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EXPORT-IMPORT BANK OF INDIA

OCCASIONAL PAPER NO. 124

INDIAN CAPITAL GOODS INDUSTRY -


A SECTOR STUDY

EXIM Bank’s Occasional Paper Series is an attempt to disseminate the findings of


research studies carried out in the Bank. The results of research studies can interest
exporters, policy makers, industrialists, export promotion agencies as well as
researchers. However, views expressed do not necessarily reflect those of the Bank.
While reasonable care has been taken to ensure authenticity of information and data,
EXIM Bank accepts no responsibility for authenticity, accuracy or completeness of such
items.

© Export-Import Bank of India


Published by Quest Publications
June 2008

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CONTENTS

Page No.
List of Tables 5
List of Exhibits 9
List of Boxes 9
Executive Summary 11
1. Introduction 28
2. Global Scenario 30
3. Capital Goods Industry in India 38
4. Exim Bank’s Support to Indian Machine tools Sector: 61
Case Study
5. Indian Capital Goods Industry: Market Analysis and 65
Export Potential
6. Challenges and Strategies 107
Annexure
1. List of Capital Goods Items Covered in Index of 116
Industrial Production
2. Shipment of Textile Machinery: Various Segments 117
3. India’s Export, Import, and Export-Import Ratio of 118
Select Machine Tools
4. India’s Export, Import, and Export-Import Ratio of 119
Select Textile Machinery
5. India’s Export, Import, and Export-Import Ratio of 120
Select Construction and Mining Machinery
6. India’s Export, Import, and Export-Import Ratio of 121
Select Process Plant Machinery
7. India’s Export, Import, and Export-Import Ratio of 121
Select Electrical Machinery

Project Team:
Mr. S. Prahalathan, General Manager, Research and Planning Group
Ms. Renuka Vijay, Manager, Research and Planning Group

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List of Tables
Table Title Pg. No.
No.
1. World Production of Machine Tools –2007 33
2. World Consumption of Machine Tools 33
3. World Export of Machine Tools 34
4. World Import of Machine Tools 35
5. FDI Inflows in Select Capital Goods Sector in India 40
6. Production of Machine Tools in India 42
7. Export of Machine Tools from India 42
8. Trends in Production of Textile Machinery in India 44
9. Indian Construction and Mining Machinery: Industry Size 47
10. Market Size and Leading Players: Select Segments of 48
Construction and Mining Machinery (2006-07)
11. Export Performance of Select Construction and Mining 48
Machinery (2006-07)
12. Market Size and Leading Players in Process Plants, 50
Machinery and Equipments
13. Export of Select Process Plant Equipments / 51
Machinery from India (2006-07)
14. Market Size and Leading Players in Transformer Industry 52
15. India’s Export of Electric Transformers, Static Converters 53
and Inductors - HS Code 8504 (2006-07)
16. India’s Import of Electric Transformers, Static Converters and 54
Inductors - HS Code 8504 (2006-07)
17. Market Size and Leading Players in Switchgear Industry 55
18. India’s Export of Switching and Protecting Electrical Circuits / 55
Apparatus in (2006-07)
19. India’s Import of Switching and Protecting Electrical Circuits / 56
Apparatus (2006-07)
20. Market Size and Leading Players in Electric Capacitor Industry 57
21. India’s Export of Electric Capacitors (2006-07) 57
22. India’s Import of Electric Capacitors (2006-07) 58
23. Market Size and Leading Players in Motors and Generators 59
24. India’s Export of Electric Motors and Generators (2006-07) 59
25. India’s Import of Electric Motors and Generators (2006-07) 60
26. World Import of Select Machine Tools 66
27. Market Analysis for Machine Tools Under HS Code 8462 67
28. Market Analysis for Machine Tools Under HS Code 8467 68
29. Market Analysis for Machine Tools Under HS Code 8457 69
30. Market Analysis for Machine Tools Under HS Code 8465 70

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Table Title Pg. No.


No.
31. Market Analysis for Machine Tools Under HS Code 8458 71
32. Market Analysis for Machine Tools Under HS Code 8460 72
33. Market Analysis for Machine Tools Under HS Code 8464 73
34. Market Analysis for Machine Tools Under HS Code 8459 74
35. Market Analysis for Machine Tools Under HS Code 8461 74
36. World Import of Select Textile Machinery 75
37. Market Analysis for Textile Machinery Under HS Code 8450 76
38. Market Analysis for Textile Machinery Under HS Code 8451 77
39. Market Analysis for Textile Machinery Under HS Code 8448 78
40. Market Analysis for Textile Machinery Under HS Code 8445 79
41. Market Analysis for Textile Machinery Under HS Code 8447 79
42. Market Analysis for Textile Machinery Under HS Code 8446 80
43. World Import of Select Construction and Mining Machinery 81
44. Market Analysis for Construction and Mining Machinery 82
Under HS Code 8429
45. Market Analysis for Construction and Mining Machinery 82
Under HS Code 8428
46. Market Analysis for Construction and Mining Machinery 83
Under HS Code 8427
47. Market Analysis for Construction and Mining Machinery 84
Under HS Code 8426
48. Market Analysis for Construction and Mining Machinery 85
Under HS Code 8430
49. Market Analysis for Construction and Mining Machinery 85
Under HS Code 8425
50. World Import of Select Process Plant Machinery 87
51. Market Analysis for Process Plant Machinery 88
Under HS Code 8421
52. Market Analysis for Process Plant Machinery 89
Under HS Code 8418
53. Market Analysis for Process Plant Machinery 90
Under HS Code 8419
54. Market Analysis for Process Plant Machinery 90
Under HS Code 8438
55. Market Analysis for Process Plant Machinery 91
Under HS Code 8403
56. Market Analysis for Process Plant Machinery 92
Under HS Code 8455

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Table Title Pg. No.


No.

57. Market Analysis for Process Plant Machinery 93


Under HS Code 8417
58. Market Analysis for Process Plant Machinery 93
Under HS Code 8402
59. Market Analysis for Process Plant Machinery 94
Under HS Code 8454
60. Market Analysis for Process Plant Machinery 95
Under HS Code 8416
61. Market Analysis for Process Plant Machinery 96
Under HS Code 8420
62. Market Analysis for Process Plant Machinery 97
Under HS Code 8404
63. Market Analysis for Process Plant Machinery 98
Under HS Code 8410
64. Market Analysis for Process Plant Machinery 98
Under HS Code 8435
65. World Import of Select Electrical Machinery 99
66. Market Analysis for Transformers Under HS Code 8504 100
67. Market Analysis for Switchgears / Control gears 101
(exceeding 1000v) Under HS Code 8535
68. Market Analysis for Switchgears / Control gears (below 1000v) 102
Under HS Code 8536
69. Market Analysis for Electric Capacitors Under HS Code 8532 103
70. Market Analysis for Motors and Generators Under HS Code 8501 103
71. Market Analysis for Electric Generating Sets Under HS Code 8502 104
72. Trends in Licenses Issued under EPCG Scheme 108

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List of Exhibits
No. Title Pg. No.

1. Leading Producers of Electrical Machinery and Apparatus (ISIC 31) 30


2. Leading Producers of Other Machinery and Equipments (ISIC 29) 31
3. Revenue Generation and Growth in Global Capital Goods Industry 32
4. Global Construction and Mining Machinery Industry: 36
Value & Growth
5. Global Market for Industrial Machinery 37
6. Movement of Index of Capital Goods Industry vis-à-vis IIP in India 39
7. Movement in Production Index of Sub-Segments of Capital 39
Goods Industry
8. Classification of Indian Machine Tools Sector 40
9. Production and Export Performance of Indian Machine 41
Tools Sector
10. Major Export Destinations of Machine Tools from India (2006-07) 43
11. Textile Machinery – Trends in Capacity, Production and Capacity 44
Utilization
12. Export and Import of Textile Machinery from India 45
13. Segment wise Import of Textile Machinery in India 45
14. Segment-wise Export of Textile Machinery from India 46
15. Structure of the Electric Equipment Industry 52
16. Production and Export Performance of Indian Machine Tools Sector 63

List of Boxes
No. Title Pg. No.

1. Lines of Credit : A Market Entry Mechanism for 112


Capital Goods Industry
2. Assessment of Conformity Standards for Machineries 113
in USA and Europe

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EXECUTIVE SUMMARY

INTRODUCTION by Datamonitor. The capital goods


Capital goods industry is the industry has seen fluctuations in its
backbone of the manufacturing growth rate over the past few years
activity. A vibrant capital goods and experienced a CAGR of 2.7%
industry is a pre-requisite to propel during the period 2002-2006. United
the growth of the manufacturing States is the major country
activity in any country. accounting for 31% of the global
market value in 2006. Europe as a
A study commissioned by the region accounted for around 28%,
Government of India1 has defined followed by the Asia-Pacific region
capital goods as plant machineries (27%). Globally, trade in capital
for agricultural, industrial and goods2 was valued at over US $
commercial segments of economic 1.5 trillion in 2006. Thus, the capital
activities that have economic asset goods trade accounts for 12% in
life of over 3 years. world merchandise trade and
Considering the list of items 17.5% in world trade in
covered under the head ‘capital manufactures. The share of exports
goods’ in calculation of IIP, this study in total world production is
has analysed major segments such estimated to be one-third. Germany
as machine tools, textile machinery, is the largest exporter of capital
electrical machinery, earthmoving goods in the world accounting for
and construction machinery, and 13% of global exports in 2006.
process plant equipments. China and the USA come next with
shares of 12% and 11%,
GLOBAL SCENARIO respectively.
In value terms, the global capital According to a study by United
goods industry is estimated to have Nations Industrial Development
generated total revenue of US $ 4.5 Organisation (UNIDO), Japan is the
trillion in 2006, according to a report largest manufacturer of electrical

1 Department of Industrial Policy and Promotion, Ministry of Commerce and


Industry, Government of India.
2 WTO statistics

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machinery and apparatus (ISIC in the total production of developing


