Heavy Engineering Equipment and Machine Tools Industry in India

Heavy Engineering Equipment and Machine Tools Industry sector is the backbone of the entire engineering sector of India. The capital goods sector, contributing 12% to the manufacturing activity, represents a multi-disciplinary field with numerous end use application areas. The capital goods industry has a strong production base capable of manufacturing the diverse range of machinery and equipments to serve a cross section of user industry segments ranging from defence, oil and gas, refinery, nuclear, chemical and petro chemicals, to consumer durables, fertilizers, automobiles, textiles etc.  It contributes more than Rs. 25,000 crore to the Government exchequer annually in terms of various taxes and levies. The annual production of the capital goods industry is Rs. 1, 75,366 crore in2011-12 (including heavy electrical equipments).

However, the potential of the capital goods industry in India is still largely untapped.  For development of Machine Tools & Textile sector, Development Councils have been constituted by the Department of Heavy Industry, Ministry of Heavy Industries & Public Enterprises. The major Industry Associations associated with this sector are Textile Machinery Manufacturers Association (TMMA), Indian Textile Accessories and Machinery Manufacturers Association (ITAMMA) and Indian Machine Tools Manufacturers Association (IMTMA).

A Working Group on ‘Capital Goods and Engineering Sector’ had been constituted by the Planning Commission under the Chairmanship of Secretary, Department of Heavy Industry. The Working Group has submitted its Report. Recommendations of the Working Group on Capital Goods and Engineering Sector are as below:

Increasing value addition in India by

•    Indigenous technology development

•    Mandating local value addition /technology transfer

•    Preference to local content in PSE purchases

•    Collaboration with user sectors through inter-ministerial coordination

Import substitution by

•  Banning imports of second hand goods

•  Regulatory mechanism for FTAs/PTAs

•  Tax structure rationalization

Export promotion by

• Export financing

• Soft promotion of exports

• Counter trade in sectors where we have strong presence.

Department of Heavy Industry will soon submit the EFC Note for the Scheme of Enhancement of Competitiveness in Capital Goods Sector for which Rs.  510.81 crore has been earmarked.