Engineering industry in India

Chennai

RVO.nl |Kansendossier Engineering Industry in India - Chennai

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Inhoudsopgave

Inhoud

1.1 Introduction 3

1.2 Heavy Engineering 4

1.3 Automotive Industry 4

1.4 Light Engineering 5

1.5 Engineering Industry in the Chennai Region 5

1.6 Government Policies 6

1.7 Trends and Opportunities 7

1.8 Opportunities for Dutch Companies 7

1.9 Future Outlook 8

1.10 Trade Fairs 8

1.11 NBSO Chennai 9

1.12 Bijlage 10

Colofon 14

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ENGINEERING INDUSTRY IN INDIA

1.1 Introduction

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 of the economy, is of strategic importance to India’s

economy. Today, India has a diversified industrial machinery/capital base

competent of catering to complex requirements and demands for a wide variety of

industrial machinery. Growth in the sector is driven by various sub-sectors such as

infrastructure, power, mining, steel, automotive, oil and gas, refinery and consumer

durables.

The Indian government has appointed the Engineering Export Promotion Council

(EEPC) to be the apex body in charge of promotion of engineering goods, products

and services from India. India exports transport equipment, capital goods, other

machinery/equipment and light engineering products such as castings, forgings and

fasteners to various countries of the world.

Capital goods and engineering turnover in India is expected to reach US$ 125.4

billion by 2017 from US$ 57.6 billion in 2012, while the electrical equipment market

size is forecasted to touch US$ 105 billion by 2022 from US$ 24.2 billion in 2011.

Also, the Indian telecom equipment market is expected to reach US$ 37 billion by

2020 from US$ 16 billion in 2011.

The Indian engineering sector is divided into two major segments - heavy

engineering and light engineering. Indian engineering exports stood at US$ 62.3

billion in the financial year ending in March 2014, registering a compound annual

growth rate (CAGR) of 10.8 per cent during the period 2008-14. A third category is

the automotive industry. The automotive industry is mentioned separately, though

it normally comes under heavy engineering, due to its large presence in India.

The Government of India has de-licensed the engineering industry and 100 per cent

foreign direct investment (FDI) has been permitted in the sector. The government

has also eliminated tariff protection on capital goods and reduced custom duties on

a range of engineering equipment. It launched the National Manufacturing Policy

with the aim of enhancing the sector's share in gross domestic product (GDP) to 25

per cent within a decade and creating 100 million jobs by 2022.

Demand for machine tools from the capital goods sector (especially automobile and

textile industries) is projected to remain high. Considering the industry's demand

for higher productivity, superior precision and accuracy, as well as low-cost

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manufacturing solutions, computer numerically controlled (CNC) machine tools are

set to be in greater demand.

1.2 Heavy Engineering

The engineering industry in India manufactures a variety of products, with heavy

engineering goods accounting for majority of the production. Most of the leading

players in the heavy engineering goods segment manufacture high value heavy

engineering goods using high technology. There is a small unorganized sector which

manufactures low technology products and is also involved in assembly of imported

components. The heavy engineering sector has many sub-sectors and the following

play a major role:

Machine tools

Textile machinery

Cement machinery

Material handling equipment

Plastic processing machinery

Dies, moulds and tools

Process plant equipment

Earth moving and construction

Rubber machinery

Sugar machinery

Paper & packaging machinery

1.3 Automotive Industry

Currently, there are 16 manufacturers of passenger cars and multi-utility vehicles, 13 manufacturers of commercial vehicles and 16 manufacturers of two-wheelers and three-wheelers

Total production in the automobiles sector stood at over 20 million units. The auto

components industry has more than 500 companies in the organised sector and about 10,000 entities in the unorganised sector. The industry’s turnover was around USD 35.1 billion. Agricultural tractors dominate the agriculture machinery sector. The Indian tractor industry is the world’s largest and accounts for one-third of the global production,

and is the cheapest producer world over providing room for more exports in tractors. More than 250,000 tractors are manufactured every year by 13 manufacturers. The following are the three main subsectors in the automotive industry:

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Passenger and utility vehicles

Auto components

Agriculture machinery

1.4 Light Engineering

The manufacturers of light engineering goods use medium to low-end technology.

