ENGINEERING AND CAPITAL

GOODS

February 2023
For updated information, please visit www.ibef.org
Table of Contents

Executive Summary 3

Advantage India 5

Market Overview 7

Notable Trends and Strategies 18

Growth Drivers 21

Opportunities 34

Key Industry Contacts 40

Appendix 42

2
Executive summary … (1/2)

▪ India’s Capital Goods manufacturing industry serves as a strong

base for its engagement across sectors such as Engineering, Capital goods turnover (US$ billion)
Construction, Infrastructure and Consumer goods, amongst others.
150
▪ It accounts for 27% of the total factories in the industrial sector and
100 115.17
represents 63% of the overall foreign collaborations.
92.00
▪ Capital Goods sector contributes to 12% of India’s manufacturing 50
output and 1.8% to GDP. 0
2019 2025F
▪ Market valuation of the capital goods industry was US$ 43.2 billion in
FY22.
Electrical equipment market (US$ billion)
▪ Indian Electrical equipment is the largest sub-sector followed by
Plant equipment & Earth moving/ mining machinery 80
60
▪ The electrical equipment market share in India is expected to
40 50.0
increase by US$ 33.74 billion from 2021 to 2025, and the market's 72
growth momentum will accelerate at a CAGR of 9%. 20
0
▪ Investment in engineering R&D sector is expected to reach US$ 63 2021 2025F
billion by 2025

▪ The Index of Industrial Production (IIP), in absolute terms, increased Engineering R&D Revenue (US$ billion)
to 144.7 in December 2022 from 137.4 in November 2022
80
60
40
63
20 36 42
0
FY19 FY22F FY25F

Source: Dept. of Heavy Industries, India Electrical and Electronics Manufacturer Association,, Business Today, Ministry of External Affairs

3
Executive summary … (2/2)

▪ The Government’s ‘Vision Plan 2030’ proposed an action plan to Construction equipment sales volume (in units)
become a manufacturing and export hub for construction equipment
and propel the development of world-class infrastructure in the 1,20,000

48,883
47,889
country.

98,204
80,000

85,385
78,109
▪ In November 2022, exports of engineering goods from India stood at

66,613
40,000
US$ 8.07 billion.
0
▪ In last fiscal year, India exported engineering goods worth US$
2014 2015 2016 2017 2018 FY22
112.10 billion.

▪ Cumulative engineering exports from April-November 2022 stood at Telecom instrument exports (US$ billion)
US$ 70.72 billion.
6
▪ Market size for the Indian Construction Equipment Market stood at 5
4.68
US$ 5.2 billion in FY22 and is forecasted to grow at a CAGR of 8.9% 4
2.58
to reach US$ 8.7 billion by 2028. 3
2
▪ The construction equipment industry is expected to sell 1,65,097
1
units by 2028. 2018-19 2019-20 2021-22
▪ The overall exports of electronics goods in April-December 2021
stood at US$ 11.11 billion and grew 49% as compared to FY20 with Production by CPSEs under DHI (US$ billion)
the US and the UAE being the top two destinations.
5.80
▪ In February 2021, the government had introduced the PLI scheme 5.60 5.68
for manufacturing of telecom and networking equipment with an 5.40 5.61
outlay of Rs 12,195 crore (US$ 1.4 billion) over a five-year period. 5.20
5.00 5.20
4.80
FY18A FY19E FY20T
Note: DHI - Dept. of Heavy Industries, A - Actual, T - Target, E - Estimate
Source: Booz and Company, Ministry of Heavy Industries and Public Enterprise, News Articles, Economic Times

4
Advantage India

5
Advantage India
2. ATTRACTIVE OPPORTUNITIES
▪ In Budget 2023-24, Government has committed an
outlay of Rs. 10 lakh crore (US$ 120 billion) during
2023-24 towards infrastructure capital expenditure
compared to Rs. 7.5 lakh crore (US$ 90 billion) (BE)
during 2022–23.
▪ An Urban Infrastructure Development Fund (UIDF)
will be managed by National Housing Bank, which
will enable creation of infrastructure in Tier 2 and 3
cities by supporting viability gap funding, enabling
creation of more bankable projects, enhancing
access to external funding, among others.
▪ In June 2022: Ministry of Heavy Industries (MHI) &
Ministry of Skill Development and Entrepreneurship
(MSDE) sign MoU to facilitate training in
engineering trades to boost capital goods sector.
1. ROBUST DEMAND
▪ Demand in the engineering
industry segment is driven by
investments and capacity creation
in core sectors like power,
infrastructure developments,
mining, oil and other sectors like
the general manufacturing sector,
automotive and process
industries, and consumer goods
industry.
Notes: FDI - Foreign Direct Investment, FY - Indian Financial Year (April - March)
Source: Government of India, Ministry of Heavy Industries, Department for Promotion of Industry and Internal Trade(DPIIT), India Electrical and Electronics Manufacturer Association
6
3. POLICY SUPPORT
▪ De-licensed engineering sector; 100% FDI permitted.
▪ An amount of Rs. 54.22 crore (US$ 6.5 million) utilized under the Scheme on
‘Enhancement of Competitiveness in Indian Capital Goods Sector in the financial
year 2020-21.
▪ Indian Electrical Equipment Industry Mission Plan (2012-22), aims to make India as
a preferred destination for production of electrical equipment to achieve an output of
US$ 100 billion by balancing the trade deficit in the sector.
▪ In October 2022, NSIC Signs MoU with Phillips Machine Tools India Pvt. Ltd. for
Skill Development Training in Additive Technologies which is the future of
manufacturing.
▪ In May 2022, MHI signs an MoU with National Research Development Corporation
to facilitate various activities for smooth implementation of the Scheme for
Enhancement of Competitiveness in the Indian Capital Goods Sector.
4. INVESTMENTS
▪ To enhance opportunities for private
2 3 investment in infrastructure
Infrastructure Finance Secretariat is
-
being established who will assist all
stakeholders for more private
investment in infrastructure, including
1 4 railways, roads, urban infrastructure,
and power.
 Market Overview

MARKET OVERVIEW

7
Two major segments

Heavy electrical

Heavy engineering and

Heavy engineering
machine tools

Automotive
Engineering

Low technology
products
Light engineering

High technology
products

8
Heavy engineering - key segments ... (1/2)

1
Machine tools
▪ The Indian machine tool market size reached US$ 1.4 billion in 2022.
▪ The market is expected to reach US$ 2.5 billion by 2028, exhibiting a growth rate (CAGR) of 9.4% during 2023-28.
▪ The manufacturers of machine tools are mostly SMEs, few of them are mid-sized manufacturers which have an annual turnover
varying between US$ 36-60 million (Rs. 300-500 crore).
▪ The types of machine tools currently manufactured are general/special purpose machines, standard Computer Numerical Control
(CNC) machines, gear cutting, grinding, medium size machines, electrical discharge machining (EDM), presses, press brakes, pipe
bending, rolling, bending machines, etc.

