Engineering Industry in India

For the construction of engineering and capital goods plants in Jhajjar, Reliance MET is providing industrial land. MET Industrial Plots Jhajjar has been authorised by the Haryana government to serve as a Model Economic Township (Reliance MET).

India's engineering industry has grown significantly over the past few years as a result of increased infrastructure and industrial production spending. The engineering sector is crucial to India's economy because it is closely related to the manufacturing and infrastructure sectors.

India has made significant progress in growing its engineering industry as it strives to become a global superpower. The Engineering Export Promotion Council (EEPC) has been designated by the government as the leading organisation in charge of promoting engineering goods, products, and services from India.

India exports capital goods, other machinery and equipment, fasteners, castings, forgings, and transportation equipment to a number of international markets. Due to the high demand for semiconductors as inputs from other industries, the Indian semiconductor market has a high potential for growth.

In June 2014, India joined the Washington Accord (WA) as a permanent member. The nation is now a member of the exclusive club of 17 nations that have signed the WA, a prestigious international agreement on engineering education and engineer mobility.

Market Size

The capital goods sector had an estimated $92 billion in revenue in 2019 and is expected to reach $115 billion by 2025.

Over 60% of all exports from India are engineering goods, the majority of which are sent to the US and Europe. In fiscal years 20 and 21, engineering exports totaled US$ 75.90 billion and US$ 39.90 billion, respectively (between April 2020 and October 2020). Electrical equipment industry's index of industrial production (IIP) was 105.5 in FY20.

Investments

Due to its comparative advantage in terms of manufacturing costs, technology, and innovation, India's engineering sector is extremely attractive to foreign companies. A number of foreign players have been able to invest in India as a result of the aforementioned factors, favourable regulatory policies, and expansion in the manufacturing sector.

The United Nations Conference on Trade and Development (UNCTAD) reports that India was among the top 10 countries receiving foreign direct investment (FDI) in 2019, bringing in US$ 49 billion, an increase of 16% from the previous year, and propelling FDI growth in South Asia.

The Department for Promotion of Industry and Internal Trade's data shows that between April 2000 and September 2020, FDI inflows for various mechanical and engineering sectors totaled US$ 3,650.78 million (DPIIT).

There have been numerous significant investments and developments in the Indian engineering and design sector recently, including:

• Daimler India (a manufacturer of commercial vehicles), which recently established 10 new touchpoints, is concentrating on network expansion in December 2020. By 2022, the company hopes to have at least 350 dealerships throughout India.

• Multiple orders for the supply of mining equipment to the coal, cement, and iron ore industries were awarded to Larsen & Toubro (L&T) in December 2020. The supply of equipment and maintenance agreements to support operations for three to four years are included in the contract's scope.

• The Gaganyaan Launch Vehicle's first piece of hardware, a booster segment, was delivered to ISRO by Larsen & Toubro ahead of schedule in November 2020.

• The highest-rated auto transformer in India was successfully developed and tested in November 2020 by state-owned engineering company BHEL, setting a record. BHEL successfully created and tested the autotransformer at the Madhya Pradesh-based National High Power Test Laboratory (NHPTL).

• A "built-to-suit" warehousing facility in Tamil Nadu was developed by supply chain management service provider Mahindra Logistics Ltd. in November 2020. Two important clients in the e-commerce and automotive engineering sectors would be served by this workspace. The facility is focused on providing integrated solutions to an online retailer and a German supplier of auto components.

• The AR-VR Innovation Lab was established by a partnership between Samsung and IIT-Jodhpur in November 2020. Samsung engineers will teach B.Tech, M.Tech, and PhD students in conjunction with the Department of Computer Science and Engineering faculty at the Indian Institute of Technology (IIT) Jodhpur. The facility will also be used for experiments by other researchers. Up to 35 students will be trained in the lab each year.

Government Initiatives

Due to its close integration with other industry sectors, the Indian engineering sector is crucial to the country's economy. The industry has no licences and is 100% FDI-friendly. The government has lowered the excise taxes on factory gate tax, capital goods, consumer durables, and vehicles in an effort to strengthen the manufacturing sector.

• The Export Policy Uttar Pradesh 2020–25 aims to increase exports from state-owned industries by fostering export growth and competitiveness, offering export subsidiaries the necessary export-related assistance and services, and building and improving technical and physical infrastructures.

• The government established a 22-member interministerial committee in November 2020 to strengthen the capital goods (CG) sector. This sector will now be better able to contribute to the country's goal of having a $5 trillion economy and a $1 trillion manufacturing sector.

• In the Union Budget 2019–20, the government announced a deduction from income taxes of Rs. 150,000 (US$2,250) for interest paid on loans for the purchase of electric vehicles.

• By amending the M-SIPS scheme, the Union Cabinet has approved incentives up to Rs. 10,000 crores ($1.47 billion) for investors in an effort to further encourage investment in the electronics sector, generate job opportunities, and lessen reliance on imports by 2020.

• The "Production Incentive Scheme" (PLI) for large-scale electronics manufacturing has been approved by the government.

Road Ahead

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$ 36 billion in FY19 to US$ 42 billion by FY22.

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