India, on its quest to become a global superpower, has made significant strides towards developing its engineering sector. The Government has appointed 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 a high growth potential area because industries which source semiconductors as inputs are witnessing high demand.
In FY22, India exported engineering goods worth US$ 111.63 billion, a 45.51% increase YoY. India exports engineering goods mostly to US and Europe, which account for over 60% of the total exports.
In FY21, India’s heavy electrical equipment production stood at Rs. 168,949 crore (US$ 21.15 billion). The electrical equipment market is forecasted to grow at 12% CAGR to reach US$ 72 billion by 2025 from US$ 48-50 billion in 2021. Export of electrical machinery and equipment stood at US$ 10.37 billion in FY22, which was a 27.6% YoY growth.
Market size of textile machinery stood at Rs. 35,000 crores (US$ 5.4 billion) in 2021. The domestic production of the industry stood at Rs. 5,093 crore (US$ 637.62 million) in FY21. Textile industry exports stood at Rs. 3,307 crores in FY21, as against Rs. 2,556 crores achieved during FY20.
In FY22, the construction equipment industry sold 85,385 units.
100% FDI is allowed through the automatic route, with major international players looking for growth opportunities to enter the Indian engineering sector. The engineering sector in India attracts immense interest from foreign players as it enjoys a comparative advantage in terms of manufacturing cost, technology, and innovation. The above, coupled with favourable regulatory policies and growth in the manufacturing sector, has allowed several foreign players to invest in India.
FDI inflow for miscellaneous mechanical and engineering industries stood at US$ 4.14 billion between April 2000-June 2022 according to the data released by Department for Promotion of Industry and Internal Trade (DPIIT).
Microsoft India and Larsen & Toubro (L&T) have signed a Memorandum of Understanding (MoU) to build a regulated sector cloud product. The two businesses will collaborate with a select group of significant customers in regulated industries to design architectures and roadmaps to help them achieve their digital transformation goals and transition traditional datacenters to hybrid cloud architecture.
Tesla, the electric car maker, has set up a R&D centre in Bengaluru and registered its subsidiary as Tesla India Motors and Energy Private Limited.
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.
To increase the employability of engineering graduates in the country, the Ministry of Human Resource Development is working along with Sector Skill Councils (SSCs) under National Skill Development Corporation (NSDC) to undertake apprenticeship/internship embedded degree programmes with a core focus on the development of knowledge, skills, aptitude and on-job training.
The AICTE has entered into collaborations with the MSME ministry, NHAI and DM offices in 150 districts to facilitate engineering internships for students.
In the Union Budget 2022-23, the government has given a massive push to the infrastructure sector by allocating Rs. 199,107 crore (US$ 26.52 billion) to enhance the transport infrastructure.
The government expanded the ‘National Infrastructure Pipeline (NIP)’ to 9,318 projects worth US$ 2.23 trillion. As of February 2022, there are 2,465 projects under development.
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.
The government has announced its PLI scheme of Rs. 10,683 crore (US$ 1.4 billion) for textiles, specifically aimed at boosting production of man-made fibre (MMF) fabric, MMF apparel and technical textiles. The government has also announced a PLI scheme for automobiles and auto components worth Rs. 25,938 crore (US$ 3.49 billion). This scheme is expected to bring investments of Rs. 42,500 (US$ 5.74 billion) by 2026.
According to the National Association of Software and Service Companies (Nasscom), India’s share in the global engineering and research and development (ER&D) market is likely to expand at a CAGR of 12-13% to reach US$ 63 billion by 2025.
By 2030, India has plans to invest US$ 34.2 billion to set up an interstate transmission network (ISTS) in order to evacuate renewable energy.