ENGINEERING EXPORT

PROMOTION COUNCIL
By- Amir Hussain
 Overview
Largest segment of the overall Indian industrial sector

Includes machinery & instruments, primary and semi finished iron & steel, steel
bars & rods, non-ferrous metals and electronic goods.

Employs over 4 million skilled and semi-skilled workers.

Engineering exports for April-November 2012 was estimated at $40.7 billion out of
the total exports of $192.7 billion.

This implies a share of 38% of India's total exports. Also engineering exports grew
by 22.21% from $33.3 billion in April-November 2011
Performance
During last five decades, EEPC India
has been playing a pivotal role in
increasing countrys engineering
exports and as of date, engineering
exports stands at US$ 34 billion in the
year 2009-10 in comparison to US$ 10
million that was achieved in the year
1956-57.
Engineering exports have been
registering steady growth each year and
has registered a growth of 33% during
2006-07 over the previous year.
Transformation
EEPC India has been instrumental in
transforming the profile of Indian
engineering exports as supplier of
low value items to capital goods,
plant and machinery, high-end
engineering services, etc.
Today, out of total engineering
exports, capital goods & machinery
account for around 47% as against
around 12% in the year 1956-57.
Diversification
During the nascent stage, Indian
engineering exports were mainly
confined to Asia and to a small
extent to Africa.
Over the years, the scenario has
completely changed and as of date,
about 40% of total engineering
exports are made to developed
countries.
Trend
During the last five years,
engineering exports have achieved an
average growth of over 13%.
In the year 2009-10 there was a drop
in engineering exports by about 18%
which was primarily owing to savior
global recession especially in USA &
Europe.
Baring the year 2009-10 there has
been a study growth year on year and
the future outlook also looks positive.
 Capital Goods
Forms the majority of the engineering sector in India.

Requirement of large capital investment poses as entry barrier.

Two broad segments Electrical and Non

Electrical machinery and equipment segments.

Electrical machinery and equipment used in

power generation, transmission, distribution, etc.

Non Electrical Machines and equipment used

in sectors like textile, cement, rubber, etc.
A. CAPITAL GOODS 2009-10 2010-11 Growth %

2- 3 wheeler 589.09 830.13 40.92

Aircraft & Spares 1005.04 1689.05 68.06

Boiler & Parts 376.19 476.48 26.66

Cement Mill Machinery 4.54 4.86 7.00

Coastal Vessels & Ships 2554.31 4577.17 79.19

Commercial Vehicles 3565.38 4966.57 39.30

Cranes, Lifts & Winches 137.86 163.11 18.32

Electric Power Equipments & Parts 3222.59 3875.12 20.25

Electric Wires & cables 287 358.77 25.01

Fencing Structures 354.65 407.51 14.90

Food Processing Machinery & Parts 271.09 253.02 -6.67

Freight Containers 6.67 32.29 384.08

 Consumer Durables
Turbines & Generator Sets Capacity established for manufacture of various kinds of
turbines such as steam & hydro turbines including industrial turbines is more than 7000 MW
per annum. BHEL has the largest installed capacity

Boilers Indian industry has the capacity to produce

supercritical parameters up to 1000 MW. BHEL is the largest
manufacturer with market share of about 60%.

Switchgear and Control The entire range of circuits used in

industrial and power sectors.

Transformers Special types of transformers required for

furnaces, rectifiers, shunt reactors as well as HVDC
transmissions up to 500KV being manufactured in India.
B. CONSUMER DURABLES 2009-10 2010-11 Growth %
Accumulator 93.07 121.25 30.28
Air Compressor 107.21 152.92 42.64

Automobile Parts 1517.22 2439.20 60.77

Bicycle & Parts 148.76 220.46 48.20

Cutting Tools 186.14 266.94 43.41

Dry Batteries 63 102.01 61.92

Electric Fan & Parts 130.41 170.88 31.04

Electric Manufacturers N.O.S. 285.68 360.75 26.28

Hand Tools 149.45 249.23 66.77

I.C. Engine & Parts 919.45 1118.20 21.62

Instruments All Types 1034.83 1264.48 22.19

Misc. Manufacturers N.O.S 139.57 80.42 -42.38

Office Equipments 60.44 54.08 -10.53

Prime Mica & Mica Products 204.46 280.22 37.05

Pumps 341.51 417.66 22.30

 NON-FERROUS METALS & PRODUCTS
THEREOF
Textile Machinery As per the Ministry of Heavy Industries over 600 units
engaged in manufacture of machinery and spares, 100 devoted solely to
manufacture complete machinery.
Cement The industry manufactures complete
cement plants, Dry processing and Pre-calcination
technology being used, Capacity 7500 TPD.