Code 31) in 2005, with a share of countries.
55.2%. Other major producers were
USA (10.0%), China (8.9%), Machine Tools
Germany (6.9%) and France (2.6%). The total production of machine
India holds a share of 1.7% in global tools by the top 29 global producers
production of electrical machinery was more than US $ 70 billion in
and apparatus in 2005. Amongst 2007, experiencing a growth of
developing countries, China is the 18% over the previous year. Japan
largest producer with a share of 55% is the largest producer of machine
in cumulative production of tools accounting for 20% of the
developing countries, followed by world production. Other major
India with a share of 10.2%, and producers are Germany (18%),
Brazil (7.2%). China (14%), Italy (10%), Korea
In the case of other machinery (6.5%) and Taiwan (6%).
and equipments (ISIC 29), which In terms of consumption of
mainly consisted of general purpose machine tools, China tops the list
machinery (engines, turbines, with total consumption worth nearly
pumps, compressors, taps, valves, US $ 13 billion, showing a growth of
bearings, gears, ovens, furnaces, 20% over the previous year. Japan
lifting and handling equipments) and
and USA comes next with a
special purpose machinery (such as
consumption level of more than US$
agricultural machinery, machine
7 billion and US$ 6 billion
tools, metallurgical machinery,
respectively. The consumption level
mining / quarrying / construction
for India is around US$ 1 billion, thus
machinery, textile / leather
being the 11th largest consumer of
machinery, and food processing
machine tools.
machinery), USA is the world’s
leading producer with a share of World export of machine tools is
19.4% in world production in 2005, estimated to be over US $ 40 billion
followed by Japan (15.6%), in 2007, a growth of 18% over the
Germany (14.9%) and China (7.3%). previous year. The export orientation
India is ranked at 15th position in of global machine tool industry thus
world production with a share of works out to over 50% in 2007.
1.4%. Amongst developing Germany is the largest exporter of
countries, China is the major machine tools in the world; exporting
producer of non-electrical machinery machine tools valued more than US$
item (ISIC 29) with a share of 33.8% 9 billion in 2007. Germany exported
in 2005. India is fourth largest over 70% of its production in 2007.
manufacturer with a share of 6.7% Other major exporters include Japan

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(US $ 7.6 billion), Italy (US $ 4.2 Asia-Pacific and Eastern European
billion), Taiwan (US $ 3.4 billion) and region investment in infrastructure
Switzerland (US $ 2.5 billion). increased substantially. Increasing
growth in extractive activities in Africa
As far as the import is
region also led the growth in the
concerned, China leads the world,
global construction and mining
with an estimated import value of US industry. USA dominates the global
$ 6.9 billon in 2007. The United construction machinery industry,
States (US $ 4.4 billion), Germany accounting for almost 39% of the
(US $ 3.7 billion) and Taiwan (US $ world market. Asia-pacific (30%) is
2.8 billion) are other major importers. the second largest region, followed
Amongst developing countries, by Europe (28%).
Mexico and India are emerging as
major importers of machine tools. Industrial Machinery
World market for industrial
Construction and Mining
machinery, equipment and supplies
Machinery
is estimated to be US $ 345 billion
Global construction and mining in 2006. Asia is the leading market
machinery industry3 is estimated to for industrial machinery accounting
have generated a total revenue of for around 32% (US $ 109 billion)
US $ 113 billion in 2006. The of world market in 2006. North
industry had experienced several America and Europe are the other
years of decline in growth, since major markets, accounting for 25%
the beginning of the decade, but share each in the world industrial
picked up in recent years. The machinery market and the industrial
industry experienced a 7% growth machinery market is expected to
in the year 2005, which, however, cross US $ 500 billion in 2011, a
came down to 4% in 2006. The CAGR of 8%.
CAGR for the industry during the
period 2002-06 stood at 4.7%. CAPITAL GOODS INDUSTRY
Construction sector witnessed IN INDIA
growth both in developed and The capital goods industry is the
developing countries during this backbone of India’s manufacturing
period. In the developed countries, sector. India produces wide range
such as USA and Europe, the growth capital goods, including machinery
in construction activity was fuelled by and machine tools. Some of the
increased demand for new office prominent capital goods produced
space. In developing countries of in India include heavy electrical

3 Includes construction machinery, farm machinery and heavy trucks.

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machinery, textile machinery, conventional machine tools as well


machine tools, earthmoving and as computer numerically controlled
construction equipment including (CNC) machines.
mining equipment, road
Total production of machine
construction equipment, material
tools in the country reached the level
handling equipment, oil & gas
exploration equipment, sugar of more than Rs. 2000 crores by the
machinery, food processing and end of the year 2006-07, showing a
packaging machinery, railway growth rate of almost 15%, over the
equipment, metallurgical previous year. Export of machine
equipment, cement machinery, tools has shown a steady increase
rubber machinery, process plants in the last few years. In the year
machinery & equipments, paper & 2006-07, export of machine tools
pulp machinery, printing machinery, was worth more than US $ 234
dairy machinery, industrial million. During the period April –
refrigeration, industrial furnaces etc. November 2007, machine tools
Capacity creation in the Indian export stood at US $ 199.28 million,
capital goods industry has been an increase of over 27%, over the
growing, since liberalization, and in same period in the previous year.
tune with the growth in industry. USA is the largest market for
Cumulative foreign direct machine tools exports from India. In
investments (actual inflows) in the the year 2006-07, USA accounted for
capital goods industry amounted to 19% (US $ 45.25 million) of India’s
over US $ 1.6 billion since January total export of machine tools. Other
2000. major markets include Germany
(8.1%), UAE (5%), Singapore
Non Electrical Machinery (4.7%), and USA (4.6%).

Machine Tools Textile Machinery


The machine tools sector is one of Textile is one of India’s major
the important segments of the export items contributing to over
capital goods industry in India. The 11% in India’s export earnings.
sector is recognized as a provider Indian textile machinery sector
of cost-effective high quality lean- started as an offshoot of the textile
manufacturing solutions. The sector industry to cater to the capital
manufactures almost the complete expenditure demand of the textile
range of metal-cutting and metal- units. the Indian textile machinery
forming machine tools. Customized sector started producing automated
in nature, the products from the machines, with innovation,
Indian basket comprise envisaging growth in capacity

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expansion in the textile industry in in specified manner, material


the post-quota regime. handling, road construction etc.
Textile machinery production Indian construction and mining
has shown steady increase in the machinery sector is also exporting to
recent years. The total production of various countries, including
textile machinery in the country developed countries such as USA,
increased from around Rs. 11,750 UK, and Singapore. Major items of
million in 2002-03 to more than export include moving, grading, pile-
Rs.30,000 million by 2007-08. The extracting machineries.
success of the textile machinery
sector depends largely on Process Plant Machinery
technology and branding. The process plant machinery and
Considering that many Indian textile components sector in India is a
machinery manufacturers have heterogeneous segment of capital
started in-house research and goods industry. The sector caters
development activities, the sector is to a wide range of process
poised for further growth. Recently, industries like oil and gas,
leading textile machinery petroleum refining, petrochemicals,
manufacturers have collectively chemicals, fertilizers,
established a research and pharmaceuticals. metal processing,
development centre at the Indian cement, paper, sugar, and food
Institute of Technology, Mumbai. processing. The sector designs and
manufactures a wide range of
Construction and Mining equipment and systems such as:
Machinery pressure vessels, columns, towers,
heat exchangers, multi-tubular
India produces a wide range of
reactors, evaporators, crystallizers,
construction and mining machinery
dryers, road/rail tankers, storage
– such as hydraulic excavators,
equipments, equipment for dairy
wheel loaders, backhoe loaders,
and food processing, mineral
bull dozers, dump trucks, tippers,
beneficiation equipments, rotary
graders, pavers, asphalt drum / wet
kilns, equipments for solid-liquid
mix plants, breakers, vibratory
separation, equipment for water
compactors, cranes, fork lifts,
and waste water treatment.
dozers, off-highway dumpers (20T
to 170T), drills, scrapers, motor Few of the Indian companies
graders, rope shovels etc. They have made their mark in the export
perform a variety of functions like arena due to their manufacturing skill
preparation of ground, excavation, and quality. These companies are
haulage of material, dumping/laying equipped with modern machinery

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and are producing sophisticated 07, India’s export of transformers


equipments such as high-pressure amounted to US $ 645 million, a
heat exchangers, spiral heat growth of 74% over the previous
exchangers, multi-wall vessels, air- year.
fin coolers, multi-tubular reactors etc.
India is also an importer of
Exports in the last couple of years
electric transformers; in the year
have grown at a CAGR of 36%, while
2006-07, India imported
the import growth (CAGR) has been
transformers valued US $ 557
around 49%.
million, a growth of 37% over the
previous year. India’s major source
Electrical Equipments and
countries include China, Germany,
Machinery
USA, Singapore and Japan. China
The electrical equipment and alone accounts for about 40% of
machinery sector comprises a India’s total transformer imports.
range of products, such as
transformers, switchgears, motors, Switchgear and Control gear
generators and control equipment. Sector
Electrical equipment and machinery
Switchgears and control gears are
is principally used in the power
required for transmission and
industry (generation, transmission
distribution of power and are
and distribution) as well as in other
necessary at every switching point
manufacturing industries, such as
in power transmission and
automobiles, cement, steel,
distribution system. This sector is
petrochemicals and refining.
fully developed and matured one in
Transformer Sector India, producing and supplying a
wide range of products catering to
Transformer is a crucial component
the needs of households,
in transmission and distribution of
commercial and power sector, for
electricity. The transformer industry
entire voltage ranging from 240 V
is usually divided into distribution
to 800 KV. India has been exporting
transformers, power transformers
switchgears and control gears to
and other types of special
various countries. In the year 2006-
transformers for welding, traction,
07, India exported switching
furnace etc.
apparatus (not exceeding 1000v)
Besides catering to the domestic valued at US $ 234 million, a
demand, India is exporting growth of 28% over the previous
transformers to over 100 countries year. In addition, India also
covering USA, Europe, Syria, exported switching apparatus
Malaysia, Singapore, Bangladesh, (exceeding 1000v) worth US $ 90
Oman and China. In the year 2006- million in 2006-07, a growth of 34%

