Trade Analytics
Engineering and Capital Goods
Engineering exports from India increased 14.7 per cent to US$ 70.6 billion in FY15’.

Engineering Industry in India

Latest update: January, 2018

  • Engineering exports from India stood at US$ 65.23 billion in FY17
  • During FY08–FY17, engineering exports from India registered growth at a CAGR of 7.61 per cent
  • Engineering exports include transport equipment, capital goods, other machinery/equipment and light engineering products such as castings, forgings and fasteners
  • In August 2016, engineering exports by India, to its top 25 destinations, registered a growth of 5.8 per cent over August 2015
  • With the revival of demand for iron and steel in China and the US, India’s engineering exports reached US$58.8 billion in FY16.
  • During the fiscal year 2016-17, the exports have touched US$65.23 billion, which exceeds the total shipments of US$58.8 billion in 2015-16.

Note: FY - Indian Financial Year (April to March)
 

  • Transport equipment (which includes Auto and auto component including Aircraft and ship boats) is the leading contributor to engineering exports. The segment accounted for 32.46 per cent of the total engineering exports from India in FY17.
  • Exports of iron and steel products accounted for a market share of around 22.44 per cent, in the overall exports, while industrial machinery including electrical machinery accounted for 23.85 per cent of the total engineering exports in FY17.
  • Other commodities includes medical and scientific instruments, hand tools and cutting tools, bicycle parts, office equipment, prime mica and mica products, etc. and accounted for a share of 10 per cent of the total engineering exports from India in FY17.
  • Attractive markets for Indian engineering products are USA, China, Germany, U.K., Canada, France, Russia, Japan, Australia, South Korea, Saudi Arabia and Southern Africa.

Note: FY - Indian Financial Year (April to March)
Source: Engineering Export Promotion Council, Department of Commerce

 

Last Updated: January, 2018

SECTORAL REPORT | January, 2018

Introduction

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.

Market size

The capital goods and engineering turnover in India is expected to reach US$ 125.4 billion by FY17.

India exports its engineering goods mostly to the US and Europe, which accounts for over 60 per cent of the total exports.

Recently, India's engineering exports to Japan and South Korea have also increased with shipments to these two countries rising by 16 and 60 per cent respectively. Sri Lanka, Nepal and Bangladesh have also emerged as the major destinations for India's engineering exports.

According to the India Electronics & Semiconductor Association, the Indian Electronic System Design and Manufacturing (ESDM) market is expected to grow at a CAGR of 16-23 per cent to reach US$ 228 billion by 2020 from $100 billion in 2016-17.

The electrical equipment industry observed a growth of 9.7 per cent during April-September 2017. Also, Growth of India’s mining and construction equipment sector is expected at 13-17 per cent in 2017 driven by increase in infrastructure spending.

According to a study by The Associated Chambers of Commerce of India (ASSOCHAM) and NEC Technologies, the demand for electronic products in India is expected to grow at a Compound Annual Growth Rate (CAGR) of 41 per cent during 2017-20 to US$ 400 billion by 2020.

According to data from the Engineering Export Promotion Council of India, engineering exports from India grew 11.33 per cent year-on-year to reach US$ 65.23 billion in FY 2016-17. Exports of electrical machinery rose to US$ 4.6 billion in FY 2016-17 from US$ 3.7 billion in FY 2015-16.

India’s engineering exports recorded a growth of 22.75 per cent to reach US $ 56,091.89 million in April-December 2017. Exports during December 2017 grew 25.41 per cent year-on-year to US$ 7,133.93 million from US$ 5,688.32 million in the same period a year ago.

Investments

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 September 2017 stood at around US$ 3.36 billion, as per data released by the Department of Industries Policy and Promotion (DIPP).