2
Textile machinery
• Major textile machineries include weaving machines, spinning machines, winding machines, processing machines, synthetic fiber
machines, etc.
• The Indian textile machinery industry was expected to touch US$ 6 billion mark by 2022.
• India’s textile machinery exports registered a growth of 21.4% to US$ 762.15 million in the first nine months of 2022.
• In 2020, creation of National Technical Textiles Mission for a period of 4 years (2020-21 to 2023-24) was approved with an outlay of US$
179 million for developing usage of technical textiles in various flagship missions, programmes of the country including strategic sectors.

3
Cement machinery
▪ Cement manufacturing machines include raw mill, cement crusher, cement mill, cement kiln, cement cooler, cement dryer, cement
silo, cement packer, etc.
▪ Currently,100% FDI is allowed under the automatic route.

Source: Indian Machine Tool Manufacturers' Association, Textile Machinery Manufacturing Association, Cabinet Committee on Infrastructure report, Ministry of Heavy Industries Annual
Report, News Articles

9
Heavy engineering - key segments ... (2/2)

4
Material handling equipment
▪ India material handling equipment market share is anticipated to grow significantly from 2017-2024 due to an attractive economic
landscape, and significant demand for goods movement.
▪ Material handling equipment have four categories: storage and handling equipment, engineered systems, industrial trucks and bulk
material handling.
▪ The Indian material handling equipment sector has grown at a CAGR of 10% between 2016-20.

5
Plastic processing machinery
▪ The market size of Plastic machinery sector stood at US$ 500 million.
▪ Demand for plastic processing machinery is expected to increase from 12,760 in FY20E to 13,740 in FY21P and 14,770 in FY22P.
▪ Out of the total machinery demand in 2020-21P, injection molding machinery is expected to comprise 10,000 units, extrusion
machines 2,770 units, and blow molding machines 970 units.

6
Process plant equipment
▪ The market size of process plant equipment sector stood at US$ 3.7 billion.
▪ Nearly 65% of the total manufacturers are small and medium enterprises.

7
Earth moving, construction and mining equipment
▪ In 2021, the production data of Earthmoving and Mining Machinery stood at US$ 3.5 billion
▪ India construction equipment market is projected to cross US$ 4.7 billion by 2025, on account of anticipated growth in construction
industry, increasing foreign investments, and rising number of smart city projects in the country.

Note: Information is as per latest available data, E - Estimated, P-Projected

Source: Ministry of Heavy Industries and Public Enterprise Annual Report 2020-21, PLEX Council, Plastindia Foundation, Invest India

10
Light engineering - key segments

1. Casting and forging

▪ Indian foundries are expected to grow
2. Medical and surgical
at a compound annual growth rate of equipment
about 12.5% from 2018 until 2023. ▪ There are 750-800 domestic Medical
▪ There are in excess of 5,000 foundries Devices manufacturers in India, with an
in India of which about 85% are small average investment of US$ 2.3-2.7
units, 10% are medium sized and 5% million and an average turnover of US$
are large, organized foundries. 6.2-6.9 million

▪ Foundry industry has a turnover of ▪ India is the 4th largest market for medical
approx. US$ 19 billion with export devices in Asia, among the top 20
approx. US$ 3.1 billion. markets for medical devices worldwide.

▪ While India may be behind China as ▪ India’s expected export of medical

far as overall castings exports are devices will reach ~ US$10 billion by
concerned, it is the second largest 2025.
producer of castings globally.

3. Industrial fasteners
▪ The Indian industrial fasteners market is expected to reach a value of Rs. 460 billion (US$ 5.57 billion)
by 2023 expanding at a CAGR of ~9.6% from 2018.

▪ The Indian automotive sector is expected to be the largest consumer of industrial fasteners, accounting
for a major share of the market by 2023.

Source: Ministry of Heavy Industries and Public Enterprise Annual Report, Foundry Informatics Centre, Invest India

11
Heavy electrical - key segments
2. TURBINES AND GENERATOR
3. TRANSFORMERS
SETS
▪ The India generator sets market is expected to grow at a CAGR of more ▪ The India power transformer market is expected to rise at a
than 5% over the period of 2020-25. CAGR of more than 3% during the forecast period of 2020-25.
▪ The current annual production capacity of domestic wind turbines is ▪ Factors such as increasing power generation capacity to meet
about 12000 MW. energy demand and expansion of transmission and distribution
▪ In 2022, GE Steam Power signed a US$ 165 million contract with Bharat systems are likely to drive the India power transformer market.
Heavy Electricals Ltd to supply three nuclear steam turbines for India's
▪ A whole range of power and distribution transformers, including
domestic nuclear power programme
a special type of transformer required for furnaces, electric
▪ In FY21, production of turbines (steam, hydro) stood at Rs. 2,949.32
tracts and rectifiers, are manufactured in India.
crore (US$ 369.24 million).

1. BOILERS 4. SWITCHGEAR AND

▪ India steam boiler systems CONTROL GEAR
market size is expected to reach
▪ Indian switchgear market
nearly US$ 22.56 billion by 2027
is projected to grow at a
with the CAGR of 4.63% during
CAGR of over 15%
the forecast period.

▪ Indian boiler manufacturer

2 3 through 2023, on account
of rising development
industry is worth for a sum of across residential,
US$146 million contributing 40% commercial and industrial
to the Indian economy. end use sectors.
▪ The Indian boiler industry is
expected to grow at a rate of 6%
1 4
to surpass US$ 194 million.

