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Heavy Engineering

India’s heavy engineering sector can be classified into two broad segments – capital goods (which is further classified as electrical machinery and non-electrical machinery), and equipment segments.

Electrical machinery includes power generation, transmission and distribution equipment such as generators and motors, transformers and switchgears. Non-electrical machinery includes machines machine tools, textile machinery, cement machinery, sugar machinery, oil field equipment, metallurgical machinery, mining machinery, dairy machinery, fertilizer machinery, rubber machinery etc.

Equipment segment is comprised of equipment’s such as material handling equipment (earth moving machinery, excavators, cranes, etc.) oil field equipment like onshore and offshore drilling equipment etc.

At present, the heavy engineering industry, including machine tools contributes 12% to the total manufacturing activity and provides critical input, i.e. machinery and equipment to the remaining sectors covered under the manufacturing activity.

Power Equipment:

There are about 675 manufacturers of electrical machinery in India. Nearly 90% of them however, are small and medium enterprises. State-owned Bharat Heavy Electricals Limited (BHEL) is the largest manufacturer of electrical and power equipment. The Product range includes transmission line towers, HT Switchgear, transformers, motors (FHP, LT, HT & DC), AC generators, conductors, capacitors, cables, energy meters, etc. The performance of the power equipment industry is closely linked to the addition in power generation capacity. While, huge investments have been planned in augmenting the power generation capacity in the country, the power equipment manufacturing industry has not kept pace with the overall growth in power production.

According to estimates by the Planning Commission, the total domestic electrical equipment market size in 2010-11 is Rs. 121,418 crore (US$ 2.1 billion). In 2010-11, total domestic production in the sector is estimated at Rs. 110,000 crore (US$ 1.9 billion); imports accounted for Rs. 31,769 crores (US$ 564 million). 37% of the supercritical segment for Boiler-Turbine-Generator (BTG) equipment and 26% in subcritical segment for BTG equipment were imported in 2010-11. It is projected that by 2016-17, the domestic market size of the electrical equipment industry is expected to grow to Rs. 301,662 crore (US$ 5.3 billion, at prevailing exchange rates).

The areas which hold potential for foreign investment include advanced ultra-super critical technology, ultra high voltage transmission equipment & systems, energy efficient technologies like IGCC, UGCC, concentrated solar thermal technologies etc.

100% FDI through the automatic route is allowed for investments in the manufacture of power equipment.

Machine Tools:

The machine tool industry is a strategic industry and determines the manufacturing competitiveness in important sectors such as automobiles, heavy electrical equipment, defense, aerospace and consumer goods and other sectors. The current size of the Indian machine tool industry stands at US$ 2.1 billion and the Indian Machine Tool Manufacturers’ Association (IMTMA) forecasts this to increase to US$ 4.1 billion by the end of the 12th Five Year Plan (2017). Though India ranks 7th in machine tools consumption globally, the country ranks 13th in terms of production and 27th in exports. The Indian Machine tool Industry has around 1000 units in the production of machine tools, accessories / attachments, subsystems and parts. Of these, around 20 in the large scale sector account for 70% of the turnover and the rest are in the SME sector of the industry. While the large organized players cater to India’s heavy and medium industries, the small-scale sector meets the demand of ancillary and other units. Many machine tool manufacturers have also obtained CE Marking certification, in keeping with the requirements of the European markets.

The auto sector accounts for 60% of machine tool demand in the country. However, with India’s GDP growing at over 8% annually, the demand for machine tools is expected to multiply from a number of industries including general engineering, energy, railways and defense. With surging industry demand, domestic machine tool companies are finding themselves underequipped and the sector continues to be overly dependent on import of machine tools, including CNC (computer numerical control) and non-CNC machines, lathes, forgings and dyes. Some of the major parameters to be achieved in the 12th Five Year Plan (2012-17) include development of high precision machine tools; multi-axes, multi-function machines; heavy duty machine tools; metal-forming machines of various types; critical mechanical elements; machine tool electronics and other sub-systems; as well as software for design / analysis / simulation, machining and manufacture. These are technologies where the Indian machine tools industry considerably lags.

According to Indian Machine Tool Manufacturers’ Association (IMTMA) data, the domestic machine tools industry is able to meet only about 33% of the total consumption due to capacity constraints and lack of investments. The target under the 12th Five Year Plan is to meet 50% of the domestic demand through local production. With demand growth projected to remain at 15% CAGR (cumulative average growth rate) over the next five years, India needs to increase production capacity at an average CAGR of 25%, which entails an upward investment of Rs.10,000 crore (US$ 1.8 billion) in the next five years.

