Advantage India
Robust
Demand
*The Indian electrical equipment market is set to experience significant growth in the coming years, with a forecasted incremental growth of Rs. 6,44,533 crore (US$ 76.24 billion) at a compound annual growth rate (CAGR) of 14.3% from FY24 to FY28.
*Market size for the Indian Construction Equipment Market stood at US$ 7.2 billion in FY23 and is forecasted to grow at a CAGR of 15% for next 5 years, as per the estimates of CII.
Attractive
Opportunities
*India constructed 5,313 km of highways in FY26, surpassing the target of 4,640 km, with capital expenditure of Rs. 2,44,362.00 crore (US$ 27.65 billion), reflecting continued momentum in infrastructure development.
*In the Union Budget FY27, the government announced capex of Rs. 15.48 lakh crore (US$ 172.00 billion)
*An Urban Infrastructure Development Fund (UIDF) will be managed by National Housing Bank, which will enable creation of infrastructure in Tier 2 and 3 cities by supporting viability gap funding, enabling creation of more bankable projects, enhancing access to external funding, among others.
Policy
Support
*De-licensed engineering sector; 100% FDI permitted.
*The capital goods sector in India benefits from a liberal policy regime, with no industrial licensing, 100% FDI under the automatic route (except from land-border nations), unrestricted technology transfer payments, and no import or export restrictions.
*The National Capital Goods Policy (2016) aims to boost India’s capital goods sector by raising its manufacturing share from 12% in 2016 to 20% by 2025, doubling production, increasing exports to 40% of output, and advancing technology capabilities to global standards.
*Indian Electrical Equipment Industry Mission Plan (2012-22), aims to make India as a preferred destination for production of electrical equipment to achieve an output of US$ 100 billion by balancing the trade deficit in the sector.
Higher
Investments
*To enhance opportunities for private investment in infrastructure - Infrastructure Finance Secretariat is being established who will assist all stakeholders for more private investment in infrastructure, including railways, roads, urban infrastructure, and power.
*The Government’s ‘Vision Plan 2030’ proposed an action plan to become a manufacturing and export hub for construction equipment and propel the development of world-class infrastructure in the country.
Introduction
India’s Capital Goods manufacturing industry serves as a strong base for its engagement across sectors such as Engineering, Construction, Infrastructure and Consumer goods, amongst others.
The engineering sector is the largest of the industrial sectors in India. It accounts for 27% of the total factories in the industrial sector and represents 63% of the overall foreign collaborations. Demand for engineering sector services is being driven by capacity expansion in industries like infrastructure, electricity, mining, oil and gas, refinery, steel, automobiles, and consumer durables. India has a competitive advantage in terms of manufacturing costs, market knowledge, technology, and innovation in various engineering sub-sectors. India’s engineering sector has witnessed remarkable growth over the last few years, driven by increased investment in infrastructure and industrial production. The engineering sector, being closely associated with the manufacturing and infrastructure sectors, is of huge strategic importance to India’s economy.
The development of the engineering sector of the economy is also significantly aided by the policies and initiatives of the Indian government.
The engineering industry has been de-licensed and allows 100% foreign direct investment (FDI). Additionally, it has grown to be the biggest contributor to the nation's overall merchandise exports.
India became a permanent member of the Washington Accord (WA) 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.
Market Size
Engineering goods remained India's largest export category, with exports valued at Rs. 10,82,729 crore (US$ 122.52 billion) in FY26, driven by strong global demand for machinery, automobiles, auto components and industrial equipment. In FY25, exports of engineering goods reached at Rs. 9,86,328 crore (US$ 116.67 billion).
The top 5 export destinations for engineering goods during FY25 were USA, UAE, Saudi Arabia, Germany and Italy.
Capital Goods sector contributes 1.9% to overall India’s GDP.
The average Index of Industrial Production (IIP) for FY26 (April 2025–March 2026) is approximately 158.90. The Index of Eight Core Industries (ICI), which tracks coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, and electricity, rose to 175.7 points in December 2025, up from 169.4 points in the same month last year. The core sector contributes 40.27% to the Index of Industrial Production (IIP), highlighting its significant impact on overall industrial output.
