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
  • India’s target is to increase electronics manufacturing capability to INR 24 Lakh cr by 2025-2026 and help create more than 10 lakh jobs. *
Reasons to Invest
  • Incentives for capacity addition in power generation will further increase the demand for electrical machinery. 
  • 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. 
  • Rapid increase in infrastructure investments and industrial production will fuel further growth.
Recent Announcements

21st July 2023:  A total of 8,738 Public Charging Stations operational in the country.

Ministry of Heavy Industries

 

16th June 2023: Union Minister of Heavy Industries Dr.Mahendra Nath Pandey Launches "Dugdh Sankalan Sathi Mobile App" to Transform Indian Dairy Industries.

Ministry of Heavy Industries

 

15th June 2023: PLI scheme will generate 1.48 lakh jobs in five years: Dr. Mahendra Nath Pandey.

Ministry of Heavy Industries

 

15th June 2022: 27 projects worth Rs 909.38 crore approved under Phase-I of the Scheme for Enhancement of Competitiveness in Indian Capital Goods

Ministry of Heavy Industries

Statistics
  • Average Index of Industrial Production of manufacture of electrical equipment in June 2023 is 103.7 *
  • Average Index of Industrial Production of machinery and equipment in June 2023 is 121.9. *
  • Average Index of Industrial Production of manufacture of computer, electronic and optical products in June 2023 is 122.8. *
Growth Drivers
  • 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 11.59 bn during the period April 2000 to March 2023. This constitutes 1.82% of the total FDI inflow received across sectors.*
  • The cumulative FDI equity inflow in the Industrial Machinery is USD 6.45 bn during the period April 2000 to March 2023. *
  • The cumulative FDI equity inflow in the Machine Tools is USD 1.07 bn during the period April 2000 to March 2023. *
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.

  1. Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing, Gazette of India
  2. Production Linked Incentive Scheme (PLI) for IT Hardware, Gazette of India

Financial Outlay-

  1. INR 40,000 cr
  2. 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
  1. Year End Review 2022: Ministry of Electronics and Information Technology (MeitY)
  2. Year End Review 2022: Ministry of Heavy Industries
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
  1. “Industry Intelligence - Indian Engineering”, Indian Electrical & Electronics Manufacturers’ Association (IEEMA)
  2. “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
  3. 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
  4. 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

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