Last Updated: July 24, 2019
Last Updated: October, 2019
The Indian Engineering sector has witnessed a remarkable growth over the last few years driven by increased investments in infrastructure and industrial production. The engineering sector, being closely associated with the manufacturing and infrastructure sectors, is of strategic importance to India’s economy.
India on its quest to become a global superpower has made significant strides towards the development of its engineering sector. The Government of India has appointed the Engineering Export Promotion Council (EEPC) as the apex body in charge of promotion of engineering goods, products and services from India. India exports transport equipment, capital goods, other machinery/equipment and light engineering products such as castings, forgings and fasteners to various countries of the world. The Indian semiconductor industry offers high growth potential areas as the industries which source semiconductors as inputs are themselves witnessing high demand.
India became a permanent member of the Washington Accord (WA) in June 2014. The country is now a part of an exclusive group of 17 countries who are permanent signatories of the WA, an elite international agreement on engineering studies and mobility of engineers.
Turnover of capital goods industry is estimated to have reached US$ 70 billion in 2017^.
India exports its engineering goods mostly to the US and Europe, which accounts for over 60 per cent of the total exports. Engineering exports for the period of FY19 were US$ 81.02 billion as against US$ 76.20 million in the same period previous year. Engineering exports grew 6.32 per cent year-on-year to US$ 81.02 billion in FY19. Engineering exports reached US$ 38.74 billion in FY20 (up to September 2019). Exports of electrical machinery grew at a CAGR of 8.94 per cent during FY10-19. It stood at US$ 11.10 billion in FY20 (April-September’19).
The electrical equipment industry observed a witnessed a record seven-year high growth of 12.8 per cent in 2017-18, on the back of increase in government spending on rural and household electrification schemes and programmes to improve power distribution.
Construction equipment industry of India is expected to grow over 18 per cent in 2018-19.
The engineering sector in India attracts immense interest from foreign players as it enjoys a comparative advantage in terms of manufacturing costs, technology and innovation. The above, coupled with favourable regulatory policies and growth in the manufacturing sector has enabled several foreign players to invest in India.
The Foreign Direct Investment (FDI) inflows into India's miscellaneous mechanical and engineering industries during April 2000 to June 2019 stood at around US$ 3.59 billion, as per data released by the Department for Promotion of Industry and Internal Trade (DPIIT).
In the recent past there have been many major investments and developments in the Indian engineering and design sector:
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 per cent 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.
Turnover of capital goods industry is expected to increase to US$ 115.17 billion by 2025F. India’s engineering R&D market will increase from US$ 28 billion in FY18 to US$ 42 billion by FY22F. Sales of construction equipment are expected to reach 90,115 and 100,000 in 2018 and 2022, respectively, while the market size of construction equipment industry is expected to grow from US$ 4.3 billion in FY18 to US$ 5 billion by FY20. India needs Rs 235 trillion (US$ 3.36 trillion) of investments in Infrastructure in the next decade.
The export of engineering goods is expected to reach US$ 200 billion by 2030.
Note: Conversion rate used as on September 2019, Re 1 = US$ 0.014019
Note: F- Forecast
References: Media reports, Press releases, EEPC India, Press Information Bureau (PIB), Department of Industrial Policy and Promotion (DIPP), The Confederation of Indian Industry (CII), Indian Electrical & Electronics Manufacturers’ Association (IEEMA).
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
Last Updated: July 24, 2019
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