The Quick Estimates of IIP stands at 173.2 against 166.3 in March 2025. India has added 52,536.49 MW Installed Power Generation Capacity in the current financial year FY26 (till January 2026).
As on January 2026, the total Installed Generation Capacity is 5,20,511 MW, comprising of 2,48,542 MW (47.7%) of fossil-fuel sources and 2,71,969 MW (52.3%) of non-fossil fuel sources. Share of ‘Renewable Energy’ sources in total installed capacity is 2,63,189 MW (50.6%).
Production in India’s capital goods sector increased from Rs. 2,66,672 crore (US$ 36.04 billion) in FY21 to Rs. 5,69,900 crore (US$ 67.40 billion) in FY25, within the sector, heavy electrical equipment stood at Rs. 3,72,200 crore (US$ 44.01 billion) and earthmoving and mining machinery at Rs. 80,750 crore (US$ 9.55 billion) in FY25, emerging as the largest contributors. Over the long term, capital goods production increased from Rs. 2,29,533 crore (US$ 27.20 billion) in FY15 to Rs. 4,29,001 crore (US$ 51.82 billion) in FY24, indicating sustained industrial expansion.
The global plastic processing machinery market size reached Rs. 3,510.00 billion (US$ 39.0 billion) in 2025 and is projected to reach Rs. 4,743.00 billion (US$ 52.7 billion) by 2034, registering a CAGR of 3.30% during 2026–2034.
Indian Process Plant and Machinery (PPM) industry has estimated capacity of US$ 6.00 billion per annum
India's foundry and casting market was valued at Rs. 1,90,234.00 crore (US$ 22.00 billion) in 2025 and is projected to reach Rs. 5,46,460.20 crore (US$ 57.90 billion) by 2034, registering a CAGR of 10.78% during 2026-2034.
There are 750-800 domestic Medical Devices manufacturers in India, with an average investment of US$ 2.3-2.7 million and an average turnover of US$ 6.2-6.9 million. As of March 2026, more than 18,646 Jan Aushadhi Kendras were operational across India, supported by an expanding pharmaceutical and medical devices supply chain and manufacturing ecosystem.
India’s fasteners market size reached Rs. 1,008.00 billion (US$ 11.20 billion) in 2025 and is projected to reach Rs. 1,530.00 billion (US$ 17.00 billion) by 2034, registering a CAGR of 4.67% during 2026–2034.
India steam boiler systems market size is expected to reach nearly US$ 22.56 billion by 2027 with the CAGR of 4.63% during the forecast period.
India’s generator market size stood at Rs. 120.60 billion (US$ 1.34 billion) in 2025 and is projected to reach Rs. 192.60 billion (US$ 2.14 billion) by 2034, registering a CAGR of 5.16% during 2026–2034.
The India power transformer market is expected to rise at a CAGR of more than 3% during the period of 2020-25.
The global switchgear market size reached Rs. 10,989.00 billion (US$ 122.10 billion) in 2025 and is projected to reach Rs. 16,137.00 billion (US$ 179.30 billion) by 2034, registering a CAGR of 4.23% during 2026–2034.
India’s automotive industry is worth more than US$ 222 billion, contributes 8% of the country’s total export, accounts for 7.1% of India's GDP and is set to become the 3rd largest in the world by 2030.
India’s agricultural equipment market size reached Rs. 1,338.50 billion (US$ 14.87 billion) in 2025 and is projected to reach Rs. 2,719.20 billion (US$ 30.21 billion) by 2034, registering a CAGR of 7.95% during 2026–2034.
India’s machine tools market size stood at Rs. 164.70 billion (US$ 1.83 billion) in 2025 and is projected to reach Rs. 315.90 billion (US$ 3.51 billion) by 2034, registering a CAGR of 7.49% during 2026–2034.
