Demand forecasting

study for Capital Goods

Industry in India

2022
By Vaibhav Tyagi
1.Introduction

Global Scenario
Indian Scenario
Product and Market Identification of Capital Goods

2. Industry Landscape in India

Major trends in export and import of capital goods

Foreign Direct Investments (FDI)

2. Key Policy Initiatives

Government policy/ Schemes/ Intervention to facilitate growth and investments in the sub sectors
Recent Sector Announcements

3. Opportunities and Challenges

Growth Drivers

4. Market outlook or future projections

5. Conclusion/Recommendations
 Introduction
Capital Goods has been defined for the purpose of this study as any
"product/ equipment of high value, durable
(economic asset life - 3 years), used as plant and machinery for
agricultural, industrial and commercial
(transportation etc.) purpose in production/ service delivery
process“

Capital Goods sector has multiplier effect and has bearing on the
growth of the user
industries as it provides critical input, i.e., machinery and equipment
to the remaining sectors covered under the
manufacturing activity. The capital goods industry contributes 12%
to the total manufacturing activity which
translates to about 1.8% of GDP.
 Global scenario
European Union and US Capital Goods companies have pioneered
international subcontracting, as the growing labor costs has
induced a relocation of labor-intensive production to other
countries. Most global companies have shown stronger disposition
for subcontracting to Asian countries, especially China and India
that also happen to have fairly deep and wide range of capabilities
in Capital Goods manufacturing. Though Chinese Capital Goods
sector is much larger (over five times) than that of India, the latter
holds a distinct edge in terms of stronger supplier and related
industries.
Indian Scenario

India’s capital goods industry is already moving in

the direction of industry 4.0 where everything will be
connected, and every data point will be analyzed.
Indian companies are at the forefront of R&D and
have already become global leaders in areas such
as pharmaceuticals and textiles. Areas such as
automation and robotics also receiving the required
attention from the industry.
•Large international industrial producers such as
Cummins and Abbott already have manufacturing
bases in the country.
 The Capital Goods in India has a market size of $ 43.2 bn.

Heavy electrical
equipment: $ 24.2 bn Machine tools: $ 1.4 bn

Printing machinery: $ 3.01 bn Dies, moulds and press tools: $

2.3 bn

Capital
Goods
Food processing Earth-moving and mining
machinery: $ 2.4 bn machinery: $ 3.3 bn

Textile machinery: $ 1.8 bn Metallurgical machinery: $ 0.4

bn
Export of Capital goods

Manufacturing is a key component of India’s

merchandise export.
 Merchandise exports from select industries
(including engineering, petroleum products,
gems & jewellery, pharmaceuticals and
chemicals) stood
at US$ 20.62 billion in June 2021.

Merchandise export from select industries

(engineering, petroleum products, gems &
jewellery, pharmaceuticals and chemicals)
stood at US$ 175
billion in FY21 as against US$ 199 billion in
FY20.
FDI
The capital goods manufacturing sector facilitates engagement
across industries such as construction, engineering, infrastructure,
consumer goods, etc. Increasing demand has led to notableWheregrowth
to sellin
the capital goods sector of India. In FY 2018 -19 had an overall
production figure amounting to $13.6 bn. The capital Goods industry
in India provides approximately five mn direct employment.

September 2020- BHEL established a 'Make in India How to sell

(MII) Business Development Group' vertical to
discover manufacturing opportunities in India and
collaborate with global OEMs to help them achieve
their goal of 'Make in India, Make for the World'.
 Key Initiatives
 Under the PLI scheme, the government plans to create global
manufacturing champions across 13 sectors and has allocated
~Rs. 1.97 lakh crore (US$ 27.13 billion) over the next five
years (starting FY22).
9Million 9Million
This is a
 In May 2021, the government approvedsampleatext
PLI scheme worth
This is18,000
a crore (US$
2.47 billion) for production of advanced chemical cell (ACC)
samplebatteries;
text this is
expected to attract investments worth Rs. 45,000 crore (US$ 6.18 billion) in
thecountry, andThis
further
is a boost capacity in core component technology and
sampleenergy
make India a clean text global hub.

 In July 2021, the government launched six technology

innovation platforms to develop technologies and thereby,
boost the manufacturing sector in India to compete globally.
Growth drivers
01 Government
Initiatives

Where to sell
02 Domicoc
consumption

03 Huge labor

04 International
investment How to sell

05 Public private
partnership
Projection Growth
 Organized manufacturing is the biggest private sector employer in India. Overall, more than
30 million people are employed in the sector (organized and unorganized) and will become
Whereworkforce
the engine of growth as it tries to incorporate the huge available to sell in India, most of
who are semi-skilled.

 The sector will push growth in the rural areas where more than 5 million manufacturing
establishments are running already. This will be an alternative available to the new
generation of farmers

How to sell
 Government aims to achieve 25% GDP share and 100 million new jobs in the sector by 2022

 The manufacturing sector of India has the potential to reach US$ 1 trillion by 2025.
Conclusion/ Recommendation

• Encourage private sector investment in technology and innovation

• Strengthening Technological Competencies
Where to sell
• Redefining Investment Cap for SMEs
• Introducing New Product Lines
• Leverage Domestic Demand for Localization and Technology
Transfer
• Promotion of Intelligent Manufacturing
• Promoting Investments in Hi-tech Capital Goods Sector
Thank you