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Building India of tomorrow

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 sector contributed ~USD 9.3 bn to exports in 2014-15.  

100% FDI has been allowed in the sector ensuring presence of many foreign players. Capital Goods sector provides approximately 1.4 mn direct and 7 mn indirect jobs.

Market-oriented reforms, such as "Power for All" along with plans to add 93 GW by 2022 will generate huge demand for power transmission and distribution (T&D) equipment.

  •  By 2022, the electrical equipment industry, comprising generation and T&D equipment, is targeted to reach a size of USD 100 bn.
  •  By 2022, the T&D equipment segment is targeted to reach a size of USD 75 bn

 

100% FDI is allowed under the automatic route

for more details refer FDI Policy 2017

HIGHLIGHTS

  • By 2025, direct & indirect employment expected to reach 5 mn and 25 mn respectively
  • Indian generation and T&D equipment market to reach USD 100 bn by 2022
  • Indian heavy electrical equipment is the largest sub-sector followed by process plant equipment and earthmoving & mining machinery

Industry Scenario

The capital goods sector has a market size of USD 43.2 bn.

The sector is further divided into 10 sub-sectors where heavy electrical equipment is the largest sub-sector followed by process plant equipment and earthmoving & mining machinery. The market size of each of the sub-sectors is as follows:

  •   Heavy Electrical Equipment: USD 24.2 bn
  •   Process Plant equipment: USD 3.7 bn
  •   Earthmoving & Mining Machinery: USD 3.3 bn
  •   Printing Machinery: USD 3.01 bn
  •   Food Processing machinery: USD 2.4 bn
  •   Dies, Moulds & Press Tools: USD 2.3 bn
  •   Textile Machinery: USD 1.8 bn
  •   Machine Tools: USD 1.4 bn
  •   Plastic Machinery: USD 0.5 bn
  •   Metallurgical Machinery : USD 0.4 bn

Growth Drivers

GD EM
  • Contribution to manufacturing

    10%

  • Direct employment to (no. of people)

    5 mn

  • Heavy elec. equipment (CAGR 5 years)

    5.2%

  • Heavy elec. equipment exports share

    14%

Key policies

National Capital Goods Policy 2016

National Policy on Capital Goods (NPCG) 2016 envisages:
- Increasing production of capital goods from ~$43.2bn in 2014-15 to $115bn in 2025 raising direct and indirect employment from the current 8.4 million to ~30 million
- Increasing exports from the current 27% to 40% of production 
- Increasing share of domestic production in India's demand from 60% to 80%
-100% FDI allowed under automatic route

Vision 2022 for the Indian Electric Machinery Equipment Industry

To make India the country of choice for the production of electrical equipment and to reach an output of USD 100 b by balancing exports and imports. Areas of focus include technology and R&D; lowering of customs duties on a range of equipment; setting up of the Electrical Equipment Skill Development Council (EESDC); Indian Electrical Equipment Industry Mission Plan 2022; the establishment of electrical equipment industry clusters; the enhancement of product-testing infrastructure in the country; an increase of shares in the export market and financial support.

National Manufacturing Policy

In order to bring about a quantitative and qualitative change and to give necessary impetus to the manufacturing sector, the Department has notified the National Manufacturing Policy (NMP) with the objective of enhancing the share of manufacturing in GDP to 25% and creating 100 million jobs over a decade or so. 

a)Incentives for infra development on PPP basis
b)17 NIMZs -  8 under the DMIC and 9 outside it. In-principle approval to 12 NIMZs
c)Access to finance for SMEs
d)Promote green initiatives by providing 5% interest in reimbursement and 10% as capital subsidy for production of equipment controlling pollution, conserving water etc. 

FDI Facts

  • FDI inflows (in USD) in electrical equipment during April 2000 - June 2017

  • FDI inflows (in USD) in industrial machinery during April 2000 - June 2017

  • FDI is allowed under the automatic route in the electrical machinery sector

Recent Investments

  • November 2017 - The Central government plans to spend USD 459.7 mn to implement various programs under the National Capital Goods Policy

  • February 2016 - One of the world's leading engineering machinery manufacturers, China's Sany Heavy Industry plans USD 9.8 bn of investments

Major Investors