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over the previous year. Major on diesel. Large number of players


markets include UK, USA, are engaged in production of
Germany, UAE, Philippines, generators, particularly in the lower
Australia and Hong Kong. KVA generator (3 to 15 KVA)
segment. This segment is
India is also an importer of
characterized by simple technology
switchgears and control gears. In the
and hence dominated by the small
year 2006-07, India imported and medium enterprises (SMEs). In
switchgears and control gears (not the year 2006-07, India’s export of
exceeding 1000v) valued US $ 462 electric motors and generators (HS
million in 2006-07. In the same year, Code 8501) was valued at US $
the import of switchgears (exceeding 133 million, whereas India’s export
1000v) amounted to US $ 51 million. of electric generating sets and
rotary converters (HS Code 8502)
Capacitors amounted to US $ 361 million. USA
Capacitors are used for correcting is the largest market for export of
power factor at the consumer end, both the categories. On the other
to improve the efficiency of the hand, India’s import of electric
system and reducing unwanted generating sets (HS Code 8502)
loses. LT capacitors, HT capacitors, was valued at US $ 114 million, and
running capacitors, electrolytic the import of electric motors and
motor starter capacitors, and generators (HS Code 8501) was
induction furnace capacitors are valued at US 244 million. China,
some of the capacitors Germany, USA and South Korea
manufactured in India. India’s are major importers under both the
export of electric capacitors categories.
amounted to US $ 39 million in In sum, the capital goods
2006-07, witnessing a growth of industry in India has witnessed
56% over the previous year. USA turnaround since last few years. The
is the major market for Indian index of industrial production is
electric capacitors with a share of witnessing an increasing trend since
11.6%, followed by Spain and Qatar 2002-03. Exports by various sub-
(10% each), Turkey and UAE (6% segments of the capital goods
each). industry is also on the increase,
especially with regard to machine
Motors and Generators tools under the category of non-
The generator industry has two electrical machinery; and
segments: portable sets, which run transformers, switchgears, electric
on kerosene, petrol and diesel; and generating sets under the electrical
stationary sets, which run primarily machinery category. India is net

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importer in most of the products, as Following this recommendation,


the leading players are expanding at the instance of the industry,
their capacities and the country is on National Programme for
the manufacturing growth path. Development of Indian Machine Tool
Industry (NPDMI) was launched in
EXIM BANK’S SUPPORT TO December 2002, as a cooperative
INDIAN MACHINE TOOLS effort of UNIDO, Government of
SECTOR: CASE STUDY India, Exim Bank and IMTMA with the
The economic reforms increased aim of strengthing the competitive
the competition to Indian industry, position and technological and
both in domestic and foreign market development capacity of
markets. This resulted in players, and establishing ‘Made in
transformation of Indian India’ label in machine tools.
manufacturing sector, which has
A Steering Committee was
been increasingly seeking
formed drawing expertise from
technological solutions that help
various fields to guide successful
them in sharpening their
implementation of the project. Exim
competitiveness, both in domestic
Bank’s representation in the
and international markets. At this
juncture, Export-Import Bank of Committee significantly contributed
India (Exim Bank) identified Indian to the successful implementation of
machine tools sector – a sub- the programme. Range of activities
segment of Indian capital goods was undertaken to update the
industry and brought out a study manufacturing and management
identifying appropriate strategies to practices of the players in Indian
strengthen this sector and thereby machine tools sector. Evaluation of
help contribute to the growth of machine tool technology and market
Indian manufacturing sector. One trends in USA and Europe was
such recommendation made by the undertaken through surveys. Visit to
study was that the Indian Machine EMO Milan (a biennial trade show for
Tools Manufacturers Association machine tools held in Italy) helped
(IMTMA) to adopt a cluster the industry to study the global
approach, seeking support from technological trends in the machine
United Nations Industrial tools sector, and undertake gap
Development Organisation (UNIDO) analysis of technology in Indian
and the Government of India (the machine tools sector. Learning
then Department of Small Scale through participation in international
Industries) to help the member- trade shows were supplemented with
firms in overcoming the showcasing the capabilities of Indian
weaknesses by adopting best machine tool manufacturers in India.
practices in the industry across the To bridge the technology gap,
globe. especially in the small and medium

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segment, a series of advanced large suppliers of different sub-


machine tool design courses were segments of capital goods. Of late,
organized at International Centre for Asian countries such as China,
Advancement of Manufacturing Taiwan and South Korea have
Technology (ICAMT), Bangalore. It become major players in production
may thus be fair to surmise that as a and export of capital goods.
result of range of such activities, the Consumption of capital goods has
production and export of Indian also increased substantially in
machine tools sector have gone up developing Asian countries due to
over the years. ‘Made in India’ label thrust given to the value-added
of Indian machine tool sector has manufacturing.
gained international reputation
Under the machine tools
making the sector more competitive
category, though there has been
in domestic as well as international
growth in exports, in the last three
markets. UNIDO declared this
years, the import of machine tools
initiative as a success story
have outgrown in several sub-
Exim Bank has been closely segments, bringing down the export-
associated with the export efforts of import ratio (Annexure - ). This
Indian machine tools sector. The indicates that there is significant
Bank has been supporting the room for market expansion in the
machine tool sector to modernise domestic market. Market analyses
and upgrade their production reveal that major developing country
facilities, adaptation of technology importers of machine tools in the
and internationally acceptable world include Mexico, Thailand,
standards through its various Turkey, Poland and China. India’s
financing products and services. The major developing country markets
Bank under its export facilitation for machine tools have been UAE,
programme, has supported the Nigeria and Thailand. In addition,
India exports machine tools to host
initiative of IMTMA in setting up of
of developing countries of Africa and
the Bangalore International
West and South Asia, such as
Exhibition Centre (BIEC)
Kenya, Sudan, Bangladesh, Iran and
Sri Lanka. Though some of the sub-
INDIAN CAPITAL GOODS
segments of machine tools are
INDUSTRY: MARKET
exported to leading developing
ANALYSIS AND EXPORT country markets, in many cases the
POTENTIAL share of India in these markets are
Globally, the capital goods industry insignificant. Thus, careful targeting
is worth around US $ 4.5 trillion. of export markets need to be
Germany and USA are traditionally undertaken by the machine tool

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industry for penetration in new countries, China, Mexico and


markets and expansion of market Indonesia are the leading importers
share in existing markets. in the world. While developed
countries cater to most of the import
The technology upgradation
requirements of these developing
fund scheme of Government of India
countries, India could explore the
has contributed to the capacity
opportunities in these countries.
expansion in the domestic textile
India’s export markets include UAE,
sector significantly. Most of such
capacity expansion has occurred Kuwait and Qatar in west Asia and
through imports. As a result, the African countries such as Kenya,
export-import ratio of textile Tanzania, Togo, Tunisia and
machinery sector has also come Mauritius. The share of India in the
down significantly in the last three import of these countries is not
years (Annexure -), especially in sub- always significant. Thus, these
segment, non-woven machinery. countries could be targeted for
Major developing country importers market expansion by the
of textile machinery in the world construction and mining equipment
include China, Hong Kong, Turkey companies in India.
and Pakistan. On the other hand, Analysis of process plant
India’s major developing country machinery sub-segment revealed
markets for textile machinery include that in some product groups, export
Bangladesh, Indonesia and UAE. is greater than imports, and export-
There is ample scope for exporting import ratio in most such product
to other developing countries of groups has also improved in the last
South Asia, especially to Pakistan three years. However, in many
and Sri Lanka. In addition, countries product groups, there has been
such as Turkey and Egypt could also reduction in export-import ratio.
be targeted for expanding exports
Major developing country importers
and enhancing market share.
include China, Mexico, Taiwan,
Construction and mining Indonesia and Turkey. Though
equipment is another area in which India’s exports of process plant
the export-import share has come equipments are oriented towards
down in the last three years, except these developing countries, the
under the product group pulley tackle volume is not consistent with the
and hoists (HS Code 8425). This potential. India’s major export
indicates that there is significant markets for process plants include
room for capacity expansion in UAE, Saudi Arabia, Nigeria, Kenya
construction and mining equipment and Vietnam. Except for few
sector also. Amongst developing products in few countries, India’s

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share is insignificant even in these CHALLENGES AND


markets. STRATEGIES
Mixed results are also observed Challenges
in electrical machinery and
equipment sub-segment. While in Technological Competency
most of the product groups the
The technologies used for
export-import ratio has increased,
production as also in assembly of
reduction has been witnessed in
Indian capital goods are not always
product groups such as electric
updated in tune with the global
motors and generators. Major
developing country importers in the technological trends. While there
world are China, Hong Kong, Taiwan are some players who have
and Mexico. Another interesting technological competencies,
trend in world trade is that there has especially in design capability,
been significant trade amongst these application innovation and process
countries, especially China, Hong innovation, the technological
Kong and Taiwan trading with each capabilities of large number of
other. India’s main developing players, especially in the SME
country export destinations of sector, are limited. In addition, the
electrical machinery include UAE technological competencies of
and Saudi Arabia. Other developing players in the SME sector, who
countries to which India has been provide components or
exporting the electrical equipments intermediates to original equipment
include Qatar, Mali, Nigeria, Syria manufacturers are also limited.
and Philippines. However, India’s Transfer of technology from other
share in total import of many of these developed countries has also not
countries is not significant, indicating been significant despite
the opportunities for market liberalization of policies for
expansion in these countries. technology transfer and foreign
In sum, the analyses show that direct investments.
there need to be capacity expansion
in the Indian capital goods industry Import of Second Hand
to cater to the rising demand, both Capital Goods
from domestic and export markets. Under the Export Promotion Capital
Technological solutions, through Goods (EPCG) Scheme, import of
research and development, are to be second hand capital goods is
offered to capture new markets; permitted in India for pre-
effective market enhancement and production, production and post-
customer retention strategies are production activities. The capital
required to sustain and expand in the goods that may be imported under
existing developing country markets. this scheme include spares

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(including refurbished/ The capital goods industry also


reconditioned spares), tools, jigs, has high incidence of taxation; a
fixtures, dies and moulds. Import of number of indirect duties (such as
capital goods under this scheme excise duty, octroi, entry tax, sales
would attract only 5% customs duty tax and service tax) are levied adding
subject to an export obligation, up to the end user cost. This makes
equivalent to 8 times of duty saved the indigenous supplies costlier vis-
on the capital goods imported. It à-vis imported capital goods. Some
may be mentioned that machine
estimates have put the cost
tools, refinery equipments,
disadvantage, due to such levies to,
construction and mining machinery,
an extent of over 20%.
plastic processing machinery and
printing machinery are some of the
second hand capital goods Delivery Schedules
imported into India. During the It may be mentioned that most of
period April – December 2007, over the capital goods are not supplied
14300 EPCG applications have off-the-shelves and are custom-
been sanctioned with licenses / made to suit the requirements of
authorizations, with a CIF duty end users. Thus, the delivery
credit of nearly Rs. 12,000 crores. schedule to cater to the order is
While the main objective of this longer than many other engineering
scheme is to help modernization of products. However, due to various
the industry, by offering duty reasons, including infrastructure
concessions, the imported capital
constraints, the delivery schedules
goods pose stiff competition to the
of Indian capital goods suppliers
indigenous capital goods
are longer than their foreign
manufacturers.
counterparts. Industry sources
Cost Competitiveness estimate that the delivery time of
Indian capital goods manufacturers
The Indian capital goods industry are two times longer than their
largely uses crucial inputs such as
global counterparts affecting the
iron and steel that are of domestic
competitiveness in delivery
origin. Over the years, there has
schedules. In such circumstances,
been significant increase in cost of
inputs, but the players in this imported capital goods are
industry are unable to pass on the preferred over Indian capital goods,
price increase to the end though they are technologically and
consumers, due to competition functionally comparable with
from imports. international standards.

