The Indian Engineering sector has witnessed a remarkable growth over the last few years driven by increased investments 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.
Inflow of foreign investments
- Cumulative FDI inflows increased to US$ 26.3 billion in FY16* from US$ 8.9 billion in FY10.
- The government’s increasing focus on attracting foreign investors in manufacturing and infrastructure is likely to boost FDI in the sector.
- FDI inflows includes Automobile industry, Electrical equipment, Miscellaneous mechanical and engineering industry, Industrial machinery, Machine tools, Agriculture machinery, Earth-moving machinery and Industrial instrument.
The capital goods & engineering turnover in India is expected to reach US$ 125.4 billion by FY17.
Engineering exports from India in FY 2014-15 stood at US$ 70.7 billion registering a growth of 14.6 per cent over the previous fiscal, as demand in key markets such as the US and the UAE is on the rise. Apart from these traditional markets, markets in Eastern and Central European countries such as Poland also hold huge promise.
India exports its engineering goods mostly to the US and Europe, which accounts for over 60 per cent of the total exports. Recently, India’s engineering exports to Japan and South Korea have also increased with shipments to these two countries rising by 16 and 60 per cent respectively.
The foreign direct investment (FDI) inflows into India’s miscellaneous mechanical and engineering industries during April 2000 to June 2015 stood at around US$ 4,053.72 million, as per data released by the Department of Industries Policy and Promotion (DIPP).
In the recent past there have been many major investments and developments in the Indian engineering and design sector:
- Essar Projects, the engineering, procurement & construction (EPC) arm of Essar Group, in a joint venture with Italy’s Saipem has won a US$ 1.57 billion contract from Kuwait National Petroleum Company (KNPC) for setting up part of the Al-Zour Refinery Project in Kuwait.
- India’s engineering and construction major, Punj Lloyd, won an order worth Rs 477 crore (US$ 71.87 million) for Ennore LNG tankage project from Mitsubishi Heavy Industries of Japan.
- Vistara, the Tata Sons-Singapore Airlines JV, signed an agreement with Airbus for engineering support services which include components supply and airframe maintenance.
- Leading online retailer Snapdeal is increasing focus on mobile commerce, where it will be doubling its engineering staff count to 700 soon as it sees over 90 per cent of business coming in through this platform over the next three years. Accordingly, the company has shifted half of its 350 engineers from PC to mobile commerce following the massive jump in traffic on this platform till last year.
- Honeywell Turbo Technologies partnered with Tata to develop their first ever petrol turbocharged engine. The new Tata Revotron 1.2T engine launched in the 2014 Tata Zest delivers improved power and torque and a multi-drive mode, according to a Honeywell statement. Honeywell’s engineering teams in Pune and Bangalore leveraged local capabilities and global expertise in petrol turbo technologies to address the specific needs of a local customer.
- The engineering and R&D division of HCL Technologies will likely cross the US$ 1 billion mark in the next financial year as the company sees larger deals in a market that’s widely expected to be the next big source of growth for the Indian IT sector. HCL Tech’s engineering services unit contributed about 17 per cent to the company’s revenue in the September quarter, coming in at US$ 245 million.
- Rolta was awarded an additional scope of work by Sadara Chemical Company, Saudi Arabia to implement a comprehensive engineering information system within Sadara’s Jubail integrated chemical complex.
- Engineers India Ltd (EIL) inked a US$ 139 million consultancy deal for a 20 million tonnes (MT) refinery and polypropylene plant being built in Nigeria by Dangote Group.
- Reliance Infrastructure acquired India’s largest ship building and heavy industries company Pipavav Defence and offshore Engineering Company Limited, whose infrastructure will facilitate Reliance Infrastructure to build submarines and aircraft carriers on the back of a technological alliance with Swedish defence company SAAB.
- Royal Enfield, a two wheeler division of Eicher Motors, acquired UK based design and engineering company Harris Performance Products Ltd, whose expertise, knowledge and understanding of motorcycling will help Eicher Motors achieve leadership in the global mid-sized motorcycling segment.
- Tractebel Engineering (India) acquired Cethar Consulting Engineers Ltd. (CCE), the renowned and respected engineering consultancy company. This acquisition makes Tractebel Engineering a key player in thermal tower sector in India and strongly enhances the portfolio of offerings, which include gas pipelines, Liquefied Natural Gas, hydro power sector.
- Bharat Forge acquired Mecanique Generate Langroise (MGL), French oil and gas machining company, via its German arm CDP Bharat Forge GmbH. Bharat Forge will benefit from MGL’s expertise in precision machining and other high value processes like cladding which have critical application in the oil and gas industry.
- Leading aircraft maker Airbus announced it has began sourcing components for almost all its jets from India and it aims to take its cumulative sourcing from India to US$ 2 billion by 2020.
- Larsen & Toubro bagged construction orders worth Rs 1,099 crore (US$ 165.6 million) which included jobs from power transmission and distribution sector worth Rs 517 crore (US$ 77.9 million) and a rural electrification project under the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) scheme at Gorakhpur in Uttar Pradesh.