Electrical Machinery
- Summary
-
- The Indian electrical equipment industry comprises of two broad segments – 1
- Generation equipment (boilers, turbines, generators)
- Transmission & Distribution (T&D) and allied equipment like transformers, cables, transmission lines, etc
- Electrical machinery and equipment exports grew by 3.5 times from 2013-14. *
- The sector contributes about 8% to the manufacturing sector in terms of value, and 1.5% to overall GDP. 2
- India is the Second-largest mobile phone producer in the world (from just 2 mobile phone factories in 2014).
- Exports of mobile phones have increased from USD 0.2 bn in 2017-18 to USD 1.7 bn in 2021(April 21-September 21).
- Engineering Goods sector constitutes the largest, more than 27%, share of India’s total exports basket. growth in Engineering Goods exports in recent years has largely been due to the Zero duty Export Promotion Capital Goods (EPCG) scheme.
- The Indian electrical equipment industry comprises of two broad segments – 1
- Reasons to Invest
-
- Indian Electrical Equipment Industry Mission Plan (2012-22), aims to make India as a preferred destination for production of electrical equipment. It also aims to achieve an output of USD 100 Bn by balancing the trade deficit in the sector. 3
- Incentives for capacity addition in power generation will further increase the demand for electrical machinery. 4
- Indian manufacturers are becoming more competitive in terms of product designs, manufacturing and testing facilities.
- Capacity creation in sectors such as infrastructure, power, mining, oil and gas, refinery, steel, automotive and consumer durables are driving demand in the engineering sector. 5
- Rapid increase in infrastructure investments and industrial production will fuel further growth.
- Researchers have developed smart IoT-based machine for welding ferrous tubes faster than conventional fusion welding or solid-state processes presently used with less consumption of energy.
- Recent Announcements
-
27th October 2022: NSIC Signs MoU with Phillips Machine Tools India Pvt. Ltd.
29th June 2022: Ministry of Heavy Industries (MHI) and Ministry of Skill Development and Entrepreneurship (MSDE) sign MoU to facilitate training in engineering trades to boost capital goods sector.
18th 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.
19th January 2021: Meity may keep INR 7,500 cr outlay for IT Hardware Manufacturing under PLI Scheme this will facilitate hardware in IT industry.
- Statistics
-
- INR 54.22 crore utilized under the Scheme on ‘Enhancement of Competitiveness in Indian Capital Goods Sector in the financial year 2020-21.
- INR 37.692 crore has been released to Indian Institute of Technology - Kharagpur, West Bengal regarding funding for setting up of 'Centre of Excellence' under the Scheme on Enhancement of competitiveness in the Indian Capital Goods Sector.
- India’s top five export destinations for Engineering Goods are: USA (14.7%), China (5.8%), UAE (5.1%), Italy (4%) & Germany (3.4%).
- Exports of Engineering goods values at USD 7,818.22 mn in September 2022 and shares highest with 23.96 % of the total exports of the month.*
- Exports of Engineering Goods values at USD 111632.94 mn from Apr21- Mar22 and records positive growth vis-à-vis Apr20-Mar21 of 45.51%.
- Engineering goods shares 26.72% of the total exports of the country within the period Apr21- Mar22.
- The Average Index of Industrial Production of machinery and equipment in the FY 2021-22 is 102.5 and has grown by 10.8 percent.
- The Average Index of Industrial Production of electrical equipment in the FY 2021-22 is 104.0 and has grown by 12.7percent.
- The index of Industrial production of Manufacture of machinery and equipment n.e.c. (weight: 4.76 percent) values at 101.8, increased by 7.8 percent in April 2022 over April 2021 which was valued at 94.4.*
- Growth Drivers
-
- 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.
- The Government plans to establish Electrical Equipment industry clusters, along with building strong support infrastructure.*
- Ministry of Heavy Industries (MHI) and Ministry of Skill Development and Entrepreneurship (MSDE) sign MoU to facilitate training in engineering trades to boost capital goods sector.*
- Three Companies signed Program Agreement under (PLI) Scheme for Advanced Chemistry Cell (ACC) Battery Storage.*
- FDI Policy
-
- 100% FDI is allowed under the automatic route in the electrical machinery sector, subject to all applicable regulations and laws. *
- The cumulative FDI equity inflow in the Electrical Equipment industry is USD 11.49 bn during the period April 2000 to December 2022. This constitutes 1.83% of the total FDI inflow received across sectors. *
- The cumulative FDI equity inflow in the Miscellaneous Mechanical & Engineering Industries is USD 4,187.9315 mn during the period April 2000 to December 2022. *
- The cumulative FDI equity inflow in the Industrial Machinery is USD 6,409.6575 mn during the period April 2000 to December 2022.This constitutes 1.02% of the total FDI inflow received across sectors. *
- The cumulative FDI equity inflow in the Machine Tools is USD 1,072.0491 mn during the period April 2000 to December 2022. *
- Production Linked Incentive (PLI) Scheme
-
The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi has given its approval to introduce the Production-Linked Incentive (PLI) Schemes for Large Scale Electronics Manufacturing and IT Hardware for Enhancing India’s Manufacturing Capabilities and Enhancing Exports – Atmanirbhar Bharat.
- Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing, Read More
- Production Linked Incentive Scheme (PLI) for IT Hardware, Read More
Financial Outlay-
- INR 40,000 cr
- INR 7,325 cr
Products: Laptops, Mobile Phones, Specified Electronic Components, Tablets, All in one PCs & Servers.
For more details on PLI Schemes, Click Here
- Sector Policy
-
DE-LICENSING *
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.