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Strategies is also important to increase the


linkages between the public
Transformation in Objective research systems and industry to
and Approach facilitate technology transfer and
Sale of capital goods is not an one- enhance the responsiveness of the
time business but require technical capital goods industry.
support in transportation, erection, Common R&D facilities under
staff training (for operation and the cluster approach or under the
minor repairs), continuous service public-private partnership approach
maintenance and periodical would enhance the technological
upgradation in technology. All over strengths of the Indian capital goods
the world, the capital goods industry. In this context, it may be
manufacturers are turning mentioned that the textile machinery
themselves as engineering services industry, with the support of
companies offering turnkey academia and Government, has set
solutions to retain the customers. up a R&D center at Indian Institute
Players in Indian capital goods of Technology (IIT), Mumbai. It is
industry may also increasingly reported that textile engineering
reorient their approach to transform related projects undertaken by post-
into service based organizations. graduate students in IIT, Mumbai, in
Such service orientation would help this R&D center, would be useful in
the industry in sharpening the product development and innovation
competitive advantage. in process engineering in the textile
engineering industry. Such R&D
Strengthening Research and centers may be encouraged to
Development contribute to the technology
Consistent with global trends, development in other capital goods
Indian capital goods industry also sub-sectors also.
needs to grant highest priority to
innovation and research and Strengthening Technological
development. The R&D intensity of Competencies
firms in Indian capital goods In order to enhance productivity,
industry is less than 1%, far below product quality and operating
than the R&D intensity of other efficiency, the players in the sector
sectors such as pharmaceuticals need to constantly upgrade their
and automobiles. Precision technological competencies. The
measuring, materials engineering, Department of Heavy Industry,
and process innovation are some Government of India, has proposed
of the areas for strengthening R&D to undertake a comprehensive
in Indian capital goods industry. It scheme for technology upgradation

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and R&D facilities for modernization may improve efficiency in


of capital goods industry. The operations and cost control.
proposed scheme may endeavour
While fiscal incentives would
to help the players in the Indian
help attract investments in the capital
capital goods industry in tracking
goods industry in general, adding
global trends in product and
production capacity, a fund for
process technologies, with specific
supporting technology upgradation in
objective of cost control, besides
the capital goods industry may be
enhancing productivity, energy considered in order to achieve
efficiency, eco-friendliness, product quality, standardization and
quality, operating flexibility and benchmarking with international
efficiency. The scheme may also products.
help enhance the usage of
information technology that Enhancing Market Position
provides convenience to the
customers, and help enhance Analysis of trends in imports by
customer base and new avenues major countries reveals that there
for profitability. Such R&D Centres is vast scope for market expansion
may also be conceived as training in many developing countries to
which India is currently exporting.
platforms for skill upgradation of the
Various market entry strategies
shop-floor technicians in the capital
may be adopted including attaining
goods industry.
market leadership, through
acquisition and consolidation, and
Fund for Technology
achieving economies of scale in
Upgradation in Capital Goods
price sensitive markets. Mergers
Industry
and acquisitions routes may also be
It may be fair to surmise that there adopted by the players in the Indian
are capacity constraints at the capital goods industry, to build and
following two levels in the capital nurture brands in export markets.
goods industry: Value-based supply chain may be
created through building
a) Capacity constraints to cater to
customized products and offer of
the demand in volume,
engineering services to create
considering the growth
exclusiveness in competitive
momentum in the industrial
markets. Sales approach should be
sector as also the overall
transformed to provide solutions
economic growth;
that add value to the clients through
b) Capacity constraints to cater to enhancement of process efficiency
the technological demands that and product quality.

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Introducing New Product Capital goods industry, one of the


Lines potential players in India in the
Over the years, players in the engineering services segment,
Indian capital goods industry has holds significant potential to tap the
been diversifying the product lines growing business opportunities in
offered with the objective of the outsourcing arena.
mitigating risks associated with
business and cyclical trends. Increasing Interaction with
However, more focus should be End-Users
given in building new generation Capital goods manufacturers also
machines that may be in demand need to closely interact with end-
in future. Such new generation users (especially sectors such as
machines should have greater automobile, defense, aeronatics,
flexibility to produce a variety of space, metals, construction,
products. Such new generation textiles, chemicals and
machineries also create pharmaceuticals), to understand the
opportunities for offering latest trends in manufacturing; the
engineering services that are less expectations of end users in
sensitive to business and cyclical performance of machinery; areas
fluctuations. for improvement in process
efficiency, energy efficiency, product
Tapping Outsourcing quality, and cost control strategies.
Opportunities The trends in shifting of
Globally, OEMs are increasingly manufacturing base from
outsourcing their design and developed to developing countries
engineering services to developing could also be unearthed through
countries like India to add value at interactions with end-user
lower cost and to focus on their industries. Such interactions would
core competencies. According to a help the players in capital goods
NASSCOM study, spending on industry to source appropriate
engineering services across the technologies, in addition to making
world is estimated to be US $ 750 plans towards capacity
billion in 2004, which is expected enhancement to cater to the
to cross US $ 1 trillion in 2020. growing demand.
While only 15-20 billion (2% of total
Thrust on Safety Standards
demand) is being off-shored at
and Product Liability
present, the off-shoring market is
expected to grow to US $ 150 Exporting to USA and EU
billion to US $ 225 billion (around requires the machinery
20% of total demand) by 2020. manufacturers to carefully consider

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the requirements for both regulatory and sea), and handling facilities in
and liability protection. USA has a such ports and power stations
complex, multi-tiered regulatory boost the demand for capital
environment for machinery and the equipments. This would be
manufacturers need to define the significant in the case of electrical
method of indicating compliance with machinery (investments in power
regulatory issues in most acceptable sector) and construction / earth
manner. The Occupational Safety moving equipments (investments in
and Health Administration (OSHA), road / rail infrastructure), which
the agency in USA, which is would have direct impact. In
responsible for regulating machinery addition, investments in
used in the workplace, has defined infrastructure would boost the
the product requirements and safety manufacturing sector and there by
standards, as also the periodicity of provide growth opportunities for
evaluating safety audits. In European capital goods such as machine
Union, there are host of Directives, tools, textile machinery and process
such as Machinery Directive 98/37/ plant machinery.
EC, Lifts Directive (95/16/EC), The consultation paper on
Directive on Personal Protective ‘Investment in Infrastructure During
Equipments 89/686/EEC, Directive the Eleventh Five Year Plan’, has
on Noise Emissions 2000/14/EC, estimated that about US $ 500 billion
governing the safety standards of investments are required in the
capital goods. In addition the EU Indian infrastructure sector to sustain
Directive concerning Liability for the GDP growth of 9%, during the
Defective Products make EU Eleventh Five Year Plan. This works
importers liable for the products they out to approximately 2.3 times higher
import, including the machinery they as compared to the actual
provide to their employees for work. investments in the infrastructure
Exporters of capital goods, sector that have taken place in the
particularly to USA and EU should Tenth Five Year Plan. If this volume
carefully follow the trends in product of investment demand in the
standards and conform their infrastructure sector is met
products to such safety systematically, the capital goods
requirements. industry would get further
momentum in demand.
Accelerating Investments in
Infrastructure Accelerating Capital
Growth in investments in Investments in Indian
infrastructure sectors, especially for Manufacturing Sector
construction of road / rail network, Government may also consider
bridges and dams, ports (both air offering incentives to the

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manufacturing sector for machineries and redesigning the


upgradation of technology and machining process to accommodate
equipments. The incentives that usage of common components /
may be considered are tax parts in various types of machineries,
concessions, accelerated would contribute to the scale
depreciation allowances and excise economies significantly.
duty relief. Such strategy may be
particularly relevant for SME sector Technology sourcing from
that would be encouraged to countries such as Germany,
upgrade their technological Switzerland, Italy and Spain may be
competence, manufacturing encouraged, especially in the context
process and product quality. of shift in manufacturing base from
developed to developing countries.
IN SUM The strengths of machining
technologies in other developing
India should leverage its inherent
countries such as China and Taiwan
strengths, such as availability of
should be effectively adapted by
pool of skilled workforce, low cost
operations and existence of large Indian players.
domestic demand, in strengthening Changing trends in product
capital goods industry. Leveraging quality and safety standards should
the abundant availability of software be monitored and complied to
skills in engineering design and sustain market presence in
drawing would strengthen developed countries. Developing
technological competitiveness. countries of Asia, Africa, Latin
Continuous training and skill America and central and east Europe
upgradation would help the human should be targeted for market
resources in the industry to capture expansion as these countries are
the trends in new processes and having almost similar raw material
technologies. and manufacturing base, like India.
Scale economies would position Effective supply chain management
India further as a cost-effective and thereby optimizing the product
manufacturing base for capital delivery schedules should be given
goods. Strategies such as top priority to retain the existing
transformation of the shop-floors fully customers as also to fetch new
flexible to produce different types of customers.