In the recent past there have been many major investments and developments in the Indian engineering and design sector:

  • Indian industrial valves market is estimated to reach USD 3 billion by 2023, with over 9 per cent Compounded Annual Growth Rate (CAGR). Globally industrial valve market all set to touch USD 88.4 billion by 2021.
  • Infrastructure, construction and capital goods companies announced orders worth Rs 55,814 crore (US$ 871.82 million) during October 1 – December 6, 2017. In the third quarter of 2016-17, this number stood at Rs 27,324 crore (US$ 426.80 million). The growth was backed by BHEL’s* receipt of Rs 20,400 crore (US$ 318.65 million) worth of power projects in Telangana and Larsen & Toubro’s receipt of a Rs 8,650 crore (US$ 135.15 million) order for the Mumbai trans-harbor link.

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 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.

  • The Union Cabinet has approved incentives up to Rs 10,000 crore (US$ 1.47 billion) for investors by amending the M-SIPS scheme, in order to further incentivise investments in electronics sector, create employment opportunities and reduce dependence on imports by 2020.
  • The Ministry of Electronics and Information Technology plans to revise its policy framework, which would involve the government taking a more active role in developing the sector by providing initial capital, with the aim to attract more private players and make India a global semiconductor hub.

Road Ahead

The engineering sector is a growing market. Spending on engineering services is projected to increase to US$ 1.1 trillion by 2020. The government, in consultation with semiconductor industry, has increased focus on the ESDM sector in last few years. Some of the initiatives outlined in the National Electronics policy and the National Telecom policy are already in the process of implementation, such as Preferential Market Access (PMS), Electronics Manufacturing Clusters (EMC) and Modified Special Incentive Package Scheme (M-SIPS).

India’s capital good sector is expected to triple in size to Rs 7.5 trillion (US$ 116 billion) and add 21 million jobs by 2025.

Exchange Rate Used: INR 1 = US$ 0.0155 as of January 04, 2018.

Note: BHEL* - Bharat Heavy Electricals Limited

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.

Posters

Brand India Pharma

BUILDING THE FUTURE

India's construction equipment market was estimated at US$ 3.47 billion in 2013 ans is expected to reach US$ 7.7 billion by 2016 growing at a CAGR of ...

+ More >

Brand India Pharma

IBEF Publications

IBEF Publication

India Now Magazine


Rural India

English

+ More Publications >

IBEF Publication

IBEF Blog - INDIA ADDA – PERSPECTIVES ON INDIA More

author_logo-ibef1.jpg Mid-term review of foreign trade policy: An update
IBEF, Knowledge Centre

The Indian Government announced the mid-term review of Foreign Trade Policy 2015-20 on December 5, 2017. Overall, the policy is expected to make Indian exports more compe...

author_Satish-Kannan1.jpg Internet Proliferation is Making Access to Healthcare Easier
Satish Kannan, Co-founder and CEO, DocsApp

In today's age, it's sometimes easy to forget that the internet is not just for networking and entertainment. It has a purpose and a vast reach; when used correct...

author_logo-ibef1.jpg Auto Expo 2018
IBEF, Knowledge Centre

Held at two separate venues in 2018, the Auto Expo is India’s largest auto gathering. The Auto Expo 2018–Vehicles is scheduled to be held at India Expo Mart, ...

author_Amit_Wadhwani1.jpg 2018 to witness a green revolution in realty and infrastructure
Mr Amit Wadhwani, Director, Sai Estate Consultants

As the Indian real estate and infrastructure sectors look towards a greener future, the investment opportunities are promising and plentiful.In recent years, India has em...

author_logo-ibef1.jpg The Journey From Fragile Five to Favored Investment Destination
IBEF, Knowledge Centre

From being labeled the ‘Fragile Five’(a term coined Morgan Stanley to represent emerging market economies)in 2013 to become one of the most favored investment...

author_logo-ibef1.jpg Current Standing and Growth Potential of India’s Handset Market
IBEF, Knowledge Centre

Smartphones have been taking the world by storm. Look at the mobile phone advertisements and you will know what we are talking about. While earlier mobile phone advertise...

ideas More

Ideas

FUTURISTIC SOLUTIONS, CURRENT SCENARIOS Futuristic Solutions, Current Scenarios
eToilets, the self-flushing, self-monitoring technology-based sanitation solution...

JOIN IBEF.org

Join IBEF.org now. Enjoy FREE subscriptions downloads, updates and more.

Error

Already a member?
Login / Retrieve Password