Notes: MW - Mega Watt, KVA - KiloVolt - Ampere

Source: Ministry of Heavy Industries and Public Enterprise Annual Report, Ministry of New and Renewable Energy, News Articles

12
Automotive - key segments
Passenger and commercial vehicles Auto components
▪ Indian auto components industry, which accounts for
▪ India’s automotive Industry is worth more
2.3% of India's GDP currently, is set to become the 3rd
than US$ 222 billion and contributes 8%
largest globally by 2025.
of the country’s total export. It accounts for
7.1% of India's GDP and is set to become ▪ Indian auto components industry witnessed a 34.8%
the 3rd largest in the world by 2030. growth to Rs. 2.65 lakh crore (US$ 31.9 billion) in first-
half of 2022-23, riding on domestic demand,
▪ Export of total number of automobiles
particularly from the passenger vehicles segment.
increased from 4.1 million in 2020-21 to
5.6 million in 2021-22, registering a ▪ During the first half of 2022-23, exports of components
positive growth of 35.9%. grew by 8.6% to US$ 10.1 billion.

▪ India’s annual production of automobiles

in FY22 was 22.93 million vehicles. Agriculture machinery
▪ In FY22, total passenger vehicle sales ▪ The Indian agricultural equipment
reached 3.07 million. market reached a value of Rs. 926
billion (US$ 11.1 billion) in 2021.
▪ In October 2022, 291,113 passenger
▪ The Indian agricultural machinery
vehicle* units were sold.
market is segmented by type of
► In October 2022, the total production of tractors, equipment, irrigation
passenger vehicles*, three wheelers, two machinery, harvesting machinery, and
wheelers, and quadricycles was 2,191,090 haying and forage machinery.
units. ▪ India's tractor exports increased by
► In FY22, total commercial vehicle sales more than 72%, reaching US$ 1025
stood at 716,566 units, three wheeler million from April-December 2021.
sales stood at 260,995 units and two
wheeler sales stood at 13,466,412 units.

Note: *Data except for BMW, Mercedes, Tata Motors & Volvo Auto
Source: Ministry of Heavy Industries and Public Enterprise Annual Report, SIAM, Cabinet Committee on Infrastructure report, ACMA, News Articles

13
Robust growth in India’s engineering export over the years

▪ Engineering accounts for about 25% of India’s total global exports in India’s engineering goods exports (US$ billion)
the goods sector and is one of the largest foreign exchange earners.
CAGR 11.34%
▪ In FY22, India exported engineering goods worth US$ 111.63 billion, 120.00
a 45.51% YoY growth.

▪ Cumulative engineering exports for April-December 2022-23 stood at

US$ 79.83 billion. 100.00

111.63
▪ In December 2022, exports of engineering goods from India stood at
US$ 9.08 billion.
80.00

80.95

79.83
▪ India's engineering goods are exported to key markets such as the

76.62
76.20

75.90
US, Europe, and China.

65.24
▪ The value of shipments to the US, the top market for India's 60.00
engineering goods, stood at US$ 1.58 billion in December 2022

▪ Engineering exports to China stood at US$ 233.2 million whereas to

40.00
the European Union (EU) it stood at US$ 1.54 billion in December
2022.

▪ Export of engineering goods is expected to reach US$ 200 billion by 20.00

2030.

▪ The engineering industry in Gujarat reported exports worth US$ 25

billion contributing around 36% of the India’s engineering exports. 0.00

FY18

FY21
FY17

FY19

FY22

FY23*
FY20
Notes: * - From April – December 2022
Source: Reserve Bank of India, Engineering Export Promotion Council, Engineering Export monitoring report, Ministry of Commerce and Industry Estimates

14
Key categories of engineering exports

▪ Engineering export from India can be divided into eight major Engineering
Visakhapatnam
exportport
performance
traffic (million
(October
tonnes)
2021)
categories.
1.4%
• Out of the eight categories, iron & steel and products made from
iron & steel contributed 30.7% to the total engineering exports in
October 2021. 1.5%
9.6%
▪ Automobiles (16%) and industrial machinery (15.4%) also
30.7%
contributed a major share to total exports.
11.5%

13.9%

16.0%
15.4%

Iron and Steel and Products made of Iron and Steel

Automobiles
Industrial Machinery
Non-Ferrous Metals and Products made of Non-Ferrous Metals
Other engineering products
Electrical Machinery
Ships, Boats and Floating products and parts
Aircrafts and Spacecraft parts and products

Source: Engineering Export Promotion Council

15
Key players ... (1/2)

Company Revenue (FY22) Products

Rs. 156,521 crore Engineering and construction, cement,

Larsen and Toubro
(US$ 19.02 billion) electrical and electronics

Rs. 20,153 crore Power generation, transmission,

Bharat Heavy Electricals Ltd.
(US$ 2.38 billion) transportation

Rs. 10,028 crore

ABB India Ltd.
(US$ 1.21 billion) Transformers, switch gears, control gears

Rs. 5,204.22 crore Power generation and transmission

CG Power and Industrial Solutions Ltd.
(US$ 632.6 million) equipment

Note: Exchanges rates used are average of the period, provided on page 44, Revenue is Consolidated Total Revenue
Source: Company Annual reports, News Articles, Money Control, Bloomberg

16
Key players ... (2/2)

Company Revenue (FY22) Products

Highways and bridges, mass rapid

Rs. 33,333 million
transport systems construction, specialist
Engineers India Ltd. (US$ 449 million)
materials manufacturing

Rs. 3,324 crore Engines, engine bearings and valves, grey

Kirloskar Oil Engines Ltd.
(US$ 444 million) iron casting

Power generation, construction and mining

Rs. 6,427.90 crore
Cummins India Ltd. equipment, fire pumps and cranes,
(US$ 781 million)
compressors

Rs. 6,128 crore Boilers, heaters, air pollution and

Thermax Ltd.
(US$ 744 million) purification, absorption cooling

Rs. 1,228.84 crore

BGR Energy Systems Ltd. Boilers, turbines, generators
(US$ 154 million)