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1. INTRODUCTION

Capital goods industry is the 313 - Manufacture of Insulated


backbone of the manufacturing Wires and Cables
activity. A vibrant capital goods
314 - Manufacture of
industry is a pre-requisite to propel
Accumulators, Primary
the growth of the manufacturing
Batteries
activity in any country. International
Standard Industrial Classification 315 - Manufacture of Electric
(ISIC) of all economic activities Lamps and Lighting
(Revision – 3) classifies most of the Equipments
capital goods items under three
divisions (29, 30 and 31) with the 319 - Manufacture of Other
following codes: Electric equipments

291 - Manufacture of General In addition, divisions 32


Purpose Machinery (Manufacture of radio, television and
communication equipment and
292 - Manufacture of Special apparatus) and 33 (Manufacture of
Purpose Machinery medical, precision and optical
instruments) are also considered as
293 - Manufacture of Domestic
capital goods, mainly used in
Appliances
electronics or services industries.
300 - Manufacture of Office,
A study commissioned by the
Accounting and Computing
Government of India4 has defined
Machinery
capital goods as plant machineries
311 - Manufacture of Electric for agricultural, industrial and
Motors, Generators, and commercial segments of economic
Transformers activities that have economic asset
life of over 3 years.
312 - Manufacture of Electricity
Distribution and Control The Index of Industrial
Apparatus Production (IIP) compiled by the

4 Department of Industrial Policy and Promotion, Ministry of Commerce and


Industry, Government of India.

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Central Statistical Organisation Considering the list of items


(CSO), Government of India, has covered under the head ‘capital
classified capital goods under use- goods’ in calculation of IIP, this study
based classification having a weight has analysed the major segments
of 9.2% in IIP. Over 50 items are such as machine tools, machinery
covered under the capital goods and equipments (such as textile
industry. The list of products along machinery, electrical machinery,
with the corresponding weights in IIP earthmoving and construction
is given at Annexure -1. machinery, and process plant
equipments).

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2. CAPITAL GOODS INDUSTRY -


GLOBAL SCENARIO

According to a study by United followed by India with a share of


Nations Industrial Development 10.2%, and Brazil (7.2%).
Organisation (UNIDO), Japan is the
There has been a shift in
largest manufacturer of electrical production of electrical machinery
machinery and apparatus (ISIC and apparatus in the last one decade
Code 31) in 2005, with a share of with many of the Asian countries
55.2% in the year 2005. Other major moving up in both the ranking and
producers were USA (10.0%), China market share. While Japan has
(8.9%), Germany (6.9%) and France increased its share from 44.3% in
(2.6%). India holds a share of 1.7% 1995 to 55.2% in 2005, China and
in global production of electrical India have increased their shares,
machinery and apparatus in 2005. from 3.9% and 0.9% in 1995, to 8.9%
Amongst developing countries, and 1.7%, respectively. Both China
China is the largest producer with a and India have also moved up their
share of 55% in cumulative ranking; while China has moved up
production of developing countries, from fifth position to third position,

Exhibit –1:
LEADING PRODUCERS OF ELECTRICAL MACHINERY AND
APPARATUS (ISIC 31)

SOURCE: International Yearbook of Industrial Statistics, 2007, UNIDO.

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India has moved up from eleventh producer of non-electrical machinery


position to sixth position. items (ISIC 29) with a share of 33.8%
in 2005. India is fourth largest
In the case of other machinery
manufacturer with a share of 6.7%
and equipments (ISIC 29), which
in the total production of developing
mainly consist of general purpose
countries.
machinery (engines, turbines,
pumps, compressors, taps, valves, In value terms, the global capital
bearings, gears, ovens, furnaces, goods industry is estimated to have
lifting and handling equipments) and generated total revenue of US $ 4.5
special purpose machinery (such as trillion in 2006, according to a report
agricultural machinery, machine by Datamonitor. The capital goods
tools, metallurgical machinery, industry has seen fluctuations in its
mining / quarrying / construction growth rate over the past few years
machinery, textile / leather and experienced a CAGR of 2.7%
machinery, and food processing during the period 2002-2006.
machinery), USA is the world’s
United States is the major
leading producer with a share of
country accounting for 31% of the
19.4% in world production in 2005,
global market value in 2006. Europe
followed by Japan (15.6%),
as a region accounted for around
Germany (14.9%) and China (7.3%).
28%, followed by the Asia-Pacific
India is ranked at 11th position in
region (27%).
world production with a share of
1.4%. Amongst developing Globally, trade in capital goods5
countries, China is the major was valued at over US $ 1.5 trillion

Exhibit – 2:
LEADING PRODUCERS OF OTHER MACHINERY AND
EQUIPMENTS (ISIC 29)

SOURCE: International Yearbook of Industrial Statistics, 2007, UNIDO.

5 WTO statistics

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Exhibit 3:
REVENUE GENERATION AND GROWTH IN GLOBAL CAPITAL
GOODS INDUSTRY

SOURCE: Datamonitor

in 2006. Thus, the capital goods 18% over the previous year. Japan
trade accounts for 12% in world is the largest producer of machine
merchandise trade and 17.5% in tools accounting for 20% of the
world trade in manufactures. The world production. Other major
share of exports in total world producers are Germany (18%),
production is estimated to be one- China (14%), Italy (10%), Korea
third. Germany is the largest exporter (6.5%) and Taiwan (6%). In fact,
of capital goods in the world following the unification of
accounting for 13% of global exports Germany, the country has remained
in 2006. China and the USA come as world’s second-largest producer,
next with shares of 12% and 11%, except in 1999 and 2002, when it
respectively. edged out Japan for the number
The trends in production and one slot.
trade in select capital goods sub- In terms of consumption of
segments are discussed below: machine tools, China tops the list
with total consumption worth nearly
MACHINE TOOLS US $ 15 billion, showing a growth of
The total production of machine 17% over the previous year. Japan
tools by the top 29 global producers and Germany comes next with a
was more than US $ 70 billion in consumption level of more than US$
2007, experiencing a growth of 7 billion each. The consumption level

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Table 1:
WORLD PRODUCTION OF MACHINE TOOLS –2007
Share of
Rank Country Production Cutting Forming
(in US$ Million) Tools Tools
1 Japan 14,443.50 88% 12%
2 Germany 12,725.40 76% 24%
3 China 10,090.00 71% 29%
4 Italy 7,272.70 49% 51%
5 South Korea 4,550.00 68% 32%
6 Taiwan 4,378.00 80% 20%
7 United States 3,578.00 79% 21%
8 Switzerland 3,323.80 85% 15%
9 Spain 1,436.80 67% 33%
10 Brazil 1,157.80 81% 19%

SOURCE: Gardner Publication Inc.

for India is around US$ 1.8 billion, consumption is in fact highest among
thus being the 9th largest consumer the top 20 countries (49%).
of machine tools. The growth rate of

Table 2:
WORLD CONSUMPTION OF MACHINE TOOLS
(US $ Million)
Rank Country 2007 2006 Growth (%)
1 China 15,390.0 13,113.0 17.0
2 Japan 7,619.4 7,858.6 -3.0
3 Germany 7,252.1 5,139.7 41.0
4 USA 6,171.8 6,361.2 -3.0
5 Italy 5,056.0 3,786.2 34.0
6 South Korea 4,150.0 4,020.0 3.0
7 Taiwan 3,785.0 2,887.0 31.0
8 Brazil 1,822.2 1,423.2 28.0
9 India 1,774.8 1,191.2 49.0
10 Mexico 1,669.6 1,245.9 34.0

SOURCE: Gardner Publication Inc.

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In terms of per-capita (US $ 7.6 billion), Italy (US $ 4.2


consumption6, however, Switzerland billion), Taiwan (US $ 3.4 billion) and
tops the list with the per capita Switzerland (US $ 2.5 billion).
consumption being US $ 172 in As far as the import is
2007. Other major countries in terms concerned, China leads the world,
of per capita consumption include with an estimated import value of US
Taiwan (US $ 166), Austria (US $ 97), $ 6.9 billon in 2007. The United
Germany and Italy (US $ 87 each). States (US $ 4.4 billion), Germany
World export of machine tools is (US $ 3.7 billion) and Taiwan (US $
estimated to be over US $ 40 billion 2.8 billion) are other major importers.
in 2007, a growth of 18% over the Amongst developing countries,
previous year. The export orientation Mexico and India are emerging as
of global machine tool industry thus major importers of machine tools.
works out to over 50% in 2007.
Germany is the largest exporter of CONSTRUCTION AND MINING
machine tools in the world, exporting MACHINERY
machine tools valued more than US$ Global construction and mining
9 billion in 2007. Germany exported machinery industry is estimated to
over 70% of its production in 2007. have generated a total revenue of
Other major exporters include Japan US $ 113 billion in 2006. The

Table 3:
WORLD EXPORT OF MACHINE TOOLS
(US $ Million)
Rank Country 2007 2006 Annual Growth
1 Germany 9,167.80 7,516.00 22%
2 Japan 7,610.10 6,513.00 17%
3 Italy 4,207.60 3,318.70 27%
4 Taiwan 3,408.00 2,964.00 15%
5 Switzerland 2,457.50 2,236.70 10%
6 South Korea 1,800.00 1,450.00 24%
7 United States 1,659.80 1,802.30 -8%
8 China 1,600.00 1190.00 34%
9 United Kingdom 922.20 879.20 5%
10 Belgium 873.20 721.30 21%

SOURCE: Gardner Publication Inc.