The entry barrier is low, owing to relatively lower requirement of capital and

technology. This segment is characterized by dominance of small and unorganized

players, which manufacture low value-added products. However, a few medium and

large scale firms produce high value-added products. This segment is also

characterized by small capacities and high level of competition. The light

engineering sector comprises of the following sub-sectors:

Castings and forgings

Medical and surgical equipment

Industrial fasteners

Miscellaneous engineering products like pumps, motors, valves, filters,

pipes, tubes, etc.

Roller bearings

1.5 Engineering Industry in the Chennai Region

The region covered by NBSO Chennai has attracted many large engineering

companies from all over the world. This is largely due to the fact that the

availability of technical educational institutions and the availability of a large pool of

technically qualified persons is the highest in the region in India. Large Dutch

companies like Philips and Shell set up their Innovation and R&D organisations in

the region.

Chennai houses the automobile manufacturing giants in the country. More than

65% of heavy vehicles produced in the country, such as cars, buses, lorries, trains

and bicycles, are produced in Chennai, and it is referred to as the Detroit of Asia.

The manufacturing units of BMW, Flextronics, Motorola, Dell, TVS, Mitsubishi, Ford,

Hyundai, Nokia, Nissan, Renault, Royal Enfield, Hindustan Motors, Daimler and

Ashok Leyland are based out of Chennai. Chennai ranks first in producing heavy

vehicles. Other large engineering companies in Chennai include Gamesa, Schneider

Electric, FL Smidth, Lincoln Electric, Ingersoll Rand, Timken and Saint Gobain.

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Chennai has a wide variety of engineering companies in sectors such as

automobiles, auto components, electrical produtcs, petrochemicals, forgings, wind

turbines, etc.

Bangalore, the capital of Karnataka, is home to several public sector undertaking

aircraft companies, such as Hindustan Aeronautics Limited (HAL), HMT Hindustan

Machine Tools, Bharat Heavy Electronics Limited (BHEL), National Aeronautics

Limited and also Indian Space Research Organization (ISRO). While Bangalore is

India’s largest aerospace hub, it is also home to many other engineering

companies, especially in the automotive, machine tools and earth moving

equipment industry.

1.6 Government Policies

The Indian Government’s focus on promoting manufacturing through its “Make in

India” campaign, developing infrastructure in a big way and opening up the defence

sector for private Indian companies and foreign companies will boost the growth of

the engineering industry in a big way. The engineering sector attracts around 35

percent of the total foreign investment into India. Continued growth of

manufacturing, and favourable regulatory policies will further propel the

engineering sector’s growth. Some of the initiatives taken by the Indian

Government to boost the engineering sector are:

The engineering sector has been de-licensed and 100 percent foreign direct

investment (FDI) has been permitted

Foreign technology agreements are allowed under the automatic route

Tariff protection of capital goods has been removed

Customs duties on a range of engineering goods have been reduced

The Indian Government’s emphasis on boosting power production will

enhance growth in the electrical industry

Huge infrastructure projects promoted by the Indian Government such as

the Golden Quadrilateral and the industrial corridors will give a tremendous

push to the engineering industry

The Government has approved the setting up a number of Special Economic

Zones(SEZ) for the engineering sector across the country and the SEZs will

provide incentives in terms of tax, customs duties and infrastructure

facilities

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1.7 Trends and Opportunities

Trends in the Indian engineering industry are clear. The industry is diversifying and

expanding. Large infrastructure and power projects are bound to give a boost to

the sector. Rising domestic competition is driving companies to focus on improving

their capabilities. Many are becoming quality conscious and are upgrading their

technology in line with global requirements. More than 2,500 firms in the

engineering sector have ISO 9000 accreditation. Companies are increasingly

focusing on R&D and product development. With 100 per cent FDI allowed through

the automatic route, major international players such as Cummins, ABB and Alfa

Laval have entered the Indian engineering sector due to growth opportunities.

