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Recommendations for 12 th Five Year Plan for Capital Goods & Engineering Sector 21 1 Sub-sector Characteristic Sub-sector Attractiveness Criteria for Assessment • Historical production growth rate • Size of Indian demand • Labor intensity 2 Self Sufficiency • Import/Domestic Demand • Growth in imports vs. growth in market 3 Export Competitiveness • Share of India in global exports • Growth of Indian exports vs. growth in global exports Capital goods & Engineering sector- Recommendations for 12th five year plan 19 The sub sectors have clear variations in the size and growth rates that could be perfectly explained by the concept of economies of scale. Some sectors are attractive from the employment aspect on account of high labor intensity. 1 1. Industry Attractiveness Labor Intensiveness for 8 sectors (2010) Labor Intensiveness (Employee/Rs Lakhs) 0.20 0.15 0.10 0.05 0.00 Plastic Machinery 1 Textile Machinery 1 Machine Tools 1 Process and plant equipment 1 Earth moving and mining equipment 1 Metallurgical Machinery 1 Heavy Electrical 1 Engineering Goods 2 Source: 1: Sub-sector data; 2: Annual survey of Industries(2008), BCG Analysis Capital goods & Engineering sector- Recommendations for 12th five year plan 21 The Plastic Machinery and Textile Machinery are the most labour intensive subsectors. These sectors are currently facing a high incidence of imports particularly from low cost countries. CAPITAL GOODS AND ENGINEERING SECTOR OCTOBER, 2011
Recommendations for 12 th Five Year Plan for Capital Goods & Engineering Sector 22 2 2. Self Reliance % split of demand between imports and domestic production (2009-10) 50% 78 76 66 62 45 35 73 4 Engineering Goods 1 Heavy Electrical and Power Plant Equipment 2 Earth moving and mining equipment 2 Plastic Machinery 2 Textile Machinery 2 Imports Machine Tools 2 Domestic Metallurgical Machinery 2 Overall Note: Import figures for process and plant equipment are being collated Source: 1:EIS; 2: Sub-sector presentation; 3: 2010-11 figures are used for Plastic machinery, Heavy Electrical & Textile machinery Capital goods & Engineering sector- Recommendations for 12th five year plan 22 Import for Process Plant Equipment: Import content is approximately 10% of standard machinery and 25-30% of Hitech equipment for Process Plant Machinery. 2006-07 2007-08 2008-09 2009-10 Apr-Dec (2010-11) USD 135 Million USD 375 Million USD 220 Million USD 205 Million USD 215 Million Rs 664 crores Rs 1844 crores Rs 1082 crores Rs 1008 crores Rs 1057 crores. These Imports are for important equipment covering sectors as such as Fertilizers, Refinery, Petrochemicals, Oil and Gas. Overall imports could be arrived by adding 20% more to these value. Data source: EEPC India. Four sub-sectors namely Textile Machinery, Earthmoving Equipment, Machine Tools and Metallurgical machinery are weak in self reliance as more than 50% of the demand is met through imports. Moreover, import content in domestic production is also high. CAPITAL GOODS AND ENGINEERING SECTOR OCTOBER, 2011
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