India’s boiler market size reached Rs. 131.40 billion (US$ 1.46 billion) in 2024 and is projected to reach Rs. 321.30 billion (US$ 3.57 billion) by 2033, registering a CAGR of 10.40% during 2025–2033.
Investments
Foreign Direct Investment (FDI) equity inflow in Miscellaneous Mechanical & Engineering Industries stood at Rs. 28,689.19 crore (US$ 4.84 billion) during April 2000–December 2025, as per DPIIT data.
Engineering accounts for about 25% of India’s total global exports in the goods sector and is one of the largest foreign exchange earners.
As per the budget estimates (BE) of FY26, the production-linked incentive (PLI) scheme for the automobile and auto components sector got a massive boost at Rs 2,818.85 crore (US$ 322.90 million) in FY26.
Recent Achievements under the Capital Goods Scheme:
- As per the budget estimates (BE) of FY27 the Production Linked Incentive (PLI) Scheme aims to attract investments, promote advanced technologies and enhance the global competitiveness of Indian manufacturing. The Economic Survey 2025-26 highlights key sectoral gains under the scheme.
- In Union Budget of FY27 under the PLI-Auto Scheme, the government has promoted manufacturing of advanced automotive technology vehicles and components, attracting investments of Rs. 35,657.00 crore (US$ 4.03 billion) and generating 48,974 jobs as of September 2025.
- Further, the PLI-Advanced Chemistry Cell (ACC) Scheme aims to localise battery manufacturing, with 40 GWh capacity awarded, strengthening India’s electric vehicle ecosystem.
- The Economic Survey 2025-26 highlighted that the Production Linked Incentive (PLI) schemes have significantly strengthened India’s manufacturing sector, with actual investment of over Rs. 2.00 lakh crore (US$ 22.63 billion) realised till September 2025. This has led to incremental production and sales of over Rs. 18.70 lakh crore (US$ 211.60 billion) and employment generation of over 12.60 lakh jobs.
- Additionally, cumulative incentives of Rs. 23,946 crore (US$ 2.71 billion) have been disbursed across 12 sectors, with 806 applications approved across 14 sectors. Exports under the PLI schemes have also exceeded Rs. 8.20 lakh crore (US$ 92.79 billion), driven by key manufacturing segments.
- Sitarc, Coimbatore: Developed 6-inch BLDC submersible pump (88% motor efficiency, 78% pump efficiency), cutting imports by 80%; awarded by UNIDO.
- CMTI: Introduced high-speed rapier loom (450 RPM) at ITMA 2023, Milan; implemented IIoT on Toyota’s engine line controlling 64 machines.
- ARAI, Pune: Established India’s first battery and BMS testing facility.
- I-4.0 India @ IISc Bengaluru: Delivered 6 smart technologies, 5 smart tools, 14 solutions in digital twin, VR, robotics, sustainability, additive manufacturing.
- ARAI-AMTIF Industry Accelerator: Enabled Raptee Energy to launch high-voltage motorcycle; developed thermally stable sodium-ion batteries.
- Centres of Excellence (CoEs): Eight CoEs established, developing 30 niche indigenous technologies in machine tools, additive manufacturing, textile machinery, welding robots, alloy design, earth moving machinery, and sensor technologies at leading institutes (IITs, IISc, CMTI).
- Common Engineering Facility Centres (CEFCs): 15 CEFCs set up, including four Industry 4.0 SAMARTH Centres (IISc Bengaluru, C4i4 Lab Pune, CMTI Bengaluru, IIT Delhi) and six web-based Technology Innovation Platforms (TIPs).
- Technology Innovation Platforms: TIPs connect India’s technical resources and industry to identify challenges, crowdsource solutions, and support start-ups and angel funding.
- Outreach: Over 76,000 students, experts, institutes, industries, and labs have registered on these platforms.
- Siemens Energy India is undertaking a capex of Rs. 280 crore (US$ 32.8 million) at its Aurangabad, Maharashtra factory. Earlier in FY24, the company had announced Rs. 460 crore (US$ 53.9 million) for its transformer factory in Kalwa, Maharashtra, and Rs. 330 crore (US$ 38.6 million) for its Gas-Insulated Switchgear (GIS) factory in Goa.
