PARAN

DONE BY
Harish kumar -33021
Jagan Raj-33022
Jayamathangi -33023
Jegan M-33024
Jyotsna-33025

COUNTRY ANALYSIS-INDIA
Democratic republic
Population-1,267,401,849.
Ranking for ease of doing business: 130th.
Exchange Rate: 1 Indian Rupee= 0.015US Dollar
GDP 2.21 trillion USD
GDP growth rate- 7.3%

FDI and FII activity

Foreign direct investment (FDI) is a major source of non-debt financial
resource.
According to Department of Industrial Policy and Promotion (DIPP), the
total FDI inflows soared by 24.5 per cent to US$ 44.9 billion during
FY2015
FIIs net investments in Indian equities and debt have touched record
highs in the past financial year, backed by expectations of an economic
recovery, falling interest rates and improving earnings outlook.
FIIs net investments stood at Rs 18,106 crore (US$ 2.65 billion) in March
2016, out of which Rs 16,731 crore (US$ 2.45 billion) was invested in
equities and Rs 1,375 crore (US$ 201 million) was invested in debt

INTERNATIONAL TRADE
Top imports: Oil, Gems, precious metals, Electronics, Machines.
Top exports:Engines, pumps, Organic chemicals, Pharmaceuticals, Cereals.
United States: US$40.4 billion (15.3% of total India exports)
United Arab Emirates: $30.3 billion (11.5%)
China: $9.5 billion (3.6%)
Trade Agreements with Bangladesh, Bhutan, Sri Lanka, Maldives, China,
and South Korea.
India-Nepal Trade Treaty.
Comprehensive Economic Cooperation Agreement (CECA) with Singapore.
Framework Agreements with the Association of Southeast Asian Nations
(ASEAN), Thailand and Chile

INDUSTRY OVERVIEW
Engineering sector in India
The Engineering sector is the largest in the overall
industrial sectors in India
Categorised into two segments:
Heavy engineering
Light engineering

Light engineering goods are essentially used as inputs

by the heavy engineering industry.

FAVORABLE FACTORS IN INDIA

Growing demand
Capacity creation in sectors such as infrastructure,
power, mining, oil & gas, refinery, steel, automotives,
and consumer durables driving demand in the
engineering sector.
Rising demand for electrical and construction
equipment

Higher investments
Comparative advantage vis--vis peers in terms of
manufacturing costs, market knowledge, technology
and creativity.

 Policy support
De-licensed engineering sector; 100 per cent FDI permitted.
Cumulative FDI at USD26.3 billion over April 2000 to September, 2015 due
to policy support

Attractive opportunities
Nuclear capacity expansion to provide significant business opportunities to
the electrical machinery industry
Rapid increase in infrastructure investment and industrial production to
fuel further growth
The capital goods & engineering turnover in India is expected to reach US$
125.4 billion by FY17

Engineering Exports in India

Indian engineering exports stood at USD70.6 billion in FY15

Over FY0815, exports registered a CAGR of 11.1 per cent

Engineering exports include transport equipment, capital goods, other

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

Indian engineering exports showed a growth of 14.6 per cent to

USD70.6 billion in FY15 from same period previous year

Key categories of engineering

exports
Transport equipment
accounted for 34.5 per cent of
the total engineering exports in
FY15
Others commodities includes
Medical and Scientific
instruments, Hand tools &
Cutting tools, Bicycle parts,
Office equipments, Prime Mica
& Mica Products etc. accounted
8.7 per cent of the total
engineering exports in FY15.

Key Players
Company

Revenues (FY16*)

Bharat Heavy Electricals Ltd (Rs

millions)

265865

Siemens India Ltd (Rs lakhs)

262040.19

Key Trends
Diversification
Several companies in the engineering sector have diversified,
either geographically or sector-wise
BHEL plans to foray into Ukraine
EIL (Engineering India Limited) is venturing in Nigeria to construct a
refinery and poly propelene plant worth USD139 million
Larsen & Toubro (L&T) has diversified into power equipment
manufacturing

Shift to value-added products

Rising competition
More than 2,500 firms in the engineering sector have ISO 9000
accreditation
Companies are increasingly focusing on R&D and product development

 Entry of international companies

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 industrys
competitiveness

P
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5 FORCES

ANALYSIS

Rivalry among the competitor

Competition is intense among major

players
Companies basically compete on pricing,
experience in a particular field, product
quality, and capability of handling projects
Small companies are also trying to revamp
their scale and size

Threat of entrants

Threat is low considering the capital

intensive nature of the industry and
reputation attached to the existing players

Bargaining power of supplier

Bargaining power of suppliers is low due to

cut-throat competition
Suppliers have a strong hand in the highend technology segment

Bargaining power of buyers

Bargaining power in tech oriented

segments is low
Competition in power generation and T&D
equipment sector gives bargaining power

Threat of substitutes

Threat is low because of the nature of the

industry
Even if the buyer wants to revamp or
renovate its existing stock, it is likely to go

Government Initiative
With the aim to boost the manufacturing sector, the
government has relaxed the excise duties on factory
gate tax, capital goods, consumer durables and vehicles
It has also reduced the basic customs duty from 10 per
cent to 5 per cent on forged steel rings used in the
manufacture of bearings of wind operated electricity
generators.
The Government of India in its Union Budget 2014-15,
has provided investment allowance at the rate of 15 per
cent to a manufacturing company that invests more
than US$ 4.17 million in any year in new plant and
machinery.

 Prime Minister, Mr Narendra Modi announced a

partnership between Bloomberg Philanthropies and the
Ministry of Urban Development, Government of India, to
advance the "Smart Cities Initiative.
The government has withdrawn excise and customs
duty exemptions granted to goods manufactured and
supplied to the defence ministry by state-owned
defence firms

Road Ahead
Spending on engineering services is projected to
increase to US$ 1.1 trillion by 2020
The Union Budget 2014-15 has allocated funds for
several infrastructure projects which are further
expected to provide a boost to the engineering sector
The industry can also look forward to deriving revenues
from newer services and from newer geographies with
Big Data, Cloud, M2M and Internet of Things becoming a
reality.
Exchange Rate Used: INR 1 = US$ 0.015 as on August
11, 2016

Challenges
The main challenges that the Indian engineering sector
faces are the need to further upgrade technology, move
up the value chain and the need to increase the scale of
manufacturing activity in order to become globally
competitive