Rubber 19 units in the organized sector for the

manufacture of rubber machinery mainly required
for tyres/rubber industry.

Material Handling Equipment Caters to requirement of industries like Coal,

cement, power, port, mining, fertilizers and steel plants.
 NON-FERROUS METALS
C. 2009-10 2010-11 Growth %
& PRODUCTS THEREOF
Aluminium & Products
1042.08 1214.10 16.51
Thereof
Other Non Ferrous Metal &
2418.77 5227.52 116.12
Products

TOTAL OF "C" 3460.85 6441.62 86.13

 Light Engineering
Highly diversified containing several distinctive sectors and subsectors.

Products range from highly sophisticated

microprocessors and medical equipment to low-
tech items such as bearings, fasteners, pipes,
tubes, etc.

The products covered under this industry are

largely used as inputs to the capital goods /
heavy engineering industries.

The size of Indian light engineering industry is estimated at around US $ 7

billion.
 PRIMARY IRON & STEEL &
D. 2009-10 2010-11 Growth %
ITEMS THEREOF
Bolts & Nuts (Fasteners) 246.93 391.15 58.40
Bright Bars 182.59 187.70 2.80

Electrodes 23.22 33.32 43.49

Ferro Alloys 880.41 2010.96 128.41

Ferrous Holloware 400.75 490.38 22.36

Ferrous industrial castings 521.35 757.56 45.31

Other Steel Products N.O.S 597.53 748.15 25.21

Prime Iron & Steels 3282.63 4467.84 36.11

Railway Track Materials (Fasteners) 6.48 11.90 83.61

Razor Blades 50.14 52.99 5.69

Sanitary Castings 440.02 486.11 10.47

Steel Forgings 354.86 518.40 46.08

Steel Furniture 34.55 55.65 61.06

Steel Pipes & Tubes 1344.15 2867.74 113.35

 Nature of Exports
Exports crossed USD 10 Billion mark in
2003-04.

Moving from low valued goods targeted at

developing countries to high value goods
targeted at developed countries.

Exports during June, 2012 were valued at

US $ 49892.40 million (Rs. 131031.43
crore) which was 46.45 per cent higher in
Dollar terms (41.06 per cent higher in
Rupee terms) than that of June, 2011.
Percentage share in 2011-12

Transport Equipment
Machinery Instruments
1.85 1.75 0.5 0.34 0.05
4.96 metal products
9.13 30.74 Non ferrous metals
Primary and Semi furnished iron
ferro alloys
14.91
Iron /Steel bar rods
Aluminium products
Machine tools
15.82 19.95
Residual engineering Items
Mica
 Exports in 2011 Change from
Country
(in USD Million) 2010-11

China 7122.04 390.08

USA 5721.63 70.40

UAE 3483.07 73.23

Singapore 2510.83 23.23

Saudi Arabia 2109.18 200.49

Emerging Destinations
Imports
Indian manufacturers are also importing cheap components
from China. For instance, flanges, which are used for
connecting pipes and industrial valves, are imported from
China and used in the manufacture of bigger pipes that are
later exported.
 Recent Trends
Contraction in growth is mainly due to external factors such as the Euro zone
crisis.

Domestically - high cost of credit, credit squeeze and the consequent fall in
industrial production.

Withdrawal of the major export sop the Duty Entitlement Passbook Scheme
(DEPB) from September 30.