6 Consumption weighted by population.

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Table 4:
WORLD IMPORT OF MACHINE TOOLS
(US $ Million)
Rank Country 2007 2006 Annual Growth
1 China 6,900.00 7,243.00 -5%
2 USA 4,253.60 4,474.60 -5%
3 Germany 3,694.50 2,535.40 46%
4 Taiwan 2,815.00 2,010.00 40%
5 Italy 1,990.90 1,397.40 42%
6 Mexico 1,544.80 1,397.40 34%
7 South Korea 1,400.00 1,358.00 3%
8 India 1,317.80 837.1 57%
9 France 1,252.00 1,071.60 17%
10 United Kingdom 1,178.30 921.60 28%

SOURCE: Gardner Publication Inc.

industry had experienced several space. In developing countries of


years of decline in growth, since Asia-Pacific and eastern European
the beginning of the decade, but region, investment in infrastructure
picked up in recent years. The increased substantially. Increasing
industry experienced a 7% growth growth in extractive activities in Africa
in the year 2005, which, however, region also led the growth in the
came down to 4% in 2006. The global construction and mining
CAGR for the industry during the industry.
period 2002-06 stood at 4.7%.
The largest segment of global
According to Datamonitor construction and mining machinery
analysis, the upturn is mainly due to industry is earthmoving equipment,
the improved performance of major which accounts for about 18% of the
end-user industries like construction, industry size. Other major segments
agriculture and manufacturing. include harvesting equipment (13%),
Construction sector witnessed industrial tractors (10%) and other
growth, both in developed and industrial rolling machines (8%).
developing countries, during this Geographically, USA dominates the
period. In the developed countries, global construction machinery
such as USA and Europe, the growth industry, accounting for almost 39%
in construction activity was fuelled by of the world market. Asia-pacific
increased demand for new office (30%) is the second largest region,

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Exhibit 4:
GLOBAL CONSTRUCTION AND MINING MACHINERY INDUSTRY:
VALUE & GROWTH

SOURCE: Datamonitor

followed by Europe (28%), in the According to Association of


world, in production of construction Equipment Manufacturers in USA,
and mining machinery. the growth outlook for the
construction equipment
Caterpillar, Inc, USA, is one of
manufacturers would be of the order
the major firms in the construction
machinery sector. The company has of 8% in the year 2008, as compared
presence spanning across the world. to the estimated growth of 9.5% in
Few other major players include: 2007. Earthmoving equipment and
Deere & Co., CNH Global, and lifting equipment are the two sub-
Komatsu. Deere & Co. operates in segments that have tremendous
USA and Canada. It specializes in potential for growth.
manufacturing and distribution of
agricultural equipments, construction INDUSTRIAL MACHINERY
and forestry equipment and World market for industrial
commercial and consumer turf machinery, equipment and supplies
equipment. is estimated to be US $ 345 billion

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in 2006. Asia is the leading market IN SUM


for industrial machinery accounting The global capital goods industry
for around 32% (US $ 109 billion)
is on a growth path and there have
of world market in 2006. North
been many new countries emerging
America and Europe are the other
as new players, especially the
major markets accounting for 25%
share each in the world industrial Asian countries. With the ample
machinery market. According to opportunities available, this industry
ICON Group, the industrial would see a lot of changes in the
machinery market is expected to future along with greater scope for
cross US $ 500 billion in 2011, a further growth and development.
CAGR of 8%

Exhibit 5:
GLOBAL MARKET FOR INDUSTRIAL MACHINERY

SOURCE: ICON Group Inc., USA.

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3. CAPITAL GOODS INDUSTRY IN INDIA

INTRODUCTION recessionary phase till 2001-02. In


The capital goods industry is the 2001-02, the Indian capital goods
backbone of India’s manufacturing industry witnessed a negative
sector. India produces wide range growth, mainly due to deceleration
capital goods, including machinery in production of transport
and machine tools. Some of the equipments. However, since 2002-
prominent capital goods produced 03, the sector has been witnessing
in India include heavy electrical buoyancy in the production trends,
machinery, textile machinery, as is evident from Exhibit -6. Though
machine tools, earthmoving and the growth momentum has
construction equipment including marginally slowed down in 2007-08,
mining equipment, road the capital goods sector still
construction equipment, material continues to be the driver of growth
handling equipment, oil & gas for IIP.
exploration equipment, sugar
Under the two-digit
machinery, food processing and
classification, in the index of
packaging machinery, railway
industrial production, capital goods
equipment, metallurgical
are classified as:
equipment, cement machinery,
rubber machinery, process plants  35 & 36 - Machinery and
machinery & equipments, paper & equipments, other than
pulp machinery, printing machinery, transport equipments;
dairy machinery, industrial
 37 - Transport equipments
refrigeration and industrial furnaces.
Indian capital good industry, in The movement in the production
the recent years has been witnessing index of these two categories shows
buoyancy after undergoing a a cyclical trend over the last one
prolonged period of cyclical and decade. However, in many years,
recessionary phase. From 1994-95, both the segments have witnessed
the Indian capital goods industry has a year-on-year growth of over 10%,
witnessed a cyclical phase, and contributing to the overall upward
thereafter the sector witnessed a movement of IIP.

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Exhibit 6:
MOVEMENT IN INDEX OF CAPITAL GOODS INDUSTRY VIS-À-VIS
IIP IN INDIA

SOURCE: Central Statistical Organisation, Government of India.

Exhibit 7:
MOVEMENT IN PRODUCTION INDEX OF SUB-SEGMENTS OF CAPITAL
GOODS INDUSTRY

SOURCE: Central Statistical Organisation, Government of India.

Capacity creation in the Indian ANALYSIS OF SUB-SEGMENTS


capital goods industry has been The study focuses on the status of
growing, since liberalization, and in the following segments of capital
tune with the overall growth in goods industry in India.
industry. Cumulative foreign direct
investments (actual inflows) in the a) Non-electrical machinery
capital goods industry amounted to (machinery not used in
over US $ 1.6 billion since January electrical industry)
2000. Details of sector-wise FDI
1. Machine tools
inflows are given in Table - 5.

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Table 5:
FDI INFLOWS IN SELECT CAPITAL GOODS SECTOR IN INDIA
Sub-segments 2000-03 2004 2005 2006 2007 Total
(Jan-Dec) (Jan–Dec) (Jan-Dec) (Jan-Dec) (Jan-Dec) Rs. US $
Million Million

Electrical equipments 11,089.16 4933.13 1075.55 3746.32 24872.69 45716.86 1055.25


Machine tools 1362.69 2652.70 1001.11 1579.25 1966.07 8561.81 193.68
Industrial machinery 2698.18 430.76 1474.73 1169.92 901.3 6674.89 149.53
Agricultural machinery 854.34 0 2777.52 2527.51 240.44 6399.82 142.18
Earthmoving machinery 755.96 5.22 2313.00 45.79 2611.36 5731.34 134.04
Boilers and steam 1.97 0 23.40 149.85 42.3 217.52 4.86
generating plants
Prime movers 0 2.49 0 0 11.6 14.09 0.34

Total above 16,762.30 8024.30 8665.31 9218.64 30645.76 73316.33 1679.88

SOURCE: Department of Industrial Policy and Promotion, Government of India.

2. Textile machinery 3. Capacitors


3. Construction and mining 4. Motors and generators
machinery
Non Electrical Machinery
4. Process plant machinery
Machine Tools
b) Electrical machinery (Machinery
used in electrical industry) The machine tools sector can be
broadly classified into the following
1. Transformer industry segments:
2. Switchgear and control The machine tools sector is one
gear of the important segments of the

Exhibit 8:
CLASSIFICATION OF INDIAN MACHINE TOOLS SECTOR

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capital goods industry in India. The growth rate of almost 15% over the
sector is recognised as a provider of previous year. The break–up of
cost-effective high quality lean- production under various segments
manufacturing solutions. The sector of machine tools sector is given in
manufactures almost the complete Table - 6. While the Groups A & B
range of metal-cutting and metal- have witnessed impressive growth
forming machine tools. Customized rates in 2006-07, over the previous
in nature, the products from the year, Group C has witnessed
Indian basket comprise conventional negative growth, due to which the
machine tools as well as computer overall growth in the machine tool
numerically controlled (CNC) sector has come down.
machines.
The Numerical Code (NC)
The industry has been showing machines and Non NC machines
an increasing trend in both belonging to the Group A showed a
production and exports over the last growth of 28% and 27%, respectively
decade. However, export orientation during 2006-07, over the previous
of the machine tools sector has been year. Machine tools of Non NC type
coming down – from a level of 67% belonging to the group B also
in 2002-03 to 51% in 2006-07.
experienced a growth rate of 34%
Total production of machine during the same period. However,
tools in the country reached the level Group C category of machine tools
of more than Rs. 2000 crores by the witnessed a negative growth of 55%,
end of the year 2006-07, showing a pulling down the overall growth for

Exhibit 9:
PRODUCTION AND EXPORT PERFORMANCE OF INDIAN MACHINE
TOOLS SECTOR

SOURCE: Exim Research; Data Sources from Indian Machine Tools


Manufacturers Association and Directorate General of Commercial Intelligence
Statistics, Government of India.

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Table 6:
PRODUCTION OF MACHINE TOOLS IN INDIA
Machine Tools Value (in Rs. Million) Growth (%)
2005-06 2006-07
Group A (large size machine tools)
NC Machines 9442.94 12052.53 27.64
Non NC Machines 4078.15 5164.33 26.63
Group B (medium size machine tools)
NC Machines - -
Non NC Machines 1866.03 2494.53 33.68
Group C (small size machine tools)
NC Machines - -
Non NC Machines 2804.97 1246.67 -55.55

Total 18192.09 20958.05 15.20

SOURCE: Indian Machine Tools Manufacturers’ Association

this sector. HSS gear tools, of export orders for Indian


Abrasives, HSS drilling tools, HSS manufacturers.
milling tools, tools for tapping and
Export of machine tools has
threading, milling cutters are some
shown a steady increase in the last
of the Group C category of machine
tools that have witnessed negative few years. In the year 2006-07,
growth rate in 2006-07. export of machine tools was worth
Table 7:
Indian machine tool EXPORT OF MACHINE TOOLS
manufacturers have been able to FROM INDIA
explore the international markets too.
Year Exports
Strategies such as product (in US $ Million)
development with enhanced
2001-02 102.48
features, competitive pricing, and
market focus have been helping the 2002-03 121.03
players to enhance their market 2003-04 140.75
presence in international markets, 2004-05 176.57
particularly in Europe, the United 2005-06 230.39
States, and east-Asian countries. 2006-07 234.75
Lathes and automats, presses,
electro-discharge machines, and SOURCE: Directorate General of
machining centres formed the bulk Commercial Intelligence and
Statistics