VISION 2022 FOR THE INDIAN ELECTRIC MACHINERY EQUIPMENT INDUSTRY *
To make India a preferred country for the production of electrical equipment. It also aims to achieve a production target of USD 100 Bn by balancing the trade deficit.
Areas of focus include:
- Technology and R&D
- Lowering of customs duties on a range of equipment
- Setting up of the Electrical Equipment Skill Development Council (EESDC)
- Establishment of electrical equipment industry clusters
- Enhancement of product-testing infrastructure in the country
- Provide credit support to economically less-developed export markets.
Scheme on Enhancement of Competitiveness in the Indian Capital Goods Sector- Phase-II *
- The Scheme provides assistance to Common Technology Development and Services Infrastructure has a financial outlay of INR 1207 crores with Budgetary support of INR 975 crore and Industry Contribution of INR 232 crore to expand and enlarge the impact created by Phase I of Capital Goods scheme, thereby providing greater impetus through the creation of a strong and globally competitive capital goods sector.
- 8 Centres of Excellence (CoEs) established in Phase -I of the Scheme for Enhancement of Competitiveness in the Indian Capital Goods Sector.
- 2 Centres of Excellence (CoEs) sanctioned in Phase -II of the Scheme for Enhancement of Competitiveness in the Indian Capital Goods Sector.
- Financial Support
-
STATE INCENTIVES *
Apart from the above, each state in India offers additional incentives for industrial projects. Incentives are in areas like subsidized land cost, relaxation in stamp duty, exemption on the sale/lease of land, patent subsidy, power tariff incentives, a concessional rate of interest on loans, investment subsidies/tax incentives, backward areas subsidies, special incentive packages for mega projects, etc.
EXPORT INCENTIVES *
Various incentives are provided under Export Promotion Capital Goods scheme, Duty Remission scheme, Focus Product scheme, Special Focus Product scheme, Focus Market scheme.
SKILL DEVELOPMENT *
Steps taken for Skill Development, such as setting up of Electrical Equipment Skill Development Council (EESDC), would help to bridge the skill gap required for critical manufacturing. It has a clear objective to enhance exports.
AREA-BASED INCENTIVES *
The government approved 15 SEZs for the engineering sector, and electrical machinery is a part of the sector. Further, development of Delhi –Mumbai Industrial sector is expected to provide a big boost to the engineering sector.
- Investment Opportunities
-
- Generation Equipment: Boilers, Turbines, Generators
- Transmission Equipment: Transformers
- Distribution Equipment: Switch Gears, Controls
- Others: Electrical Motors, Wires and Cables
- Sector Reports
- Foreign Investors
-
- MHI (Japan)
- Hitachi (Japan)
- Babcock (UK)
- Alstom (France)
- Toshiba (Japan)
- Ansaldo (Italy)
- Colfax Corporation (USA)
- Schneider Electric (France)
- Legrand (France)
- GE (USA)
- Sources
-
- “Industry Intelligence - Indian Engineering”, Indian Electrical & Electronics Manufacturers’ Association (IEEMA) website, https://ieema.org/industry-intelligence/indian-engineering/
- “Indian Electrical Machinery & Equipment Industry,” EEPC India website, https://www.eepcindia.org/download/IndianElectricalMachinery-EquipmentIndustry-190312114534.pdf
- “Indian Electrical Equipment Industry Mission Plan 2012-2022”, Department of Heavy Industries, Ministry of Heavy Industries & Public Enterprises, https://dhi.nic.in/writereaddata/Content/indian_mission_plan_2012-2022.pdf
- “Indian Electrical Machinery & Equipment Industry,” EEPC India website, https://www.eepcindia.org/download/IndianElectricalMachinery-EquipmentIndustry-190312114534.pdf
- “Indian Electrical Equipment Industry Mission Plan 2012-2022”, Department of Heavy Industries, Ministry of Heavy Industries & Public Enterprises, https://dhi.nic.in/writereaddata/Content/indian_mission_plan_2012-2022.pdf
- “Indian Electrical Machinery & Equipment Industry,” EEPC India website, https://www.eepcindia.org/download/IndianElectricalMachinery-EquipmentIndustry-190312114534.pdf
- “Fact Sheet On Foreign Direct Investment (FDI) From April, 2000 To December, 2019”, Department for Promotion of Industry and Industrial Trade, https://dipp.gov.in/sites/default/files/FDI_Factsheet_December-19_5March2020.pdf
- “Indian Electrical Machinery & Equipment Industry,” EEPC India website, https://www.eepcindia.org/download/IndianElectricalMachinery-EquipmentIndustry-190312114534.pdf
- Consolidated FDI Policy, https://invest-india-revamp-static-files.s3.ap-south-1.amazonaws.com/2020-04/FDI%20Policy%202019%20revised_19%20April%202020.pdf
- “Annual Report 2018-19,” Ministry of Heavy Industries & Public Enterprises, https://dhi.nic.in/writereaddata/DHI_2018-19_annual_report/ENGLISH/files/downloads/HEAVY%20ENGLISH%202018-19.pdf
- “Indian Electrical Equipment Industry Mission Plan 2012-2022”, Department of Heavy Industries, Ministry of Heavy Industries & Public Enterprises, https://dhi.nic.in/writereaddata/Content/indian_mission_plan_2012-2022.pdf
- “Product Sector Overview : Electrical Machinery, Equipments & Components,” EEPC India website, http://ingineering-brands.com/catalogue/product_sector_overview/em
- Factsheet on FDI - April 2000 to March 2022, Department for Promotion of Industry and Internal Trade, https://dpiit.gov.in/sites/default/files/FDI_Factsheet_March_2022_23May2022.pdf