Sector requires policy support in terms of lower credit costs and stability in the
exchange rate for exporters to remain competitive.
FOREIGN TRADE POLICY
Assistance to States for
Developing Export Infrastructure
and Allied Activities (ASIDE)
The objective of ASIDE scheme is to establish a mechanism for involving the State Governments to
participate in funding of infrastructure critical for growth of exports by providing export performance
linked financial assistance to them. The Scheme is administered by Department of Commerce (DoC).
The activities aimed at development of infrastructure for exports can be funded from the scheme provided
such activity has overwhelming export content and their linkage with exports is fully established. The
specific purposes for which funds can be sanctioned and utilized under the Scheme are as follows :
I. Creation of new Export Promotion Industrial Parks/Zones (SEZs/Agri. Business Zones) and augmenting facilities in the existing ones.
II. Setting up of electronics and other related infrastructure in export conclave.
III. Equity participation in infrastructure projects including the setting up of SEZs.
IV. Meeting requirements of capital outlay of EPIPs/EPZs/SEZs.
V. Development of complementary infrastructure such as, roads connecting the production centers with the ports, setting up of Inland
Container Depots and Container Freight Stations.
VI. Stabilizing power supply through additional transformers and islanding of export production center etc.
VII. Development of minor ports and jetties to serve export purpose.
VIII. Assistance for setting up Common Effluent
IX. Any other activity as may be notified by DoC.
 SEZs, STPIs, EHTP & EOUs
SEZs: To promote Export-Import & provide hassle free &
International competitive advantage.
SEZs: The units in the Zone have to be a net foreign
exchange earner but they are not subjected to any pre-
determined value addition or minimum export performance
requirements.
STPIs: To promote & facilitate Software Exports from
India. Offers all statutory services and high speed Data
connectivity to its member companies as 100% Export
Oriented Units.
STPIs: With the a share of 76.72percent remains the largest
contributor to this sector.
 Sector Formal In-principle Notified Exporting SEZs
Approvals approvals SEZ (Central Govt.
+State
Govt./Pvt. SEZs
+
notified SEZs)
Aviation/Aerospace/Copper 2 1 1 3
IT/ITES/EH/Semiconductor 354 1 233 88
Textiles/Apparel/Wool 18 1 12 5
Pharma/chemicals 23 3 20 8
Petrochemicals /petro. 4 1 2 0
Multi-Product 24 16 15 17
Building product/material 1 2 1 2
Beach & mineral/metals 2 0 2 0
Bio-tech 31 0 20 2
Engineering 21 1 17 9
Multi-Services/Services 16 3 9 1
Metallurgical Engineering 1 0 0 1
Electronic prod/ind 3 0 3 1
Auto and related 3 1 1 1
Footwear/Leather 7 0 5 2
Gems and Jewellery 12 3 6 3
Plastic Products 0 2 0 0
Handicrafts 5 0 3 2
Strategic Manufacturing 0 1 0 0
Granite Processing and Industries 1 0 1 0
GRAND TOTAL 583 45 380 154
 MDA & MAI
MDA - Marketing Development
Assistance
Individual exporters for participating in
approved Trade bodies led export
promotion activities abroad.
EPCs to undertake export promotion
activities for their product &
commodities.
Focus Area export promotion programs
in specific regions abroad like Focus
LAC, Focus Africa, Focus CIS, etc.
Residual essential activities connected
with marketing promotion efforts
abroad.
MAI - Market Access
Initiative
Financial Assistance is given to eligible
exporters.
To support marketing projects abroad
based on focus product - focus country
approach. Under marketing projects,
following activities will be funded:
a) Opening of Showrooms
b) Opening of Warehouses
c) Display in international departmental
stores
d) Publicity Campaign and Brand Promotion
e) Participation in Trade Fairs, etc., abroad
f) Research and Product Development
MDA MAI
23-27 May,
EEPC INDIA Pavilion at NEWCAST/ GIFA/ METEC 2011 1 Addis Ababa, Ethiopia CII