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more than US $ 234 Million. During expenditure demand of the textile


the period April – December 2007, units. In the initial years, the growth
machine tools export stood at US $ in the Indian textile machinery
209.81 million, an increase of over sector was hampered due to
28%, over the same period in the increasing demand for automated
previous year. machines. However, the Indian
USA is the largest market for textile machinery sector started
export of machine tools from India. producing automated machines,
In the year 2006-07, USA accounted with innovation, envisaging growth
for 19% (US $ 45.25 million) of in capacity expansion in the textile
India’s total export of machine tools. industry in the post-quota regime.
Other major markets include The thrust given by the
Germany (8.1%), UAE (5%), Government of India for
Singapore (4.7%), and US (4.6%). upgradation of technology (through
the Technology Upgradation Fund
Textile Machinery Scheme - TUFS) also contributed
to the growth in demand for textile
Textile is one of the major export
machinery.
items of India contributing to over
11% in India’s export earnings. Textile machinery production
Indian textile machinery sector has shown steady increase in the
started as an offshoot of the textile recent years. The total production of
industry to cater to the capital textile machinery in the country

Exhibit 10:
MAJOR EXPORT DESTINATIONS OF MACHINE TOOLS FROM INDIA
(2006-07)

SOURCE: Directorate General of Commercial Intelligence and Statistics

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increased from around Rs. 1175 The capacity of the sector (in
crores in 2002-03 to more than value terms) was estimated at Rs.
Rs.3000 crores by 2007-08. 3000 crores 2003-04, which has
Segments like spinning & allied increased to around Rs. 3800 crores
machinery, processing machinery, in 2007-08. The capacity utilization
have experienced growth in thus works out to around 80% in
production during this period. 2007-08.
Table 8:
TRENDS IN PRODUCTION OF TEXTILE MACHINERY IN INDIA
(Value in Rs. Million)
CATEGORIES 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08(P)
Spinning & 5816.68 6811.63 9957.79 13232.05 19910.45 22719.45
allied machinery
Synthetic fibre machinery 962.98 982.84 510.35 366.89 223.8 404.58
Weaving & 782.49 875.79 1166.64 1586.19 1572.86 1148.96
allied machinery
Processing machinery 731.92 1109.87 1358.07 2421.69 1644.39 921.43
Miscellaneous 69.91 94.02 121.02 120.61 122.48 129.71
(Spinning, Weaving &
Processing machines)
Textile testing/measuring
instruments machinery 387.84 497.98 578.01 647.69 630.81 437.01
Hosiery machinery & needles 260.72 442.71 391.91 425.26 338.74 354.72

Total 9012.54 10814.84 14083.79 18800.38 24594.02 26306.82


Spares & accessories 2737.9 2591.15 2764.35 3323.00 3396.80 3780.86

Grand Total 11750.44 13405.99 16848.14 22123.38 27990.82 30087.68

SOURCE: Office of the Textile Commissioner, Textile Machinery Manufacturers Association

Exhibit 11:
TEXTILE MACHINERY – TRENDS IN CAPACITY, PRODUCTION AND
CAPACITY UTILIZATION

SOURCE: Office of the Textile Commissioner, Textile Machinery Manufacturers Association

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Though not a significant volume, year. During the period April – July
India still exports textile machinery. 2007, export of textile machinery
In the last few years, value of exports stood at Rs. 189 crores, whereas
of textile machinery was hovering import value during this period stood
around less than Rs. 500 crores. at Rs. 2465 crores.
However, as a result of increasing Segment-wise exports show that
activities in the textile industry, import spinning machinery is the largest
of textile machinery is on the rise. import item accounting for more than
Total import of textile machinery 40% of total textile machinery
during the year 2006-07 was imports. Other major items are
estimated to be more than Rs. 9,000 knitting machinery (19%), weaving
crores, thus showing a growth rate machinery (13%), and processing
of around 33% over the previous machinery (12%).
Exhibit: 12:
EXPORT AND IMPORT OF TEXTILE MACHINERY FROM INDIA
(In Rs. Million)

SOURCE: Directorate General of Commercial Intelligence and Statistics

Exhibit: 13:
SEGMENT WISE IMPORT OF TEXTILE MACHINERY IN INDIA (2006-07)

SOURCE: Directorate General of Commercial Intelligence and Statistics

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With respect to exports, majority Construction and Mining


of India’s textile machinery exports Machinery
are in the form of auxiliary machinery, There is an all-pervasive boom in
having a share of 86% in 2006-07. the housing and infrastructure
Other major export items are activities in India, which is likely to
spinning machinery (17%), drive the associated sectors such
processing machinery (9%) and as manufacture of construction and
washing machines (7%). mining equipments. India produces
The success of the textile a wide range of construction and
machinery sector depends largely on mining machinery – such as
technology and branding. hydraulic excavators, wheel
Considering that many Indian textile loaders, backhoe loaders, bull
machinery manufacturers have dozers, dump trucks, tippers,
started in-house research and graders, pavers, asphalt drum / wet
development activities, the sector is mix plants, breakers, vibratory
poised for further growth. Recently, compactors, cranes, fork lifts,
leading textile machinery dozers, off-highway dumpers (20T
manufacturers have collectively to 170T), drills, scrapers, motor
established a research and graders, rope shovels etc. They
development centre at the Indian perform a variety of functions like
Institute of Technology, Mumbai. preparation of ground, excavation,

Exhibit: 14:
SEGMENT-WISE EXPORT OF TEXTILE MACHINERY FROM INDIA
(2006-07)
Source:

SOURCE: Directorate General of Commercial Intelligence and Statistics

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haulage of material, dumping/laying equipment segment; Action


in specified manner, material Construction Equipment, TIL and
handling, road construction etc. Mukand in the cranes segment; and
OTIS and Johnson in the lifts and
The construction and mining
escalators segments.
machinery sector in India has
witnessed a phase of reorientation Export performance of Indian
in the last few years through construction and mining equipment
acquisitions and joint ventures. This industry is given in Table 11. It may
also reflects the active interest of be noted that in India, being a large
international majors in the domestic and growing economy, the domestic
market. However, given the heavy demand is greater than the
sunk cost involved in the sector, the production capacity and thus the
number of producers in each major portion of demand is met
segment is few. Many international through imports. Major items of
players have also appointed selling imports include lifting, handling,
agents for importing and selling loading and unloading machines;
complete equipments in India. self-propelled bulldozers, scrapers,
and graders; and derricks, cranes,
Major players are Bharat Earth mobile lifting frames. Import growth
Movers Ltd (BEML) and TELCO (CAGR) in the last three years has
construction equipment in the earth been over 45%. Indian construction
moving machinery segment; Escorts and mining machinery sector is also
and Gujarat Apollo Instruments in the exporting to various countries,
construction machinery segment; including developed countries such
Mcnally Bharat Engg. Co., Elecon as USA, UK, and Singapore. Major
Engg. Co., TRF, Godrej & Boyce, items of export include moving,
and Voltas in the material handling grading, pile-extracting machineries.
Table 9:
INDIAN CONSTRUCTION AND MINING MACHINERY: INDUSTRY SIZE
Sl. No Category Estimated size in Rs. crores
(2006-07)
1 Earthmoving machinery 4500.00
2. Construction machinery 700.00
3. Material handling equipments 1600.00
4. Cranes 800.00
5. Lifts and escalators 700.00
Total above 8300.00

SOURCE: Industry – Market Size and Shares, CMIE

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Table 10:
MARKET SIZE AND LEADING PLAYERS: SELECT SEGMENTS OF
CONSTRUCTION AND MINING MACHINERY (2006-07)
Major Products Companies Market Share (%)
Earthmoving Machinery Bharat Earth Movers Limited 39.97
Total Market Size: Telco Construction Equipment Co. 28.22
Rs. 4500 crores L&T- Komatsu 13.20
Larsen & Toubro 4.60
Construction Machinery Escorts Construction Equipment 48.85
Total Market Size: Gujarat Apollo Inds. 19.00
Rs. 700 crores Ashoka Buildcon 6.57
Sayaji Iron & Engg. Co. 4.42
Apollo Industrial Products 3.80
Material Handling Mcnally Bharat Engg. Co 24.87
Equipment Elecon Engg. 21.68
Total Market Size: TRF 16.68
Rs. 1600 crores Godrej & Boyce 10.18
Voltas 7.18
Cranes Action Construction Equipment 26.62
Total Market Size: TIL 19.50
Rs. 800 crores Mukand 14.00
Hercules Hoists 10.75
Greaves Cotton 9.00
Lifts and Escalators OTIS Elevators 64.34
Total Market Size: Johnson Lifts 33.22
Rs. 700 crores

SOURCE: Industry: Market Size and Share, 2007; CMIE

Table 11:
EXPORT PERFORMANCE OF SELECT CONSTRUCTION AND MINING
MACHINERY (2006-07) (US $ Million)
ITC HS Description Exports Imports
Code
8425 Pulley, tackle and hoists other than 6.99 24.22
skip hoist; winches and capstans; jacks
8426 Derricks, cranes, mobile lifting frames etc 18.43 265.90
8427 Fork-lift trucks, other works trucks with lifts etc. 6.82 34.50
8428 Lifting, handling, loading & unload machines 27.44 342.97
8429 Self-propelled bulldozers, graders, scrapers etc. 26.59 283.05
8430 Other Machineries for moving, grading etc,
pile-extractors, snow-ploughs etc 44.03 285.40
Total 130.30 1236.04
SOURCE: Directorate General of Commercial Intelligence and Statistics

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Process Plant Machinery and areas of applications.