Entry of new players has raised the industry’s competitiveness. New opportunities

are coming up in the areas of Defence, Civil Nuclear Sector, Auto Components,

Power, Material Handling Equipment, Machine Tools and Aerospace.

1.8 Opportunities for Dutch Companies

Dutch companies have a lot of opportunities in the expanding Indian engineering

market. Some of the areas where Dutch companies can explore, export and invest

in the Indian engineering sector are as follows:

Infrastructure: Construction, engineering, machinery and equipment

supply, planning and design

Power: Technology transfer, equipment supply, consultancy

Defence: R&D, equipment supply, technology transfer

Automotive components: Design, R&D

Material handling equipment: Supply of equipment, technology transfer,

local manufacture

Machine tools: Supply of equipment, machinery, technology transfer

Process Industry: Design, technology transfer, supply of equipment and

machinery, local manufacture

Medical and surgical equipment: Supply of high-tech equipment, technology

transfer, local manufacture

Agriculture machinery: Supply of dairy, poultry, horticulture and food

processing machinery and equipment, technology transfer, R&D and local

manufacture

Aerospace: Design, R&D, supply of components and local manufacture

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1.9 Future Outlook

The engineering sector is a growing market largely due to government spending,

favourable government policies and new investments in the areas of infrastructure

development, power projects, metals, oil and gas, petrochemical industries,

defence, aerospace and other sub-sectors of engineering. In addition, increased

industrial and manufacturing growth will boost growth in the engineering sector.

Current spending on engineering services is projected to increase to US$ 1.1 trillion

by 2020. With development in associated sectors such as automotive, industrial

goods and infrastructure, coupled with a well-developed technical human resources

pool, engineering exports are expected to touch US$ 120 billion by 2015. Also, the

Union Budget 2014-15 has allocated funds for several infrastructure projects which

are further expected to provide a boost to the engineering sector.

Emerging trends like outsourcing of engineering services provide opportunities for

growth. Engineering and design services such as new product design, product

improvement, maintenance and designing manufacturing systems are increasingly

being outsourced to Asian countries like India. It is estimated that by 2020, India

can be a USD 40 billion market for engineering outsourcing services. All these

together provide many opportunities for the Indian engineering sector.

1.10 Trade Fairs

Since the engineering industry has a wide variety of sub-sectors, the trade fairs are

more sector specific and there are very few general engineering fairs. Listed below

are some of the major trade fairs related to the engineering industry and its sub-

sectors:

1. International Engineering Trade Fair – 2017 – This is India’s largest

engineering trade fair and is held in New Delhi once in two years. The latest

was held in February 2015. For more details, you can visit the website:

http://www.ietfindia.in/

2. Automobile Engineering Show – 07-09 July 2015. Organised by Messe

Frankfurt in Chennai.

Website:http://automotive-engineering-

show.in.messefrankfurt.com/Chennai/en/exhibitors/welcome.html

3. Foodpro 2015 – 28-30 August in Chennai. It is a trade fair for food

processing machinery and equipment and is organised by CII.

Website: http://www.foodpro.in/

4. International Railway Equipment Exhibition IREE 2015 – 14-16 October

2015 in New Delhi. This is a trade fair for railway equipment and is

organised jointly by the CII and Indian Railways.

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Website: http://www.ireeindia.com/

5. Urban Mass Transport Expo – 14-16 October in New Delhi. This is an

exhibition that focuses on technology related to urban transport and is

organised by CII.

Website: http://10times.com/utme

6. EXCON 2015 – 25-29 November 2015 in Bangalore. This is India’s largest

exhibition related to the construction machinery and equipment organised

by CII.

