Going Strong

WITH CAPITAL EXPENDITURE ON THE RISE ACROSS MEGA INFRASTRUCTURE AND INDUSTRIAL PROJECTS, INDIA’S HEAVY ENGINEERING UNITS HAVE MUCH TO CHEER FOR.

- Mitalee Kurdekar

THE HEAVY ENGINEERING INDUSTRY IS IN A buoyant mood. With a spate of mega projects on the anvil, capital expenditure – particularly with regard to infrastructure building and capital intensive manufacturing sites including metro rail, highways, expressways, seaports, airports, refineries, and oil & gas installations – is on the rise. Naturally, the positive impact of this is being seen across the heavy engineering industry, with demand growing at a steady pace. And heavy engineering manufacturers are responding rather well.

More importantly, the industry has matured a great deal in recent years. Traditionally viewed as the barometer of any vibrant economy, the Indian heavy engineering industry feeds the demand of many critical, growing sectors of our economy. Over the past five years, it is said to have grown at an average rate of 12% due to a variety of factors like a steady rise in infrastructure development, growing industrial production, as well as a slew of government initiatives like liberalisation of FDI participation to 100% in select industries, and rationalisation of the indirect tax structure and customs levies.

Favourable conditions have attracted many foreign players to this industry, with the purpose of meeting unfulfilled or new domestic demand, in addition to taking advantage of India’s ideal location when it comes to exporting their products to other markets around the world. This has also encouraged local players to diversify and also engage in new technological developments. Further, the appointment of the Engineering Export Promotion Council (EEPC) as the nodal agency to spearhead the export efforts of Indian engineering units, coupled with a comparatively weaker rupee, has helped increase the exports of engineering goods. Even more encouraging is the fact that more than half of such exports are to developed countries like the US and others in Europe.