Note: Exchanges rates used are average of the period, provided on page 44, Revenue is Consolidated Total Revenue
Source: Company Annual Report, News Articles

17
 Recent Trends and Strategies

RECENT TRENDS AND STRATEGIES

18
Notable trends in the industry

3. Partnership
▪ Companies across this sector are
partnering with technology
providers to enhance their
1. Diversification
capabilities and sustain the market
▪ Creation of a significant number of uncertainties.
special economic zones (SEZs)
across the country has been ▪ In November 2022, L&T Infotech
approved. and Mindtree merged to make
India's 5th-largest IT company,
▪ The development of Delhi Mumbai LTIMindtree, that will help
Industrial Corridor (DMIC) across businesses proactively take on and
seven states will further bolster the shape the future by harnessing the
engineering sector. full power of digital technologies.
▪ Reliance Defense and Engineering
Ltd has signed an agreement with
the US Navy for undertaking
service, maintenance and repair of
Seventh Fleet of US Navy at the
Reliance Shipyard at Pipavav in
Gujarat. 2. Entry of international companies
▪ With 100% FDI allowed through the automatic route, major international players such as Cummins,
GE, ABB and Alfa Laval have entered the Indian engineering sector due to growth opportunities.

▪ American plane maker Boeing Corporation has launched the Boeing India Engineering &
Technology Centre in Bengaluru.

Source: Sutherland Research, News Sources

19
Strategies adopted
1. Demonstrate capabilities
▪ In January 2023, Bharat Heavy Electricals
Ltd (BHEL) bagged the order for
renovation and modernization of 200 MW
Unit-3 and 210 MW Unit-5 steam turbines
at Ukai thermal power station in Gujarat.
▪ ABB India can utilize around Rs. 1,800
crore (US$ 217.2 million) of its cash
balance for inorganic growth or
acquisitions apart from organic expansion
plan.
2. Operational efficiency
▪ Making process changes — including
the adjustment of a company’s physical
footprint, outsourcing or offshoring of
particular processes, changes to
organizational structure — can help
increase efficiency.
▪ Strong analytical capacity will allow
companies to slice and dice their
operational data, identifying
opportunities to make operations more
efficient — such as workforce planning.
Source: KPMG Report on Engineering sector
20
5. PSU stake sale
▪ In 2021, the government is pursuing strategic sale in 22 PSU firms of
which 17 are ongoing transactions including BPCL, Shipping
Corporation of India, Concor and BEML.
4. Skill improvement
5 ▪ To increase the employability of engineering
1 graduates in the country, AICTE (All India council
of Technical education) leadership is taking a lot
of efforts and recommends model curriculum for
engineering programs like AI, IoT, Robotics,
Block chain, Machine learning, Data Science and
Cyber security.
▪ In October 2022, NSIC Signs MoU with Phillips
2 4 Machine Tools India Pvt. Ltd. for Skill
Development Training in Additive Technologies
which is the future of manufacturing.
3 ▪ In June 2022: Ministry of Heavy Industries (MHI)
and Ministry of Skill Development and
Entrepreneurship (MSDE) signed a MoU to
facilitate training in engineering trades to boost
3. Acquisitions capital goods sector.
▪ In January 2023, L&T Technology Services ▪ In May 2022, MHI signs an MoU with National
Limited announced to acquire the Smart Research Development Corporation to facilitate
various activities for smooth implementation of
World & Communication (SWC) Business
the Scheme for Enhancement of
of L&T, to combine synergies and take
Competitiveness in the Indian Capital Goods
offerings in Next-Gen Communications,
Sector.
Sustainable Spaces and Cybersecurity to
the global market.
 Growth Drivers

GROWTH DRIVERS

21
Growth drivers for the Indian engineering sector

1 2 3

POLICIES DEMAND-SIDE DRIVERS INVESTMENT

▪ New export policy in Uttar ▪ Capacity addition for power ▪ With 100% FDI allowed through the
Pradesh: The policy is aimed at generation automatic route, major international
promoting export growth and
▪ Increase in infrastructure spending players such as Cummins, GE,
competitiveness, providing export
ABB and Alfa Laval have entered
subsidiaries with the required ▪ Rise in exports, which touched US$ the Indian engineering sector due
export-related assistance and 111.63 billion in FY22. to growth opportunities.
services, and creating and
improving the technical and ▪ Demand in the engineering industry ▪ To enhance opportunities for
physical infrastructure to improve segment is driven by investments private investment in infrastructure
exports from state industries. and capacity creation in core - Infrastructure Finance Secretariat
sectors like power, infrastructure is being established who will assist
▪ Voluntary Vehicle-Fleet
developments, mining, oil and other all stakeholders for more private
Modernisation Programme
sectors like the general investment in infrastructure,
(VVMP): In August 2021, Prime
manufacturing sector, automotive including railways, roads, urban
Minister Mr. Narendra Modi
and process industries, and infrastructure, and power.
launched the Voluntary Vehicle-
consumer goods industry.
Fleet Modernisation Programme
(VVMP), also known as the Vehicle
Scrapping Policy, during the
‘Investors Summit for Setting Up
Vehicle Scrapping Infrastructure’ in
Gujarat.

22
Capacity augmentation boosts demand

Energy Requirement (BU) Visakhapatnam

Installed Energy
port traffic
Capacity
(million
(in GW)
tonnes)

2500

2000

2,047.00
94.43
159.95
1500 FY23,

1,566.00
FY21 as of
1,290.02

236.06
1,274.56
1,212.13

1000 June
287.72
500

0
FY18

FY19

FY20

FY22

FY27
Conventional Sources Renewable Sources

▪ India's power requirement is estimated to be 1,650.59 BUs in FY23, up from 1,275.53 BUs in FY21.

▪ The total power consumption in India is 127.39 billion units as of September 2022.

▪ The growing energy requirement will require enhancement of installed power capacity.

▪ The installed power capacity in India is around 408.72 GW as of November 2022.

▪ Industrial sector is the largest consumer of energy consuming about 50% of the total commercial energy produced in the country followed by the
transport sector.