Website: http://www.excon.in/aboutevent.php

7. IMTEX 2016 – 21-26 January 2016 in Bangalore. This is India’s largest

trade fair related to machine tools, metal forming technologies, welding,

etc. It is organised by the Indian Machine Tool Manufacturers Association

(IMTMA). Website: http://www.imtex.in/

8. ELECRAMA 2016 – 13-17 February 2016 in Bangalore. This is India’s largest

trade fair related to the electricity industry, technologies and systems and

is held once in two years.

Website: https://elecrama.com/default.html

9. ACREX 2016 – 25-27 February 2016 in Mumbai. This is an exhibition on a

wide range of engineering services, equipment and the cold chain sector.

Website: http://www.acrex.in/

10. India Aviation 2016 – 16-20 March 2016 in Hyderabad. This is India’s

largest civil aviation exhibition and is held once in two years. It is organised

by FICCI and the Indian Ministry of Civil Aviation.

Website: http://www.india-aviation.in/

1.11 NBSO Chennai

NBSO Chennai is based in the South India and looks after the southern states of

Tamilnadu, Karnataka, Kerala and Pondicherry. NBSO Chennai will be happy to

assist Dutch engineering companies that are looking to do business in the region.

We can provide you with information, assistance, finding partners, organizing visits

or participation in trade fairs and conferences, meetings with local companies,

chambers of commerce, branch association, etc. Please contact us by e-mail or

telephone:

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V. Vijay Kumar, Chief Representative : vkumar@nbsochennai.org

P.R. Meenakshi, Deputy Representative : prmeena@nbsochennai.org

General : info@nbsochennai.org

Tel: +91 44 4215 8388

Address:

Netherlands Business Support Office, Chennai

203, Sigma Wing, Raheja Towers

177, Anna Salai

Chennai – 600 002

India

1.12 Bijlage

Ondersteuning vanuit RVO

1. Missievouchers SIB

Subsidies & Financiering

Wilt u als 'startende' exporteur een (nieuwe) buitenlandse markt gaan verkennen?

Heeft u behoefte aan meer inzicht, contacten en een daadwerkelijke oriëntatie op

een voor u nieuwe markt? Dan is de missievoucher wat voor u. De handelsmissie of

collectieve beursinzending dient op de agenda van het netwerk Internationaal

Ondernemen te zijn aangemeld en open te staan voor deelname. Vouchers kunnen

niet worden aangevraagd voor beurzen in het buitenland waarbij geen collectieve

inzending door een Nederlandse organisator plaatsvindt.

2. Dutch Good Growth Fund (DGGF)

Financiering voor (mkb-)ondernemers die willen investeren in opkomende markten

en ontwikkelingslanden. De investeringen of export moet bijdragen aan de

ontwikkeling van het land.

3. Government-to-government (G2G) en Knowledge-to-knowledge (K2K)

Samenwerkingsprogramma van Nederlandse en buitenlandse overheidsorganisaties

en kennisinstellingen. Doel is het scheppen van gunstige voorwaarden voor

ondernemers om zaken te doen op markten in het buitenland.

4. Matchmakingfaciliteit Ontwikkelingslanden (MMF)

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Samenwerkingsprogramma om ondernemers in ontwikkelingslanden en opkomende

markten in contact te brengen met Nederlandse ondernemers.

5. Netherlands Management Training Programme (NMTP)

Samenwerkingsprogramma voor studie en stage van managers en ondernemers

met als doel internationale zakenrelaties op te bouwen.

6. Partners for International Business (PIB)

Samenwerkingsprogramma en (diplomatieke) ondersteuning voor groepen

bedrijven en kennisinstellingen die gezamenlijk een buitenlandse markt willen

betreden. In een samenwerkingsverband doen minimaal 3 Nederlandse bedrijven

mee.

7. Subsidieregeling voor demonstratieprojecten, haalbaarheidsstudies en

kennisverwerving (DHK)

Subsidie voor demonstratieprojecten, haalbaarheidsstudies of kennisverwerving

door (mkb-)ondernemingen die willen uitbreiden naar opkomende markten of

ontwikkelingslanden.