- Larsen & Toubro allocated land in Gujarat for a green hydrogen and derivatives plant and acquired the remaining 26% stake in L&T Special Steels and Heavy Forgings in FY25.
- The development of Delhi Mumbai Industrial Corridor (DMIC) across seven states will further bolster the engineering sector.
- Reliance Defence and Engineering Ltd has signed an agreement with the US Navy for undertaking service, maintenance, and repair of Seventh Fleet of US Navy at the Reliance Shipyard at Pipavav in Gujarat.
- American plane maker Boeing Corporation has launched the Boeing India Engineering & Technology Centre in Bengaluru.
In the recent past, there have been many major investments and developments in the Indian engineering and design sector:
- The Federal Highway Administration requested a budget of Rs. 6,41,566.20 crore (US$ 72.60 billion), including Rs. 75,114.50 crore (US$ 8.50 billion) in advance appropriations under the IIJA and Rs. 20,325.10 crore (US$ 2.30 billion) for the INFRA programme, supporting sustained demand for earthmoving, material handling, paving and site-development equipment.
- The global heavy construction equipment market was valued at Rs. 19,80,095.85 crore (US$ 239.19 billion) in 2024 and is projected to reach Rs. 31,07,056.50 crore (US$ 329.25 billion) by 2032, reflecting continued demand driven by infrastructure development and urbanisation.
- Construction equipment industry The capital goods sector witnessed a revival in investment activity during January–February 2026, supported by sustained government capital expenditure of Rs. 12.20 lakh crore (US$ 135.56 billion), as announced in the Union Budget 2026–27 (February 2026), along with improving private sector capex and policy-driven incentives aimed at strengthening domestic manufacturing and infrastructure development.
- The capital goods sector is expected to witness strong revenue growth, supported by execution of a robust order book, with project-based companies likely to record execution growth of ~15% in FY26. Additionally, the defence sector remains a key focus area, with the Defence Acquisition Council (DAC) approving acquisition proposals worth Rs. 79,000 crore (US$ 8.78 billion) in October 2025 (Q3 FY26), taking the total approvals to ~Rs. 3.30 lakh crore (US$ 36.67 billion) during FY26 (year-to-date). These approvals are expected to translate into execution over the next 2–4 years, strengthening future growth prospects.
- On November 3, 2025, L&T’s Heavy Engineering business signed an MoU with Holtec International’s Asia arm to jointly design and build advanced heat transfer equipment for nuclear and thermal power plants, strengthening their global energy solutions collaboration.
- On September 5, 2025, Bharat Heavy Electricals Limited (BHEL) signed a long-term exclusive memorandum of understanding with Horizon Fuel Cell Technologies Pte Ltd, Singapore to collaborate on hydrogen fuel cell based rolling stock solutions, with exclusivity for 10 years.
- On August 28, 2025, CG SemiPrivate Limited, a subsidiary of CG Power and Industrial Solutions Limited, inaugurated India’s first Outsourced Semiconductor Assembly and Test (OSAT) facility in Sanand, Gujarat with an investment of over Rs. 7,600 crore (US$ 868 million) to support advanced chip packaging and testing and strengthen the domestic semiconductor ecosystem.
- On August 20, 2024, CG Power and Industrial Solutions completed the acquisition of a 55% stake in GG Tronics India Pvt Ltd for Rs. 319.38 crore (US$ 36.5 million), making GG Tronics a subsidiary to expand its railway signalling and safety systems portfolio.
- India’s machine tools market size stood at Rs. 164.70 billion (US$ 1.83 billion) in 2025 and is projected to reach Rs. 315.90 billion (US$ 3.51 billion) by 2034, registering a CAGR of 7.49% during 2026–2034.
- The Indian government announced a reduction in customs duty on textile machinery, spares, and accessories. The changes include bringing shuttleless looms under the category of zero rate of duty.