Notes: BU- Billion Unit, GW- Giga Watt, P - Projected; Conventional sources includes Thermal, Nuclear and Hydro Power; Renewable sources includes Small Hydro, Wind, Solar and Bio-
Power
Source: CEA, Ministry of Power Annual Report, National Electricity Plan 2018

23
Infrastructure, one of the key demand drivers for machinery...
(1/2)
▪ In budget 2023-24, Ministry of Railways received its highest-ever
allocation of Rs. 2.4 lakh crore (US$ 28.9 billion), approximately nine
times the allocation in 2013-14. Infrastructure Investment (US$ million)
▪ In budget 2023-24, Ministry of Road Transport and Highways saw a
36% increase in its budget to about Rs. 2.7 lakh crore (US$ 32.5 900

billion). 800
▪ The government launched the National Infrastructure Pipeline (NIP)
700
with a forward-looking approach and with a projected infrastructure
investment of around Rs. 111 lakh crore (US$ 1.3 trillion), during 600
FY20-25 to provide high quality infrastructure across the country.
500 778.90
▪ The NIP currently has 8,964 projects with a total investment of more
than Rs. 108 lakh crore (US$ 1.3 trillion) under different stages of 400
implementation. 577.19
300
▪ Increase in the construction of National Highways (NHs)/roads over 369.28
200
time, with 10,457 km of roads constructed in FY22 as compared to
6,061 km in FY16. 100
▪ Total budgetary support for investment in the sector has been
0
increasing rapidly in the last four years and stood at around Rs. 1.4

2008-12

2018-22
2013-17RE
lakh crore (US$ 16.8 billion) during FY23 (as of 31 October, 2022).

▪ In line with the vision of monetisation of public sector assets,

National Highways Authority of India (NHAI) launched its InvIT in
FY22.

▪ NHAI InvIT has raised more than Rs. 10,200 crore (US$ 1.2 billion)
from high quality foreign and Indian institutional investors (up to
December 2022).
Note: RE - Revised Estimates, E - Estimated
Source: Office of the Economic Adviser, CRISIL Infrastructure Yearbook 2018, News Article, Economic Survey, PIB Portal

24
Infrastructure, one of the key demand drivers for machinery...
(2/2)

Infrastructure Supporting Industries Index Length of National Highways Constructed (in kms)

145.0 12,000

142.8
140.0

10,800
10,000
135.0

9,829
136.1

9,242
8,784
130.0 8,000

131.6
131.2

8,231
125.0
125.7

6,000

123.2

6,061
120.0
120.5

115.0 4,000

4,410
115.1

110.0
111.7

2,000
105.0

100.0 0
FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23* FY15 FY16 FY17 FY18 FY19 FY20 FY21

▪ India has one of the largest road networks (5.48 million kms) comprising expressways, national, state highways, district and village roads.
▪ India plans to spend US$ 1.4 trillion on infrastructure between 2019-2023 which is predicted to boost the expansive growth of the sector.
▪ The Ministry of Road Transport and Highways plans to construct around 28,391 km of highways in 25 months at a daily average of around 38 km,
starting from March 2022 to the end of the financial year 2023-24.
▪ Increasing construction of roads and highways all over the country as a source of development in the state is further responsible for the future
growth of the India construction market in the upcoming five years
▪ The Infrastructure Supporting Industries Index (part of the wider Index of Industrial Production) comprises eight core industries, such as coal,
crude oil, natural gas, petroleum refinery products, fertilisers, steel, cement and electricity. This index stood at 142.8 in FY23*.

Note: * - April-September 2022

Source: National Highway Authority of India, Ministry of Road Transport and Highways

25
Strong policy support crucial for the sector…(1/3)

Make in India

1 ▪ Shri Dharmendra Pradhan, Minister of Skill Development and Entrepreneurship and Education, said
growth of capital goods sector is correlated to the success of Make in India program.

Special Economic Zones (SEZs)

▪ The government approved 15 SEZs for the engineering sector, & electrical machinery is a part of the sector.
2 ▪ The Delhi Mumbai Industrial Corridor (DMIC) is being developed across seven states and is expected to
bolster the sector.

Infra Projects
3 ▪ Top infra projects that are underway includes Chenab Bridge, Delhi Mumbai Expressway, Central Vista,
Eastern Dedicated Freight Corridor, Mumbai Nagpur Expressway, Kochi Water Metro.

Tariffs and custom duties

▪ In budget 2023, customs duty exemption is being provided to import of specified capital goods and
4 machinery required for manufacture of lithium-ion cells for batteries used in electric vehicles and mobile
handsets.

De-licensing

5 ▪ The electrical machinery industry has been de-licensed, along with 100% FDI allowed in this sector. This
has facilitated the entry of major global players into the electrical machinery industry in India.

Notes: GW - Giga Watt

Source: DHI Annual Report, Ministry of Power Annual Report, Make in India

26
Strong policy support crucial for the sector…(2/3)

Budgetary support

6 • Under the Union Budget 2023-24, Government has committed an outlay of Rs. 10 lakh crore (US$ 120
billion) towards infrastructure capital expenditure compared to Rs. 7.5 lakh crore (US$ 90 billion) (BE)
during 2022–23, which is a 33% year-on-year increase.

Higher allocation to the defence sector

7 ▪ Under Union Budget 2023-24, defence sector has been allocated a budget of Rs. 5.94 lakh crore (US$ 72
billion).

Investment on building internal and external infrastructure in Smart Cities

8 ▪ In February 2022, the Prime Minister inaugurated Asia’s largest bio-CNG plant set up under the Indore
Smart City Project.

Interministerial committee

9 ▪ In November 2020, to strengthen the capital goods (CG) sector, the government set up a 22-member
interministerial committee through initiatives, which will help the sector to effectively contribute to the
national target of achieving a US$ 5 trillion economy and a US$ 1 trillion manufacturing sector.

New Engineering Research & Development Policy

10 ▪ In March 2021, the Karnataka government launched the ‘Karnataka Engineering Research & Development
(Engineering R&D) Policy 2021’ to help anchor the sector’s potential by creating 50,000 new jobs and
increasing the state’s contribution to this sector to 45%.

