ENGINEERING INDUSTRY IN INDIA Presented by -
Sweta Leena Panda (000308)
Challenges
Market size
Introduction Growth
ENGINEERING INDUSTERY
Engineering
Heavy Engineering
Heavy Electrical
Heavy Engineering and Machine Tools
Automotive
Light Engineering
Low Technology Products
High Technology Products
CHALLENGES
Barriers to entry
Bargaining power of suppliers and customers
Competitions
Other Challenges
MARKET SIZE• Capacity creation in sectors such as
infrastructure, power, mining, oil & gas, refinery, steel, automotive, and consumer durables driving demand in the engineering sector .
• Rising demand for electrical and construction equipment
• Nuclear capacity expansion to provide significant business opportunities to the electrical machinery industry
• Rapid increase in infrastructure investment and industrial production to fuel further growth
• Comparative advantage vis-à-vis peers in terms of manufacturing costs, market knowledge, technology and creativity
• Highly organised sector and dominated by large players employing over four million skilled and semi-skilled labour
De-licensed engineering sector 100% FDI permitted .Cumulative FDI totaled USD 19.9 billion over April 2000 – 2013 due to policy report.
Advantage India Engineering exports from
India: USD56.7
billion
Engineering exports target from India: USD125.0 billion
FY 13 FY 15
KEY PLAYERSCompany Revenues (FY13) Products
Larsen & Toubro USD28.3 billion Engineering & Construction, Cement, Electrical & Electronics
Bharat Heavy Electricals Ltd
USD9.3 billionPower Generation, Transmission, Transportation
Siemens India Ltd USD2.6 billion Power Generation and Distribution Equipment, Transportation Systems, Communication and Healthcare Products
ABB Ltd USD1.4 billion** Transformers, Switch Gears, Control Gears
Crompton Greaves Ltd
USD2.1 billion Power Generation and Transmission Equipment
Engineers India USD0.5 billion Highways & Bridges, Mass Rapid Transport Systems Construction, Specialist Materials Manufacturing
GROWTH
Growth drivers
Demand-side
Drivers
Policy Investment
•De-licensing •Reduction in tariff and customs •Supportive government policies leading to higher investments
•Capacity addition for power generation •Increase in infrastructure spending •Rise in exports
•Increasing FDI inflows •Higher M&A •Easy credit facilities for manufacturing companies
GROWTHRobust growth in India’s
Engineering exports over the years
FY09 FY10 FY11 FY12 FY13 FY14
31.3
45.3
38.3
58.1
67.1
56.7CAGR:12.6%
Exports performance of principle commodities
18%
9%
14%
32%
27%
Column1
Manufactures ofmetalsOthersTransport equipmentMachinery andinstrument
FUTURE GROWTHIncreasing industrialisation and economic development to drive capital goods & engineering market
Capital goods & engineering turnover is expected to reach USD125.4 billion by 2017 from USD57.6 billion in 2012
Expansion in the electrical equipment industry
Engineering research & design segment revenues to increase fourfold by 2020
Electrical equipment market size expected to reach to USD105 billion by 2022 from USD24.2 billion in 2011
ER&D revenues projected to reach to USD45 billion in 2020 from USD11.2 billion in 2012
57.6
125,4
2012 2017CG and Engineering Turnover
CAGR:16.8%
24.2
105
2012 2022Electrical equipment market size
CAGR:14.2%
11.2
45
2012 2020ER&D revenue
CAGR:19.0%
FUTURE GROWTHIndian construction equipment market to grow sevenfold from 2012 to 2020
Construction equipment market projected to reach USD22.7 billion by 2020 from USD3 billion in 2012
Indian telecom equipment market to more than double by 2020
Increased production of Central Public Sector Enterprise (CPSE)
Telecom equipment market to reach USD37 billion by 2020 from USD16 billion in 2011
Production of CPSE under DHI to aggregate USD10.7 billion by 2014 from USD9.2 billion in 2011
3
22.7
Construction equipment market revenue
2020
CAGR:28.8%
16
37
2020Telecom equipment market size
CAGR:9.7%
9.2
10.7
2011
2014 Production of CPSE's
CAGR:5.4%
2011
2012
CONCLUSION
India's engineering sector is forecast to grow by almost 25 per cent a year for the next few years because of higher investment in infrastructure, favourable government policies and new oil and gas power and metallurgy projects.
World class infrastructure is of utmost importance for unleashing high and sustained growth. In fact, it is the long term driver for the construction sector as well. While short term factors may keep sentiments subdued, over the long term, demand will remain strong. The proposed increase in doubling investment in infrastructure from Rs 20 trillion to Rs 41 trillion in the twelfth five-year plan (2012-2017) should translate into a business for construction companies as and when the black clouds clear-up.