8. DRIVE

Wilt u bijdragen aan de totstandkoming van publieke infrastructuur in een

laag- of middeninkomensland? Stimuleert u met deze opdracht een goed

ondernemingsklimaat en de ontwikkeling van de private sector in het land?

Dan kunt u in aanmerking komen voor een financiële bijdrage. Hiermee

kunt u de aanbestedende overheid van een ontwikkelingsland een

aantrekkelijk financieringsaanbod doen.

Tools voor ondernemers

1. Starters International Business

Met Starters International Business helpt het ministerie van

Buitenlandse Zaken bedrijven die de stap willen maken naar markten in

het buitenland.

Door export kunt u uw risico’s beter spreiden. Maar hoe pakt u dat goed

aan? Wat zijn uw sterktes? Welke markten bieden kansen? En wat moet

u doen om die kansen te pakken? Met Starters International Business -

Go Abroad, Well Prepared komt u tot een duidelijk stappenplan

waarmee u direct aan de slag kunt.

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2. Informatie op Maat

De Rijksdienst voor Ondernemend Nederland (RVO.nl) en het netwerk

van ambassades, consulaten en Netherlands Business Support Offices

(NBSO's) bieden u via Informatie op Maat een informatiedossier of

landenvergelijking met concrete, betrouwbare en actuele informatie.

3. Zakenpartnerscan

Wij kunnen de zakenpartnerscan in ruim 60 landen voor u uitvoeren. U

kunt voor meerdere landen een zakenpartnerscan aanvragen. Hiervoor

moet u ingeschreven staan bij de Nederlandse Kamer van Koophandel

(KvK). Wij kunnen u helpen bij het vinden van betrouwbare

zakenpartners als u weet:

•in welk land u zakenpartners zoekt;

•of u een handelsagent, importeur, distributeur of productiepartner

zoekt;

•hoeveel (financiële) middelen en tijd u heeft om uw zakendoelen in het

land te behalen.

4. Buitenlandnetwerk

Het buitenlandnetwerk ondersteunt u bij internationale handel,

investeringen, onderzoek en samenwerking. In vrijwel elk land ter

wereld zijn één of meer Nederlandse vertegenwoordigingen te vinden.

De verschillende onderdelen van het buitenlandnetwerk werken nauw

samen.

5. Financieringsadvies

Als mkb'er heeft u soms behoefte aan een onafhankelijke

sparringpartner om over uw plannen te praten. Iemand die u de weg

wijst. Met verstand van de actuele overheidsregelingen én ervaring in

de commerciële kredietwereld. Iemand die kritisch kijkt naar uw

plannen en suggesties doet om verder te komen.

6. App NL Exporteert

http://www.rvo.nl/onderwerpen/internationaal-ondernemen/hulp-bij-zakendoen-het-buitenland/nl-exporteert-wijzer-export

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7. Entrepreneurial Minds www.entrepreneurialmindsindia.nl

Op 5 juni 2015 organiseerde de Nederlandse ambassade in New Delhi ter gelegenheid van het bezoek van MP Rutte aan India een interactieve “talkshow” met Nederlandse en Indiase Entrepreneurial

Minds. Onder begeleiding van een bekende Indiase moderator en in aanwezigheid van een select publiek, vertelden zij in pitchvorm over hun kleine en middelgrote initiatieven en over de manier waarop zij

hebben weten in te spelen op wat NL en India elkaar te bieden hebben. Talloze private initiatieven toonden een positief beeld van de mogelijkheden in en met India, waarbij creativiteit, (sociaal) ondernemerschap, doorzettingsvermogen en geduld vooralsnog sleutelwoorden blijven. De website http://www.entrepreneurialmindsindia.nl stelt deze profielen ten toon en zal op termijn aangevuld worden met nieuwe profielen en

met praktische wenken over zaken doen in India.

8. Portal Ondernemen in Ontwikkelingslanden http://www.ondernemeninontwikkelingslanden.nl/land/india

9. Portal Internationaal Ondernemen http://www.internationaalondernemen.nl/

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Colofon

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