- India’s automobile exports stood at 63.20 lakh units during January–December 2025, comprising 49.40 lakh two-wheelers, 8.60 lakh passenger vehicles, 4.30 lakh three-wheelers and 0.90 lakh commercial vehicles.
- India’s automobile production stood at India’s automobile production stood at 332.10 lakh units during CY2025, comprising 255.00 two-wheelers, 53.80 passenger vehicles, 12.20 three-wheelers and 11.10 commercial vehicles.
- The sector is also, a significant employment creator in the country with an estimated 30 million jobs (Direct: 4.2 Mn, Indirect: 26.5 Mn) across the entire automotive value chain.
- Automobile retail sales during CY25 stood at 44.90 lakh units for passenger vehicles (PV), 7.90 lakh units for two-wheelers (2W) and 10.30 lakh units for commercial vehicles (CV), according to the SIAM.
- In February 2023, Reliance Industries Limited (RIL) and its vehicle partner Ashok Leyland unveiled India’s first Hydrogen Internal Combustion Engine (H2-ICE) technology solution for heavy-duty trucks at the India Energy Week in Bengaluru.
- State-run PSUs Nuclear Power Corporation of India Ltd (NPCIL) and Bharat Heavy Electricals Ltd (BHEL) have signed a memorandum of understanding (MoU) in April 2023 to jointly pursue business opportunities in the area of Nuclear Power Plants based on Pressurized Heavy Water Reactor (PHWR) technology.
- With 100% FDI allowed through the automatic route, major international players such as Cummins, GE, ABB, and Alfa Laval have entered the Indian engineering sector due to growth opportunities.
Government Initiatives
The Indian engineering sector is of strategic importance to the economy owing to its intense integration with other industry segments. The sector has been de-licensed and enjoys 100% FDI. With the aim to boost the manufacturing sector, the government has relaxed the excise duties on factory gate tax, capital goods, consumer durables and vehicles.
The India–New Zealand Free Trade Agreement signed on 27 April 2026 is expected to support India's engineering exports to New Zealand, with exports projected to increase from Rs. 1,241.60 crore (US$ 140.50 million) in FY26 to Rs. 2,474.36-2,651.10 crore (US$ 280-300 million) over the next five years through zero-duty market access for Indian goods.
India and Israel signed the Terms of Reference for a Free Trade Agreement (FTA) in November 2025, with the first round of negotiations concluded in February 2026. The agreement is expected to enhance industrial cooperation, improve market access for goods and services, strengthen supply chains and boost bilateral trade, technology transfer and investment flows in manufacturing and capital goods. It also forms part of India’s broader strategy to expand global trade partnerships and promote manufacturing and exports.
India's construction equipment industry recorded 1,40,191 units in total sales in FY26, while exports increased 31.5% year-on-year to 16,885 units, supported by robust infrastructure development and growing global demand. Government initiatives such as the National Infrastructure Pipeline (NIP), PM Gati Shakti and the Production Linked Incentive (PLI) Scheme continue to strengthen domestic manufacturing, localisation and technology adoption, positioning India as a major global hub for construction equipment manufacturing and exports.
- MHI is implementing the Scheme for ‘Enhancement of Competitiveness in the Indian Capital Goods Sector Phase 2’ in order to facilitate adoption of Industry 4.0 and to promote investments in manufacturing sector, indigenization of technologies and creation / augmentation of common service infrastructure / Testing facilities. Rs. 250 crores have been allocated under this Scheme for Financial Year 2023-24.
- The Ministry of Heavy Industries (MHI) launched two Production Linked Incentive (PLI) Schemes, namely PLI Scheme for Automobile and Auto Component Industry, and PLI Scheme for National Programme on Advanced Chemistry Cell (ACC) Battery Storage.
- To increase the employability of engineering graduates in the country, AICTE (All India council of technical education) leadership is taking a lot of efforts and recommends model curriculum for engineering programs like AI, IoT, Robotics, Block chain, Machine learning, Data Science and Cyber security.
- In the Union Budget FY27, the government announced capex of Rs. 15.48 lakh crore (US$ 172.00 billion).
