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CAPITAL GOODS

FDI In Capital Goods Sectors

The capital goods manufacturing sector facilitates engagement across industries such as construction, engineering, infrastructure, consumer goods, etc. Increasing demand has led to notable growth in the capital goods sector of India. In FY 2018 -19 had an overall production figure amounting to $13.6 bn. The capital Goods industry in India provides approximately five mn direct employment.

Heavy electrical and power equipment, earthmoving and mining machinery, and process plant equipment are the top three export subsectors, accounting for 85 percent of India's total capital goods exports.


Market-oriented reforms such as 'Power for All' along with plans to add 93 GW by 2022, will generate massive demand for power transmission and distribution (T&D) equipment. In addition, India became a permanent member of the Washington Accord (WA) in June 2014. The country is now a part of an exclusive group of 17 countries that are permanent signatories of the WA, an elite international agreement on engineering studies, and engineers mobility.

100% FDI in the capital goods sector is allowed under the automatic route.

 

  • 12 %

    Share in manufacturing

  • 5 mn

    Direct employment

  • 40 %

    T&D equipment demand

  • 9.97 Bn (USD)

    Electrical machinery export

  • 1

    Direct and indirect employment expected to reach 5 million and 25 million, respectively by 2025

  • 2

    Indian generation and T&D equipment market to reach $100 bn by 2022

  • 3

    Indian Electrical equipment is the largest sun-sector followed by Plant equipment & Earth moving/mining machinery

  • The Capital Goods in India has a market size of $43.2 bn. India is an attractive destination for FDI in the capital goods sector.
  • The industry is divided into ten sub-sectors where Electrical equipment is the largest sub-sector, followed by Plant Equipment and Earthmoving/ Mining machinery.
  1. The market size of each of the sub-sectors are as follows:
  • Heavy electrical equipment: $ 24.2 bn.
  • Process plant equipment: $ 3.7 bn.
  • Earth-moving and mining machinery: $ 3.3 bn.
  • Printing machinery: $ 3.01 bn.
  • Food processing machinery: $ 2.4 bn.
  • Dies, molds and press tools: $ 2.3 bn.
  • Textile machinery: $ 1.8 bn.
  • Machine tools: $ 1.4 bn.
  • Plastic machinery: $ 0.5 bn.
  • Metallurgical machinery: $ 0.4 bn.
  • Ageing equipment requires auto replacement

    Opportunity for Transmission & Distribution (T&D) sector
  • Huge market potential

    Target industry size of $ 100 bn by 2022
  • The potential for closing import-export gap

    The Capital Goods imports to India is approximately 3X the exports
  • Massive power capacity addition in future

    Infrastructure, Power, Mining, Oil & Gas, Steel & Automotive
  • Nuclear capacity expansion

    Significant business opportunity
  • September 2020- BHEL established a 'Make in India (MII) Business Development Group' vertical to discover manufacturing opportunities in India and collaborate with global OEMs to help them achieve their goal of 'Make in India, Make for the World'.

  • $5.87 bn FDI in capital goods sector inflows in Industrial Machinery during April 2000 – March 2021
  • $10.02 bn FDI inflows in Electrical Equipment during April 2000 – March 2021
  • 100% FDI is allowed under the automatic route in the electrical machinery sector

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