Notes: Capex - Capital Expenditure, JNNURM - Jawaharlal Nehru National Urban Renewal Mission
Source: Union Budget 2013-14, 2022-23 and 2019-20

27
Strong policy support crucial for the sector…(3/3)

Voluntary Vehicle-Fleet Modernisation Programme (VVMP)

▪ The objectives of the policy are to reduce population of old and defective vehicles, achieve reduction in
vehicular air pollutants to fulfil India’s climate commitments, improve road and vehicular safety, achieve
better fuel efficiency, formalize the currently informal vehicle scrapping industry and boost availability of low-
11 cost raw materials for automotive, steel and electronics industry.
▪ The policy will bring in investments of Rs. 10,000 crore (US$ 1.35 billion) to set up 450-500 Automated
Testing Stations (ATS) and 60-70 Registered Vehicle Scrapping Facilities (RVSF) across the country.
▪ The policy has proposed to push 28 million decade old vehicles off the roads.

New export policy in Uttar Pradesh

▪ Export policy is being established for the State of Uttar Pradesh to tap onto opportunities in international
market, optimum utilization of the resources of the state, employment generation and to synergize with the
12 Foreign Trade Policy 2020-25.
▪ The objective of this policy is to promote development and competition in the field of exports, to provide
necessary export-related assistance and services to export ancillary institutions, to establish and develop
technical and physical infrastructure to increase exports from the state.

Source: Press Releases

28
Special economic zones (SEZs) to promote exports ... (1/3)

Developer Location Product

Andhra Pradesh Industrial Infrastructure Corporation Limited

Ranga Reddy, Andhra Pradesh Aerospace and precision engineering
(APIIC)

Deccan Infrastructure and Land Holdings Ltd Nalgonda, Andhra Pradesh Light engineering

M/s Essar Hazira SEZ Hazira, Gujarat Engineering

Gujarat Industrial Development Corporation Ltd (GIDC) Gandhinagar, Gujarat Electronic products

N.G. Realty Pvt Ltd Ahmedabad, Gujarat Engineering

M/s Synefra Engineering and Construction Ltd Vadodara, Gujarat High-tech engineering and related products

E. Complex Pvt Ltd Amreli, Gujarat Engineering

Dishman Infrastructure Ltd Ahmedabad, Gujarat Engineering

Ansal Properties and Infrastructure Ltd Sonepat, Haryana Engineering

Raheja Haryana SEZ Developers Pvt Ltd Gurgaon, Haryana Engineering

Ansal Kamdhenu Engineering SEZ Ltd Sonepat, Haryana Engineering

Karnataka Industrial Areas Development Board Shivamogga, Karnataka Engineering

Port-based for high-tech engineering

Suzlon Infrastructure Ltd Mangaluru, Karnataka
products

Source: SEZ India

29
Special economic zones (SEZs) to promote exports ... (2/3)

Developer Location Product

Quest Machining and Manufacturing Pvt Ltd Belagavi, Karnataka Auto, aerospace and industrial engineering

Viraj Profiles Ltd Thane, Maharashtra Stainless steel engineering products

Navi Mumbai SEZ Pvt Ltd Navi Mumbai, Maharashtra Light engineering

Maharashtra Industrial Development Corporation (MIDC) Satara, Maharashtra Engineering

Township Developers India Pvt Ltd Pune, Maharashtra Engineering

Maharashtra Industrial Development Corporation (MIDC) Aurangabad, Maharashtra Engineering and Electronics

Orissa Industrial Infrastructure Development Corporation

Jajpur, Orissa Metallurgical engineering
(IDCO)

Vividha Infrastructure Pvt Ltd Patiala, Punjab Engineering

Mahindra Worldcity (Jaipur) Ltd Jaipur, Rajasthan Light engineering

New Chennai Township Pvt Ltd Kanchipuram, Tamil Nadu Engineering

Perundurai Engineering SEZ by SIPCOT Erode, Tamil Nadu Engineering

Uttar Pradesh State Industrial Development Corporation

Kanpur, Uttar Pradesh Engineering
(UPSIDC)

Source: SEZ India

30
Special economic zones (SEZs) to promote exports ... (3/3)

Developer Location Product

High-tech Engineering products and related

Aspen Infrastructures Ltd Vadodara, Gujarat
Services

High-tech Engineering products and related

Aspen Infrastructures Ltd Karnataka
Services

Quest SEZ Development Private Ltd Belagavi, Karnataka Precision Engineering Product

Khed Economic Infrastructure Limited (Bharat Forge Ltd) Pune, Maharashtra Engineering and Electronics

State Industries Promotion Corporation of Tamil Nadu Vellore, Tamil Nadu Engineering

State Industries Promotion Corporation of Tamil Nadu Erode, Tamil Nadu Engineering

High-tech Engineering products and related

Aspen Infrastructures Ltd Coimbatore District, Tamil Nadu
Services

Source: SEZ India

31
Inflow of foreign investment; rise in M&A activity ... (1/2)

▪ Total foreign direct investment (FDI) inflow to India stood at US$ FDI inflows in miscellaneous mechanical and engineering
81.97 billion in the financial year 2020-21. industries from April 2000-June 2021 (US$ billion)
▪ FDI inflow for miscellaneous mechanical and engineering industries 4.0
stood at US$ 4.10 billion between April 2000-September 2022. 3.66
0.16 0.06
0.15
▪ FDI inflow depends on a host of factors such as availability of natural 3.5
0.38
resource, market size, infrastructure, political and general investment
climate as well as macro-economic stability and investment decision 3.0 0.36
of foreign investors.
0.55
▪ The Government reviews the FDI policy on an ongoing basis and 2.5
makes significant changes from time to time, to ensure that India 0.25
remains attractive and investor friendly destination. 2.0
0.26
▪ To further liberalize and simplify FDI policy for providing Ease of 0.35
1.5
doing business and attract investments, reforms have been
1.12
undertaken recently across sectors such as Coal Mining, Contract
Manufacturing, Digital Media, Single Brand Retail Trading, Civil 1.0
Aviation, Defence, Insurance and Telecom.
0.5

0.0

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20
FY01-FY11

FY01-FY23*
Note: * - Until September 2022
Source: Department for Promotion of Industry and Internal Trade(DPIIT), News Articles, PIB