EEPC INDIA organized an India Pavilion at NEWCAST 2011 held from 28th June 2nd
2011
July 2011 at Dusseldorf, Germany. This is the worlds leading international trade fair for 4-8 August,
casting technology & metallurgy. EEPC INDIA booked 447 sq m and 35 engineering 2 IIJS, Mumbai G&J EPC
companies participated in the fair through EEPC INDIA Pavilion. 2011
EMO, Hanover (19 - 23 September 2011) 17-20
EEPC INDIA booked 305 sqm and participated along with its 10 member companies in
EMO Hanover 2011 held in Hanover, Germany during 19-23 September 2011. EMO is a
3 Toronto, Canada EEPC October,
world famous exhibition on Machine Tool Industry. Each company under India Pavilion 2011
received an average of 185 business visitors during the show out of which 47 were serious
business contacts. The companies under India pavilion have generated enquiries worth 19-21
US$ 744,000 and spot orders of US$ 5500 was booked by one of the participant. 4 Tex-Trends 2012 AEPC January,
THE INDIA SHOW, Toronto, Canada (17 20 October 2011) 2012
EEPC INDIA organized The India Show in Toronto, Canada which is the latest concept in
marketing Brand India across the world by the Government of India. The India Show 10-12
was synchronized with Canadian Manufacturing Technology Show (CMTS) where India
was declared as Strategic International Partner in this exhibition. Nearly 155 member-
5 Lagos, Nigeria FICCI February,
firms of EEPC INDIA participated in the event to explore large opportunities in Canada. 2012
11-13
6 Lahore, Pakistan FICCI February,
2012
21-23
7 INDIASOFT 2012 ESC EPC
March 2012
India Engineering & 22-24
8 Sourcing Show 2012, EEPC March,
Towns of Export
Excellence (TEE)
A number of towns have emerged as dynamic industrial clusters contributing handsomely to
India's exports. It is necessary to grant recognition to these industrial clusters with a view to
maximize their potential and enable them to move up the value chain and also to tap new markets.
Selected towns producing goods of Rs. 750 Crore or more will be notified as TEE based on
potential for growth in exports. However for TEE in Handloom, Handicraft, Agriculture and
Fisheries sector, threshold limit would be Rs 150 Crores. The following facilities will be provided
to such TEE's:
I. Recognized associations of units will be provided financial assistance under MAI scheme, on priority basis,
for export promotion projects for marketing, capacity building and technological services.
II. Common Service Providers in these areas shall be entitled for EPCG scheme.
III. The projects received from TEEs shall be accorded priority by SLEPC (State Level Export Promotion
Committee) for financial assistance under ASIDE.
. Notified Towns (TEEs) are listed in Appendix 7 of HBP vi.
 EPCG SCHEME
Zero Duty
Import of capital goods for pre-production, production and post-production at zero
customs duty, subject to an export obligation equivalent to 6 times of duty saved on
capital goods imported under EPCG scheme, to be fulfilled in 6 years reckoned
from Authorization issue-date.
3% Duty
Concessional 3% duty EPCG scheme allows import of capital goods for pre-
production, production and post-production at 3% customs duty, subject to an
export obligation equivalent to 8 times of duty saved on capital goods imported
under EPCG scheme, to be fulfilled in 8 years reckoned from Authorization issue
date.
EEPC sources told FE the EPCG scheme was introduced as an export
promotion measure to encourage the manufacturing sector to enhance
the exports and scheme was used effectively by the exporters since it
provides substantial benefit by way of duty saving. "However, with the
present customs duty structure of 7.5% on capital goods viz-a-viz EPCG
duty at 3%, the resultant duty saving is only 4.5%. Added to the minimal
saving, the obligation will on the total duty saving including
countervailing duty (CVD) portion which amounts to 8 times of 25.54%
(204.39%) at the present level.