- India constructed 5,313 km of highways in FY26, surpassing the target of 4,640 km, with capital expenditure of Rs. 2,44,362.00 crore (US$ 27.65 billion), reflecting continued momentum in infrastructure development.
- The allocation for the Ministry of Road Transport and Highways stood at Rs. 2,80,519 crore (US$ 33.17 billion) in FY25 (RE) and Rs. 2,87,333 crore (US$ 32.51 billion) in FY26 (BE), which was further increased to Rs. 3.09 lakh crore (US$ 34.33 billion) in FY27 (BE), reflecting continued focus on infrastructure development.
- Length of high-speed corridors expanded from 93 km in 2014 to 2,474 km in 2024.16 length of four lane and above NHs increased from 18,278 km in 2014 to 45,947 km in 2024.
- The Indian electrical equipment market is set to experience significant growth in the coming years, with a forecasted incremental growth of Rs. 6,44,533 crore (US$ 76.24 billion) at a compound annual growth rate (CAGR) of 14.3% from FY24 to FY28.
- India’s total road network expanded from 4 lakh km in 1951 to 64 lakh km in 2020, registering a CAGR of 3.3% during 2010–2020. The length of high-speed corridors increased from 93 km in 2014 to 2,474 km in 2024, while the length of four-lane and above National Highways rose from 18,278 km in 2014 to 45,947 km in 2024, reflecting significant infrastructure development.
- The automobile component industry turnover stood at Rs. 3.3 lakh crore (US$ 39.6 billion) during first half of FY25, registering a revenue growth of 11.3% as compared to first half of FY24.
- The All-India Council for Technical Education (AICTE) has launched educational books for diploma and under-graduate engineering courses in Marathi language so that students can learn better in their native language.
- The AICTE has entered collaborations with the MSME ministry, NHAI and DM offices in 150 districts to facilitate engineering internships for students.
- Prime Minister Mr. Narendra Modi, on the country's 75th Independence Day, announced plans to invest Rs. 100 trillion (US$ 1.35 trillion) in infrastructure to stimulate economic development and generate employment.
Road Ahead
India’s engineering and capital goods sector is poised for strong and sustained growth, driven by infrastructure development, industrial expansion, and rising exports. The electrical equipment market alone is expected to grow by nearly US$ 33 billion between 2021 and 2025, supported by strong demand across power, manufacturing, and infrastructure. Similarly, the India Engineering Research and Development (ER&D) services market is estimated at US$ 133.71 billion in 2025 and is projected to reach US$ 217.90 billion by 2030, growing at a CAGR of 10.3%.
Construction and heavy machinery will remain critical growth drivers. India's construction equipment industry registered total sales of 1,36,995 units in FY26, supported by continued infrastructure development and construction activity across the country. India’s construction equipment industry recorded total sales of 1,40,191 units in FY25, compared to 1,35,650 units in FY24, registering a growth of 3% YoY. The construction equipment market, valued at Rs. 69,046 crore (US$ 7.91 billion) in 2025, is projected to reach Rs. 1,02,827 crore (US$ 11.78 billion) by 2030, while equipment sales are expected to cross 165,000 units by 2028. The earthmoving and construction equipment (ECE) industry, already the third largest globally, grew by 26% year-on-year to 135,650 units in FY24, with demand expected to accelerate further alongside infrastructure projects. The machine tools market, catering to automobiles and textiles, is also expected to touch US$ 2.5 billion by 2028, growing at a CAGR of 9.4%.
In the power and energy-linked segments, steady growth is anticipated. The steam boiler systems market is projected to reach nearly US$ 22.56 billion by 2027, while the generator sets market is expected to expand at over 5% CAGR through 2025. The global power transformer market size reached Rs. 2,511.00 billion (US$ 27.90 billion) in 2025 and is projected to reach Rs. 4,158.00 billion (US$ 46.20 billion) by 2034, registering a CAGR of 5.60% during 2026–2034.