32
Inflow of foreign investment; rise in M&A activity ... (2/2)

M&A deals
Acquirer Target Type Acquisition date
Huntsman Advanced Materials Solutions Pvt Ltd
Pidilite Industries Ltd. Acquisition October 2020
(HAMSPL)
Siemens India C&S Electric Acquisition January 2020
Shinryo Corporation Suvidha Engineers India Acquisition October 2018
Larsen & Toubro’s Electrical & Automation
Schneider Electric and Temasek Acquisition May 2018
business
Reliance Infrastructure (Mumbai Power
Adani Transmission Acquisition March 2018
business)
Axiscades Mistral Solutions Acquisition November 2017
ABB Group GE Industrial Solutions Acquisition September 2017
Spectrum Integrated Technologies and Lynxemi
Hero Electronix Acquisition August 2017
Pvt Ltd
Warburg Pincus Tata Technologies Ltd. Minority Stake June 2017
Havells India Lloyd Electricals - consumer durables unit Acquisition February 2017
Birla Corp. Ltd Reliance Cement Company Pvt. Ltd. Acquisition July 2016
Fairfax India Holdings Corp. and
Bangalore International Airport Ltd. Minority stake March 2016
Fairfax Financial Holdings Ltd
Royal Enfield Harris Performance company Acquisition March 2016
Balasore Alloys Ltd - Ispat Group Rohit Ferro-Tech Acquisition May 2015
Reliance Infrastructure Pipavav Defence and Offshore Engineering Majority stake March 2015
Systra S.A SAI Consulting Engineers Majority stake December 2014
Tractors India Pvt Ltd Caterpillar Global Mining LLC Acquisition February 2014

Source: Grant Thornton, Thomson Banker, VC circle, News Articles

33
 Opportunities

OPPORTUNITIES

34
Growth opportunities in the engineering sector … (1/2)

Defence sector
▪ Under Union Budget 2023-24, defence sector has been allocated a budget of Rs. 5.94 lakh crore (US$ 72 billion).
▪ In 2023, Defence Minister of India has called upon Indian and global industry leaders to support the government’s endeavor to
design, develop and manufacture cutting-edge products, using critical technologies within India to attain complete
‘Aatmanirbharta’ in defence.

1 ▪ The vision of the government is to achieve a turnover of US$ 25 billion including export of US$ 5 billion in Aerospace and
Defence goods and services by 2025.
▪ Ministry of Defence has also notified three 'Positive Indigenisation lists' comprising of 310 defence equipments to be
manufactured locally.
▪ The government has also announced two dedicated Defence Industrial Corridors in the States of Tamil Nadu and Uttar Pradesh
to act as clusters of defence manufacturing that leverage existing infrastructure, and human capital.

Auto components
▪ As per a Crisil report, domestic auto component production is projected to grow 10-12% annually till FY23 to reach Rs. 5,223
billion (US$ 81.04 billion).
▪ In December 2022, Spark Minda inaugurated 28th automotive component manufacturing plant in India.

2 ▪ In December 2022, Honda Cars India has announced a tie-up with Maruti Suzuki Toyotsu India (MSTI), to offer vehicle
scrapping services to its customers through its dealer network.
▪ In November 2022, ARAI, Ansys signs MoU for research in emerging automotive technologies.
▪ PLI schemes in automobile and auto component sector with financial outlay of Rs. 25,938 crore (US$ 3.49 billion) introduced
under Atmanirbhar Bharat 3.0.

Notes: GW - Giga Watt, SME - Small and Medium Enterprises, CY - Calendar Year
Source: Sutherland Research, Crisil, News Source

35
Growth opportunities in the engineering sector … (2/2)

Civil nuclear sector

3 India’s installed nuclear power capacity of 6,780 MW will increase to 22,480 MW by 2031 on progressive completion of
projects under construction and accorded sanction.
India will triple its present installed nuclear power generation capacity in the next 10 years.

Power transmission and distribution (T&D)

4 T&D expenditure is set to increase on growth in power generation and privatisation of distribution.
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.

Machine tools
The Indian machine tools market size reached US$ 1.4 billion in 2022 and is expected to reach US$ 2.5 billion by 2028,

5 exhibiting a growth rate (CAGR) of 9.4% during 2023-28.

The growing prominence of automation across numerous manufacturing processes, to enhance their productivity and meet
quality standards, is currently driving the India machine tools market.

Material handling equipment

The Indian automated material handling (AMH) market was valued at US$ 1,353.8 million in 2020 and is expected to go up

6
to US$ 2,739.34 million by 2026 at a CAGR of 12.7%.
The Indian material handling sector has observed a momentous growth in recent years due to rising investment in
infrastructure development, increased demand for higher automation, and safe working practices in the manufacturing area.

Note: CKM- Circuit Kilometres

Source: Sutherland Research

36
Rising demand for electrical equipment … (1/2)

Imports of electrical machinery and equipment (US$ billion) T&D equipment demand projection (US$ billion)

80.0
10.00

75.0
70.0
9.00

9.40
8.00 60.0
8.31

7.00

7.13
50.0
6.00
6.32

5.00 40.0

39.9
4.00 30.0
3.00
20.0
2.00

15.1
1.00 10.0

0.00 0.0
FY17

FY18

FY19

FY20

FY15

FY17

FY22
▪ Imports of Electrical Machinery in India increased to US$ 16.1 billion in 2021.
▪ The Indian electrical equipment industry comprises of two broad segments, Generation equipment (boilers, turbines, generators) and
Transmission & Distribution (T&D) and allied equipment like transformers, cables, transmission lines, etc.
▪ The sector contributes about 8% to the manufacturing sector in terms of value, and 1.5% to overall GDP.
▪ Incentives for capacity addition in power generation will further increase the demand for electrical machinery.

