Goods

India’s capital goods sector is a critical driver of industrial growth and economic development, supporting infrastructure, manufacturing, and technological advancement across the country.

Machinery and equipment represent 21.5% of the total manufacturing segment, underscoring the sector’s strategic importance.

The sector is broadly classified into 11 major sub-segments: with the top sub sectors being Power & Electrical Equipment, Plant Process Equipment, Earthmoving & Mining Machinery, Textile Machinery, Machine Tools. 

India is the third-largest market for construction equipment, reflecting rapid urbanization and extensive infrastructure development, including smart cities, transportation networks, and modern industrial facilities.

According to the Indian Electrical and Electronics Manufacturers’ Association (IEEMA), the electrical equipment industry witnessed consistent double-digit growth in power equipment, particularly transmission equipment and transformers, driven by domestic demand and international market expansion.

After power and electrical equipment, Process Plant Equipment leads India’s capital goods exports at $1 Bn in 2023–24, followed by Earthmoving & Mining Machinery ($700 mn), Food Processing Machinery ($415 mn), Textile Machinery ($445 mn), and Printing Machinery ($236 mn), highlighting the sector’s diverse global footprint.

As per industry estimates, India is also among the top 5 global markets for FDI inflows in Plant Process Equipment, Machine Tools, Earthmoving & Mining Machinery, and Power & Electrical Equipment, demonstrating strong investor confidence in the sector.

The policy environment is highly supportive:
•⁠  ⁠FDI up to 100% permitted on automatic route (through RBI) except from the countries having land borders with India
•⁠  ⁠No industrial license is required for the sector
•⁠  ⁠Quantum of payment for technology transfer, design and drawing, royalty, etc. to the foreign collaborator is not restricted
•⁠  ⁠There is no restriction on imports and exports

The government has strengthened the capital goods sector through policies that boost domestic production, reduce import dependence, and enhance competitiveness. The Scheme for Enhancement of Competitiveness in the Capital Goods Sector (SECC) supports technology upgradation, skill development, and modern infrastructure, including Common Engineering Facility Centres (CEFCs) and upgraded testing facilities. Exporters benefit from initiatives such as the Manufacture and Other Operations in Warehouse Regulations (MOOWR) Scheme for deferred customs duty in bonded warehouses, the Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme providing rebates , the Export Promotion Capital Goods (EPCG) Scheme enabling duty-free imports with export obligations, and the Duty Drawback Scheme, which refunds duties on inputs used in exports.