The Indian machine tools sector offers several opportunities for investment. Given the current gap between demand and supply, there is a clear need for adding capacities in this sector. The industry is moving towards increasingly sophisticated CNC machines, driven by demand from key user segments, such as, automobiles and consumer durables. Machine tool manufacturers need to develop capabilities to cater to this demand and investments in this area could yield long term benefits. FDI is allowed up to 100% in the Indian machine tools industry, under the automatic route. Technology collaboration is also freely allowed.

Textile Machinery:

The Indian Textiles Industry contributes 14% of industrial production, 4% of GDP and 10.63% of country’s export earnings and provides direct employment to over 35 million people. India’s Ministry of Commerce, Industry and Textiles has projected to increase the country’s share of textiles and apparels in world trade from the current level of 4.5% to 8% and reach exports of US$ 80 billion by 2020. With the government planning to develop India into a textile hub, the industry will be investing heavily in new textile machinery, particularly in areas like weaving, processing, special process finishing machines (plasma finishing), filament yarn processing, shuttle-less looms (rapier >400 rpm; air jet > 800 rpm; water jet > 800 rpm), high-speed knitting and garmenting machineries and in critical components such as auto comer and rotor spinning machines with automation, wider width processing machines etc.

The textile machinery industry is a significant component of the capital goods industry. The industry comprises of 1,446 units of which 598 units produce complete machines and about 848 units are producing parts and accessories as well as equipment for testing and monitoring of fibers and textiles. Textile machinery industry grew at a slow pace of 4.21% during 11th Five Year Plan Period (2007-12) due to global recession which adversely affected the textile industry. Presently the size of the textile machinery industry is about US$ 1.8 billion, wherein domestic production accounts for US$ 1 billion. Production is projected to grow from US$ 1 billion in 2010-11 to US$ 2.5 billion in 2016-17 at a CAGR of 15% based on commensurate growth of Indian textile industry and expected policy interventions. While the state of Tamil Nadu specializes in production of spinning and allied machinery followed by textile testing equipment, the state of Gujarat is the leader in synthetic filament yarn machinery production.

According to a study by India’s Associated Chamber of Commerce (ASSOCHAM), the textile machinery sector at present meets 45-50% of the overall demand of the domestic textile industry whose main constituent is ginning, spinning, weaving and processing. ASSOCHAM estimates that in 2012 the turnover of the Indian textile industry will reach US$ 115 billion, which will generate huge demand in the ancillary industry, including machinery and accessories.

India’s textile industry is de-licensed with FDI up to 100% allowed under the automatic route. Recognizing that technology is the key to being competitive in the global market, the Government of India established the Technology Upgradation Fund Scheme (TUFS) to enable firms to access low-interest loans for technology upgradation. The following

Rubber Machinery Industry:

There are about 10 units for the manufacture of rubber machinery mainly required for tire / tube industry. The fast growth of the automobile industry is driving the growth of the rubber machinery industry. Research and Markets estimates the tire market in India will grow at a compounded annual growth rate (CAGR) of 12% between 2011 and 2015. One of the key factors contributing to this market growth is the growing demand for automobile products. The tire market in India has also been witnessing the emergence of tubeless tires and growing demand for radial tires. Moreover, with the steady development of road infrastructure and the increasing importance of fuel-efficient products in the automobile industry, the proportion of radial tires in various segments of the tire market in India is anticipated to increase six times from the current levels. The range of equipment manufactured included inter-mixer, tire curing presses, tube splicer, bladder curing presses, compression and transfer molding machines, tire molds, tire building drums / machines, turret servicer, bias cutters, bead wires etc. The domestic installed capacity is over US$ 200 million. There is a gap in technology for the manufacture of high speed calendaring line particularly for heavy earthmoving equipment and duplex / triplex extruder which are being imported. The rubber machinery industry is de-licensed and FDI of up to 100% is allowed under the automatic route as well as technology collaboration is freely allowed.