Note: T&D - Transmission and Distribution, BTG - Boilers, Turbine, Generator

Source: Indian Electrical and Electronics Manufacturers Association, Department of Heavy Industries, DGCIS, Trading Economics

37
Rising demand for electrical equipment … (2/2)

Generation equipment-wise demand projection

Exports of industrial machinery (US$ billion)
(US$ billion)
^CAGR 50.02%
100% 20.0
0.52 3.30 6.70
90%

18.83
1.40
80% 16.0
70%
3.30 6.70
60% 3.40 12.0
50%

10.10
40% 5.80 11.70 8.0

8.43
30%

6.70
20% 4.0

4.60
3.70
10%
0% 0.0
FY11 FY17 FY22

FY16

FY17

FY18

FY19

FY20

FY22

Nov)
(till
Boilers Turbines Generators

▪ The electrical equipment market share in India is expected to increase by US$ 33.74 billion from 2021-25 at a CAGR of 9%.

▪ Domestic electrical equipment market is expected to grow at an annual rate of 12% to reach US$ 72 billion by 2025.

▪ In FY21, India’s heavy electrical equipment production stood at Rs. 168,949 crore (US$ 21.15 billion).

▪ Production of generation equipment (boilers, turbines and generators) in India is estimated to be around US$ 5.7 billion by 2022.

▪ The electrical machinery/equipment segment grew nearly 90% with shipments jumping to Rs. 13,606 crore (US$ 1.6 billion) in the April-July 2022
from Rs. 7,202 crore (US$ 869 million) in the year-ago period.

Note: BTG - Boiler, Transmission and Generation, ^CAGR is up to FY20

Source: Indian Electrical and Electronics Manufacturers Association

38
Growth potential in the construction equipment industry

▪ India’s construction equipment market size is estimated to reach US$ 8.7 billion by 2028 from US$ 5.2 billion in 2022, growing at a CAGR of over
8% on account of anticipated growth in construction industry, increasing foreign investments, and rising number of smart city projects in the
country.
▪ In FY22, the construction equipment industry sold 85,385 units.

▪ Demand for Indian manufactured construction equipment also remains robust globally, with exports witnessing a growth of 60% YoY in FY22.

▪ The earthmoving equipment and road construction equipment account for close to 70% of India’s construction equipment market.

▪ The demand outlook for the construction equipment sector remains robust with Ministry of Road Transport & Highways targeting 18,000 km of
national highway construction in FY22-23 at a pace of 50km per day and expanding the national highway network to two lakh km by 2025.

Expected unit sales by 2021

Equipment 2015 2016 2017 2018 2022*

Backhoe loaders 21,192 29,847 32,728 45,000 45,000
Crawler excavators 11,013 16,491 20,062 24,000 34,000
Mobile compressors 3,542 4,678 5,108 5,200 5,500
Mobile cranes 4,863 5,492 7,749 11,000 11,000
Compaction equipment 2,771 3,865 4,765 5,500 5,000
Wheeled loaders 2,097 2,206 2,781 3,300 3,500
Crawler dozers 391 435 534 450 600

Note: *Forecast
Source: NBM and CW

39
Key Industry Contacts

40
Key Industry Contacts
Agency
National Automotive Testing and R&D
Infrastructure Project (NATRiP)
The Automotive Research Association of
India
Fluid Control Research Institute
Engineering Export Promotion Council
(EEPC)
41
Contact Information
NBCC Place, South Tower,
3rd Floor, Bhishma Pitamah Marg,
Pragati Vihar, Lodhi Road,
New Delhi - 110003
Tel: + 91-11-49215555
Fax: +91-11-24369333
E-mail: team@natrip.in
Website: https://www.natrip.in/
Survey No 102, Vetal Hill, Off Paud Road,
Kothrud, Pune - 411 038
P.B. No 832, Pune - 411 004
Tel. No: +91-020-30231111
Fax No: +91-020-25434190
Email Id: info@araiindia.com
Website: https://www.araiindia.com/
Kanjikode West,
Palakkad - 678623.
Phone: 91-491-2566120/2566206
Fax: 0491-2566326
E-mail: fcri@fcriindia.com
Website: https://www.fcriindia.com/
‘Vanijya Bhawan’, 1st Floor
International Trade Facilitation Centre
1/1, Wood Street
Kolkata, West Bengal-700016
Phone: 91-33-22890651, 22890652
Fax: 91-33-22890654
E-mail: eepc@eepcindia.org
Website: https://www.eepcindia.org/
Appendix

42
Glossary

▪ BTG: Boilers, Turbines, Generators

▪ BHEL: Bharat Heavy Electricals Limited

▪ MHI: Mitsubishi heavy industries

▪ DHI: Department of Heavy industries

▪ BHEL: Bharat Heavy Electricals Ltd

▪ ICEMA: Indian Construction Equipment Manufacturer’s Association

▪ HAL: Hindustan Aeronautics Limited

▪ IEEMA: Indian Electrical and Electronics Manufacturers Association

▪ EEPC: Engineering Export Promotion Council

▪ TPD: Tonnes Per Day

▪ NHAI: National Highway Authority of India

▪ MORTH: Ministry of Road Transport and Highways

▪ CEA: Central Electrical Authority

▪ HVDC: High Voltage Direct Current

▪ US$: US Dollar

▪ Rs: Indian Rupee

▪ FY: Indian Financial Year (April to March)

▪ Wherever applicable, numbers have been rounded off to two decimals

43
Exchange rates

Exchange Rates (Fiscal Year) Exchange Rates (Calendar Year)

Year Rs. Equivalent of one US$ Year Rs. Equivalent of one US$
2004-05 44.95 2005 44.11
2005-06 44.28 2006 45.33
2006-07 45.29 2007 41.29
2007-08 40.24 2008 43.42
2008-09 45.91 2009 48.35
2009-10 47.42 2010 45.74
2010-11 45.58 2011 46.67
2011-12 47.95 2012 53.49
2012-13 54.45 2013 58.63
2013-14 60.50 2014 61.03
2014-15 61.15 2015 64.15
2015-16 65.46 2016 67.21
2016-17 67.09 2017 65.12
2017-18 64.45 2018 68.36
2018-19 69.89 2019 69.89
2019-20 70.49 2020 74.18
2020-21 73.20 2021 73.93
2021-22 74.42 2022 79.82
2022-23 78.60 2023* 82.74

Note: *- Until February 2023

Source: Foreign Exchange Dealers’ Association of India

44
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45