Read more:
http://www.americanessays.com/study-aids/free-essays/economics/the-
epcg-scheme.php#ixzz2JZqLHUht
 Technology Park (EHTP)
Scheme
The EHTP Scheme is a 100% Export Oriented Scheme for undertaking
manufacturing of electronic hardware equipment/components and other items.
in India. This scheme is unique in its nature as it focuses on one
product/sector, i.e. Electronic Hardware.

An EHTP unit is also allowed to manufacture items other than those specified
in the approval letter, provided that such other items fall in the category of
Electronic Hardware, the design and production facilities are common and
have similar manufacturing process.
HIGHLIGHTS OF EHTP SCHEME
The Central Government, State Government, Public or
Private sector undertakings or any combination thereof
may set up the Electronic Hardware Technology Park
(EHTP).
100% foreign equity investment in the companies
permissible under the 'Automatic Route' of RBI.
100% Customs Duty exemption on imports of Capital
Goods and inputs (Raw Materials, Components,
Consumables, Parts and packing Materials)
FOCUS PRODUCT SCHEME
Objective: To incentivize export of select products that have high export
intensity / employment potential, thereby to offset infrastructure inefficiencies
and other associated costs involved in marketing of these products.

Eligibility: Exporters of select products to all countries

Incentive: Transferable / sellable duty credit @ 2% of FOB value of exports

in foreign exchange from 27.08.2009 (1.25% for prior periods)
SL.N FPS ITC (HS) DESCRIPTION
O. PRODUCT CODE
CODE
1 1 843290 PARTS OF AGRCLTRL & HORTCULTRL MACHINERY
2 2 73269099 ALL OTHER ARTICLES OF IRON/STEEL NES OTHER
STEERING OR RUDDER EQUIPMENT FOR SHIPS
AND BOATS, N.E.S.
3 3 871690 PARTS&ACCESSORIES OF VEHICLES OF HDG 8716
4 4 8452 SEWNG MCHNS,EXCL BOOK-SEWNG MCHNS OF
HDG NO 8440;FURNTR,BASES & COVRS SPCLY
DSGND FOR SEWNG MCHNS;SEWNG MCHNS
NEDLS
5 5 84729090 OTHERS(COIN-SORTNG & COUNTNG MCHN ETC)
6 6 73182400 COTTERS & COTTER PINS,NON-THREADED
7 7 730722 THREADED ELBOWS,BNDS & SLEVS OF STNLES
STL
8 8 73259999 OTHER CAST ARTICLES OF IRON OR STEEL N.E.S
9 9 847290 OTHR OFFICE MACHINES
10 10 8201 HAND TOOLS LIKE SPADES,SHOVELS,HOES,FORKS
AXES & SIMLR SEWING TOOLS SECATRS-ANY
KINDKNIVES,HEDGE SHEARS ETC USD IN
AGR/FORSTRY
Opportunities For Investment

Attractive Areas for Investment

Key segments for investment have been assessed based on the following
factors
Segment size
Projected growth in domestic and exports markets
Presence of supply base and supporting industries
Readiness of the market to accept global products and services
Based on the above, the following segments appear attractive
Electricity generation/transmission equipment
Earthmoving machinery
Thermal equipment - primarily boilers and furnaces
Attractive Locations
Key states for investment have been assessed based on the following
factors
Engineering / multi-product SEZs being developed
Conducive factor and demand conditions
Presence of industry players and supporting institutions
Proximity to ports
Based on the above, the following states appear attractive
Maharashtra
Gujarat
Tamil Nadu
Relevant News Article
India-EU FTA to create jobs, boost trade: IEBF (Source :
The Economic Times )
Orissa steel industry pleads for fair pricing of iron ore
(Source : Business Standard)
Government announces more sops to lift exports,
extends interest subsidy (Source : The Hindu Business Line )
Global slowdown may dampen export growth prospects
in 2013 (Source : The Economic Times )
Iron ore supply to steel mills likely to take more time
(Source : Business Standard )
Conclusion
The Engineering sectors future outlook is promising.
Drivers like power projects, other infrastructure
development activities, industrial growth and favorable
policy regulations will drive growth in manufacturing.
Power sector contributes the largest to the engineering
companies revenues. Major players in this sector like ABB
and BHEL derive 60 per cent and 69 per cent of their
revenues from supplying equipments to the power sector
Engineering and design services such as new product
designing, product improvement, maintenance and
designing manufacturing systems are increasingly getting
RECOMMENDATIONS
To attain and sustain high rates of economic growth, follow a two-
pronged growth strategy, wherein the first prong is export-led growth,
and the second prong is rural improvement..
Establish SEZs be for attracting both potential domestic and foreign
investors.
Make investments on a much higher level to upgrade technology
Boilers, industrial machinery and electric generators appear to be
the most attractive segments from a size and growth perspective
More Public Private Partner Ship for unleashing high and sustained
growth of the industry
Have BOT(Build Operate and Transfer ) projects to have bright future.
 INDIA 2020
1997
Limited CNC Machines
Experimental Laser, Waterjet Cutting
Modernize Forging and Casting Industry
Mix of Imported Technologies and Limited
capabilities in machine tools and state of
the art boilers
India emerging as Software producer
Import Dependency
2020
80% of the machines produced will be
CNC
Intelligent Manufacturing
High Speed machining
India leading producer of casting and
forging
Self sufficient in advanced machine tools
and boilers
About 10-15% advanced software in the
world will be of Indian origin. Net
exporter of technologies by 2020.