 8.87 billion in 2022-23 declining by 17.5% over the previous year. Industrial machinery recorded exports of US$ 18.77 billion, while electrical machinery exports were valued at US$ 10.97 billion in 2022-23.
Export Destinations
India exports engineering products to the following regions: ASEAN, North-East Asia, Africa, EU, North America, CIS, Latin America, South Asia, Africa, Middle East, West Asia, etc. The top five Indian engineering goods importing countries were the USA, the UAE, Germany, Italy, and Singapore with a share of 17.44%, 4.61%, 3.68%, 3.67%, and 3.42%, respectively, in 2022-23 out of the 25 countries recorded positive cumulative growth in engineering exports during April-March 2022.
India's engineering exports continued their year-on-year growth for the second consecutive month into January 2024 with a 4.20% increase. The expansion in January 2024 was attributed to increased shipments of Iron & Steel, Aircrafts, spacecraft and parts, Copper and copper products, and Electric machinery. Additionally, heightened demand from South Asia, the European Union, and North America contributed to this growth.
The share of the top 25 importing nations of India's engineering goods accounted for 75.9% of India's total engineering exports in 2022-23. This significant share is evidence of the dependence of India's engineering exports on the traditional markets. Italy, the UAE, and the USA were the top three importers of Indian Iron and Steel during 2022-23, whereas the USA, Germany, and the UAE were the top three importers of India's 'Products of Iron and Steel' during the same period as compared to 2021-22.
Indian industrial machinery saw the highest imports from the USA during 2022-23. Germany and Thailand were the two immediate followers of the USA. South Africa, Mexico, and Saudi Arabia were the top three importers of India's automobiles during 2022-23 in India’s global exports respectively over the same period last fiscal.
During 2022-23, the top three importers of India's non-ferrous metals and products were the USA, Korea, and Malaysia whereas the USA, France, and Germany were the three top importers of Indian electrical machinery and components during the same period.
During 2024-25, the top three importers of India's Engineering Goods were the USA, UAE, and Saudi Arabia.
Government Initiatives
The government of India has implemented various export promotion schemes, such as the Zero Duty Export Promotion Capital Goods (EPCG) scheme, Towns of Export Excellence (TEE), Market Access Initiative (MAI), etc. These schemes are aimed at encouraging the exporter and to help increase the revenue from international markets. Also, schemes such as duty exemption, advance authorization, duty-free import, rebate on service tax, etc. have been implemented to ease raw material imports. The Indian Engineering Exposition (INDEE), a brand of EEPC India, is one of the largest engineering expositions in the world.
Apart from the specific schemes mentioned above, the Government of India has taken several initiatives to support and enhance the competitiveness of the domestic engineering goods manufacturing firms such as the "Make in India" initiative, PLI scheme for Automobile, and Auto components, PLI scheme for National Programme on Advanced chemistry cell (ACC) Battery Storage, FAME INDIA II scheme, Capital goods scheme, Industry 4.0.
The Government of India, along with the Engineering Export Promotion Council, frequently organizes the International Engineering Sourcing Show (IESS) with the main objective of promoting India's image and providing a platform for Indian exporters to showcase their strengths and capabilities in an emerging market. This has become a unique platform between Indian and overseas engineering firms with B2B meets, thematic seminars and exclusive country and state sessions, bilateral forums.
Government Body
Engineering Export Promotion Council (EEPC)
Formed in 1955, EEPC is a trade and investment promotion organization for the Indian engineering sector. The primary responsibilities and activities of the council are to arrange seminars, exhibitions, and buyer-seller meet and also to promote the 'Make in India' brand. It also provides services to its members and foreign buyers.
Vanijya Bhawan
1st Floor, International Trade Facilitation Centre,
1/1, Wood Street
Kolkata - 700016
West Bengal
India
Tel.:+91-33-22890651/ 52
Fax: +91-33-22890654
Email: eepcho@eepcindia.net
Website: www.eepcindia.org
Partners