Material Handling Equipment:

The range of equipment manufactured includes crushing and screening plants, coal/ore/ash handling plant and associated equipment such as stackers, reclaimers, ship loaders/ unloaders, wagon tipplers, feeders etc. catering to the growing and rapidly changing needs of the core industries such as Coal, Cement, Power, Port, Mining, Fertilizers and Steel plants. There are 50 units in the organized sector for the manufacture of material handling equipment. Besides, there are a number of units operating in the small-scale sector. This industry is de-licensed and FDI up to 100% under automatic route as well as technology collaboration is allowed freely.

Metallurgical Machinery:

Metallurgical machinery includes equipment for mineral beneficiation, ore dressing, crushing and screening plants, steel plant equipment, foundry equipment and furnaces. Since the nature of technology is specialized and derived from the steel making technology, very few large-scale manufacturers are involved in the sector. At present, there are 39 units in the organized sector engaged in the manufacture of various types of metallurgical machinery. Indigenous manufacturers are in a position to supply majority of the equipment for steel plants e.g., blast furnaces, sinter plants, coke ovens steel melting shop equipment, continuous casting equipment, rolling mills & finishing line. However, there is potential for domestic manufacture of plants and equipment in the ferrous and the non-ferrous sectors.

The demand for metallurgical equipment is growing very rapidly. The domestic consumption has risen from Rs. 1,068 crore (US$ 190 million) in 2004-05 to Rs. 4,992 crore (US$ 890 million) in 2010-11 at a CAGR of 29.3%. However, domestic production has not kept pace. According to Planning Commission data, in 2010-11, India imported metallurgical machinery worth Rs. 4,346 crore (US$ 775 million), at a CAGR of 29%. About 81% of the metallurgical machinery used in the country is being imported. The industry is de-licensed and FDI up to 100%, under automatic route as well as technology collaboration, is allowed freely.

Earthmoving and Mining machinery:

The earthmoving and mining machinery sector in India has evolved over the years and is at present in an intermediate stage of development. The technology available in the country has the pedigree from the international majors due to technical collaborations in the past and is one generation behind in some product segments. Few products manufactured in India by some of the MNC’s who have set up assembly plants in India are meeting the global standards. The industry is trying to bring in international levels of technology as demand and scale of operation is increasing. The users are now not looking at initial cost of equipment but focusing on cost per ton of usage and it is anticipated that 5 years hence, more mechanization and enhancement of scale may lead to change in the level of technology in use. In India open cast mining is much more popular than underground mining. Hence the equipment required for the open cast mining like Dumpers, Dozers Shovels, Draglines and Excavator are manufactured in India. The level of technology is at par with international standards except for the usage of electronic controls, hydraulic systems and engines, adhering to latest emission norms.

Currently 20 large and global manufacturers and nearly 200 small and medium manufacturers of earthmoving and mining machinery are present in India. The product range comprises of Backhoe Loaders, Compactors, Mobile Cranes, Pavers, Batching Plants, Crawler Crane, Transit Mixer, Concrete Pump, Tower Cranes, Hydraulic Excavators, Dumpers, Mining Shovel, Walking Draglines, Dozers, Wheel Loaders, Graders, Drilling Equipment, etc. Supported by the accelerated economic growth from the year 2003 onwards, construction and mining machinery sector has grown by leaps and bounds to sustain rapid expansion happening in infrastructure and core sectors projects. According to estimates by the Planning Commission, the consumption of mining and construction equipment is expected to grow from the current level of US$ 2.5 billion to US$ 8 billion by 2017 at a CAGR of 19.5%. The domestic manufacturing output would grow from the current level of US$ 1.3 billion to US$ 6.2 billion at a CAGR of 28.5% and would be able to meet at least 78% of the domestic demand.

Based on the Industry forecast for the next 20 years, there is an urgent need to develop indigenous capability to design and produce the following complex machineries, to be able to meet the market demand, bulk of which is currently imported.

High capacity Electric Dump Trucks ~ 190 ton – 240 tons

High capacity Rope shovels ~  42 cubic meters

Walking Draglines ~  72 m - 33 cubic meters; 150m - 50 cubic meters

Hybrid Drive Loaders of high capacity ~ 10 cum bucket

Electronically Controlled Emission Compliant engine ~ 2500 HP

Fully Automatic Electronically Modulated Transmission ~ 1500HP

Long Wall Mining systems and Continuous miners for underground mines

Axial piston pumps and motors

Cutter Suction Dredgers and Trailer Suction Hopper Dredgers

The mining machinery industry is de-licensed and FDI up to 100% under the automatic route is allowed.
 
Important Links:
  • Department of Heavy Industry: http://dhi.nic.in/