Automobile retail sales during CY25 stood at 44.90 lakh units for passenger vehicles (PV), 7.90 lakh units for two-wheelers (2W) and 10.30 lakh units for commercial vehicles (CV), according to the SIAM. India’s automobile exports stood at 63.20 lakh units during January–December 2025, comprising 49.40 lakh two-wheelers, 8.60 lakh passenger vehicles, 4.30 lakh three-wheelers and 0.90 lakh commercial vehicles. India’s automobile production stood at India’s automobile production stood at 332.10 lakh units during CY2025, comprising 255.00 two-wheelers, 53.80 passenger vehicles, 12.20 three-wheelers and 11.10 commercial vehicles.
The India automated material handling market is projected to expand from Rs. 14,181.08 crore (US$ 1.64 billion) in 2025 and Rs. 16,525.19 crore (US$ 1.87 billion) in 2026 to Rs. 29,692.32 crore (US$ 3.36 billion) by 2031, registering a CAGR of 12.43% between 2026 and 2031.
India is also emerging as a significant player in high-value exports. Engineering goods remained India's largest export category, with exports valued at Rs. 10,82,729 crore (US$ 122.52 billion) in FY26, driven by strong global demand for machinery, automobiles, auto components and industrial equipment. While medical devices exports are set to touch US$ 10 billion by 2025. The government is pushing to make India a major exporter of telecom equipment within the next two to three years, aligned with the Make in India initiative and broader efforts to improve ease of doing business. Telecom exports increased from Rs. 55,070.80 crore (US$ 7.40 billion) in FY2021-22 to Rs. 3,02,225.40 crore (US$ 34.20 billion) in FY26, registering a CAGR of 46.80%.
Together, these trends indicate that India’s engineering, capital goods, and allied industries will continue to grow as vital enablers of economic expansion, infrastructure development, and global trade leadership.
Note: Passenger Vehicles data excludes BMW, Mercedes, Tata Motors & Volvo Auto
References: Media reports, press releases, EEPC India, Press Information Bureau (PIB), Department for Promotion of Industry and Internal Trade (DPIIT), The Confederation of Indian Industry (CII), Indian Electrical & Electronics Manufacturers’ Association (IEEMA), Union Budget 2026-27
FAQs
The engineering industry in India is the country's largest industrial sector, serving infrastructure, construction, power, automotive, oil & gas, and manufacturing industries. It is also India's largest merchandise export category and a key driver of industrial growth.
The engineering sector in India supports manufacturing, infrastructure development, exports, and employment across multiple industries. It accounts for 27% of industrial factories and 63% of foreign collaborations, highlighting its strategic importance to the economy.
The engineering industry covers capital goods, electrical equipment, machine tools, construction equipment, industrial machinery, automotive components, heavy engineering, and process plant machinery. These segments support India's industrial and infrastructure expansion.
The engineering sector in India is driven by infrastructure investments, industrial expansion, rising engineering goods exports, manufacturing growth, and increasing demand from power, mining, automobiles, and construction industries.
The capital goods industry strengthens the engineering industry in India by supplying machinery, heavy electrical equipment, construction equipment, and industrial systems. Rising capital goods production is enhancing manufacturing capacity and supporting large-scale infrastructure projects.
The Government is supporting the engineering sector in India through the PLI Scheme, PM Gati Shakti, the National Infrastructure Pipeline, Industry 4.0 initiatives, 100% FDI, and the Capital Goods Scheme to boost manufacturing, exports, and technology adoption.
The engineering industry in India offers investment opportunities in capital goods, electrical equipment, semiconductors, green hydrogen, construction equipment, industrial automation, and engineering R&D. Rising FDI and infrastructure spending continue to strengthen the sector's investment potential.
Engineering goods exports are India's largest merchandise export category, reaching US$ 122.52 billion in FY26. Strong global demand for machinery, automobiles, auto components, and industrial equipment continues to strengthen export earnings and manufacturing growth.
The engineering industry in India is expected to witness sustained growth, supported by infrastructure development, capital goods expansion, engineering exports, Industry 4.0 adoption, and rising investments in advanced manufacturing and clean energy technologies.
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