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. India’s engineering sector has witnessed a remarkable growth over the last few years, driven by increased investment in infrastructure and industrial production. The engineering sector, being closely associated with the manufacturing and infrastructure sectors, is of strategic importance to India’s economy.
The leading export subsectors of the capital goods sector are heavy electrical and power equipment, earthmoving and mining machinery, and process plant equipment – together accounting for 85% of India's total capital goods exports.
To indigenize manufacturing capabilities in India, IIT Madras has launched the advanced manufacturing technology development centre which is working with the capital goods industry, India on various aspects including the smart manufacturing platform for production processes.
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.
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.
The Index of Industrial Production (IIP) for the electrical equipment manufacturing industry stood at 98.3 in May 2022.
Electrical equipment market is forecasted to grow at 12% CAGR to reach US$ 72 billion by 2025 from US$ 48-50 billion in 2021. Electrical equipment export market is forecasted to reach US$ 13 billion by 2025, from US$ 8.62 billion in 2021.
Target Production size of capital goods will be $ 100 bn by 2025
Indian generation and T&D equipment market to reach $ 100 bn by 2025
By 2025, the Electrical equipment industry, comprising generation and T&D equipment, is targeted to reach a size of $100 bn
By 2025, the T&D equipment segment is targeted to reach a size of $75 bn
100% FDI is allowed under the automatic route
In September 2021, the Indian government announced a PLI scheme for automobiles and auto components worth Rs. 25,938 crore (US$ 3.49 billion). This scheme is expected to bring investments of Rs. 42,500 (US$ 5.74 billion) by 2026.
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.