The process plant machinery and International companies (such as
components sector in India is a Atlas Capco, Alfa Laval, J.L. Smith,
heterogeneous segment of capital Sulzer) also have presence in India
goods industry. The sector caters through joint ventures or technology
to a wide range of process tie-ups. Besides, the internationally
industries like oil and gas, renowned consultants in the process
petroleum refining, petrochemicals, industries like Flour Daniel, Bechtel,
chemicals, fertilizers, Foster Wheel, LG, Daelim, Jacobs,
pharmaceuticals. metal processing, Kvaerner, Mitsui Babcock, Linde,
cement, paper, sugar, and food ABB Lummus, Technip, Stone &
processing. The sector designs and Webster, Udhe and Toyo
manufactures a wide range of Engineering have offices in India.
equipment and systems such as: The market size and major
pressure vessels, columns, towers, players in select segments of
heat exchangers, multi-tubular process plants / machineries are
reactors, evaporators, crystallizers, given in Table - 12.
dryers, road/rail tankers, storage
equipments, equipment for dairy Few of the Indian companies
and food processing, mineral have made their mark in the export
beneficiation equipments, rotary arena due to their manufacturing skill
kilns, equipments for solid-liquid and quality. These companies are
separation, equipment for water equipped with modern machinery
and waste water treatment. and are producing sophisticated
equipments such as high-pressure
The sector is highly capital heat exchangers, spiral heat
intensive with a strong engineering exchangers, multi-wall vessels, air-
orientation (thus knowledge fin coolers, multi-tubular reactors etc.
intensive also), where the products Export and import of select process
are mostly custom built. Hence plant equipment / machineries are
economies of scale have less given in Table - 13.
relevance in this sector except for the
machine, or labour utilization factor, Major categories of exports
if workload is not uniform. include: machinery / plant, laboratory
equipment for heating or cooking
Due to the heterogeneous excl. household; centrifuge
nature of the sector, the process machines, including dryers, filtering
plant industry is fragmented in or purifying machinery; metal rolling
nature. Some large as well as mills and rolls thereof. India’s import
medium sized companies are well of process plant machinery were
diversified in terms of product range mainly centrifuge machines,

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Table 12:
MARKET SIZE AND LEADING PLAYERS IN PROCESS PLANTS,
MACHINERY AND EQUIPMENTS
Segments Market Size Leading Players
(2006-07)
(Rs. Crores)
Chemical Machinery 2500 L&T, Godrej, Ingersoll-Rand, Bharat
Heavy Plate and Vessel, Tema
India.
Cement Machinery 250 L&T, Walchandnagar Industries,
Alsthom, KCP, CIMMCO
Sugar Machinery 700 Thyssenkrupp, Fives Cail KCP,
Texmaco.
Metallurgical Machinery 300 L&T, Tata Steel, Disa India, Mukand
Total (above) 3750

SOURCE: Industry: Market Size and Shares, CMIE, 2008.

including dryers, filtering or purifying industry (generation, transmission


machinery; machinery / plant, and distribution) as well as in other
laboratory equipment for heating or manufacturing industries, such as
cooking (excluding household use); automobiles, cement, steel,
Metal rolling mills and rolls thereof; petrochemicals and refining.
refrigeration and freezing equipment,
A few large players, such as
electric or others; converters, ladles,
BHEL, ABB, Alstom, Siemens, and
ingot moulds and casting machines
used in metallurgy. Exports in the last Crompton Greaves, dominate the
couple of years have grown at a electrical equipment industry.
CAGR of 36%, while the import However, there are several small and
growth (CAGR) has been medium sized players specializing in
around 49%. specific product lines. The raw
material cost in total operating cost
Electrical Equipments and of the sector is estimated to be
Machinery significant. The primary raw
materials are copper, aluminium and
The electrical equipment and
steel.
machinery sector comprises a
range of products, such as Indian electric machinery sector
transformers, switchgears, motors, caters to most of the indigenous
generators and control equipment. demand. In select segments,
Electrical equipment and machinery especially to meet the demand for
is principally used in the power highly sophisticated equipments,

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Table 13:
EXPORT OF SELECT PROCESS PLANT EQUIPMENTS / MACHINERY
FROM INDIA (2006-07)
ITC HS Description US $ Million
Code Exports Imports
8402 Vapour generating boilers 74.89 19.56
(excluding central heating water boilers),
8403 Control heating boilers 12.31 2.09
8404 Auxiliary plant used with boilers, condenser
from steam and other vapour power unit 24.12 8.49
8410 Hydraulic turbines, water wheels, regulators 9.89 21.11
8416 Furnace burners for liquid fuels, for pulverized
soil fuel, for gas; mechanical stockers, etc., 10.32 30.49
8417 Industrial or laboratory furnaces or ovens,
non-electric 28.77 126.99
8418 Refrigeration and freezing equipment,
electric or others 92.61 175.92
8419 Machinery / Plant, laboratory equipment for
heating or cooking excl. household. 257.54 293.25
8420 Calendering / Rolling machines 10.46 14.04
8421 Centrifuge machines, including dryers;
filtering or purifying machinery 116.25 342.99
8435 Presses, crushers or similar machinery used
in manufacture of wine, cider, fruit juices 5.81 9.9
8438 Other industrial machinery in preparation of
food / drink etc., 60.72 60.72
8454 Converters, ladles, ingot moulds and casting
machines used in metallurgy 37.45 163.36
8455 Metal rolling mills and rolls thereof 104.7 243.72
Total 822.07 1512.63
SOURCE: Directorate General of Commercial Intelligence and Statistics

sourcing is done through imports. 2002-03 onwards. The structure of


Switchgear is the fastest growing the electric equipment sector is given
segment of this industry. Both in Exhibit -15. The market size of the
production and sales of electrical electrical equipment sector is given
equipment has shown steady rise in in Table - 14.
the recent times, particularly from

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Exhibit: 15:
STRUCTURE OF THE ELECTRIC EQUIPMENT INDUSTRY

Transformer Sector forefront for over 50 years and has


Transformer is a crucial component a well-matured technology-base in
in transmission and distribution of the sub-segment of up to 800 KV.
electricity. The transformer industry The transformer market in India is
is usually divided into distribution in a growth path, as there is a
transformers, power transformers growing demand for power in the
and other types of special country. There are about 150
transformers for welding, traction, transformer companies in India,
furnace etc. The transformer with an overall production of over
industry in India has been in the 90,000 MVA per annum.

Table 14:
MARKET SIZE AND LEADING PLAYERS IN TRANSFORMER INDUSTRY
Segments Market Size Leading Players
(2006-07)
(Rs. Crores)
Transformers 6000.00 Crompton Greaves (Rs. 998.75 crs)
Vijay Electricals (Rs. 987.82 crs)
BHEL (Rs. 611.83 crs)
EMCO (Rs. 542.78 crs)
Areva (Rs. 463.69 crs)

SOURCE: Industry: Market Size and Shares, CMIE, 2008.

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The turnover of the transformer India is also an importer of


industry in India is showing a steady electric transformers; in the year
rise in the last few years. India is self- 2006-07, India imported
reliant in respect of the resources for transformers valued US $ 557
prime materials and testing facilities. million, a growth of 37% over the
Manufacturing facility for Cold-Rolled previous year. India’s major source
Grain Oriented (CRGO) steel, countries include China, Germany,
winding conductors, bushings up to USA, Singapore and Japan. China
420KV class etc. are well alone accounts for about 40% of
established. India’s total transformer imports.
Besides catering to the domestic
demand, India is exporting Switchgear and Control gear
transformers to over 100 countries Sector
covering USA, Europe, Syria, Switchgears and control gears are
Malaysia, Singapore, Bangladesh, required for transmission and
Oman and China. In the year 2006- distribution of power and are
07, India’s export of transformers necessary at every switching point
amounted to US $ 645 million, a in power transmission and
growth of 74% over the previous distribution system. This sector is
year. fully developed and matured one in
Table 15:
INDIA’S EXPORT OF ELECTRIC TRANSFORMERS,
STATIC CONVERTERS AND INDUCTORS
HS Code 8504 (2006-07)
Sl No Export Destination Value Share (%)
(US $ Million)
World 645.46 100.00
1. USA 192.64 29.85
2. The Netherlands 103.24 15.99
3. Syria 37.62 5.82
4. UK 27.84 4.31
5. Malaysia 19.51 3.02
6. UAE 18.67 2.89
7. Singapore 18.08 2.80
8. Bangladesh 17.50 2.71
9. Oman 17.45 2.70
10. China 16.74 2.59

SOURCE: Directorate General of Commercial Intelligence and Statistics

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Table 16:
INDIA’S IMPORT OF ELECTRIC TRANSFORMERS,
STATIC CONVERTERS AND INDUCTORS
HS Code 8504 (2006-07)
Sl No Export Destination Value Share (%)
(US $ Million)
World 557.12 100.00
1. China 219.24 39.35
2. Germany 52.09 9.35
3. USA 40.77 7.31
4. Singapore 24.69 4.43
5. Japan 21.72 3.90
6. Thailand 17.86 3.20
7. Italy 15.79 2.83
8. Taiwan 14.88 2.67
9. Hong Kong 13.83 2.48
10. South Korea 13.06 2.34

SOURCE: Directorate General of Commercial Intelligence and Statistics

India, producing and supplying a various types of circuit breakers


wide range of products catering to (below 36KV).
the needs of households,
 High Voltage (HV) Switchgear
commercial and power sector, for
– product range include
entire voltage, ranging from 240 V
switchgears above 36KV, such
to 800 KV. Major players in the
as SF6 (Sulphur Hexafluoride)
switchgear segment are Siemens,
breaker, gas insulated
ABB, Crompton Greaves, Areva
switchgear, lighting arresters
and Havells. The switchgear
and composite insulators.
products can be broadly
categorised into the following three India has been exporting
groups: switchgears and control gears to
various countries. In the year 2006-
 Low Voltage (LV) Switchgear
07, India exported switching
(upto 1000 V) – mainly used
apparatus (not exceeding 1000v)
in domestic, power distribution
valued at US $ 234 million, a growth
and industrial control system.
of 28% over the previous year. In
 Medium Voltage (MV) addition, India also exported
Switchgear (upto 36KV) – switching apparatus (exceeding
product range mainly include 1000v) worth US $ 90 million in

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Table 17:
MARKET SIZE AND LEADING PLAYERS IN SWITCHGEAR INDUSTRY
Segments Market Size Leading Players
(2006-07)
(Rs. Crores)
Switchgears 6000.00 Siemens (Rs. 936.85 crs)
ABB (Rs. 921.53 crs)
Crompton Greaves (Rs. 872.66 crs)
Areva (Rs. 565.42 crs)
Havells (Rs. 533.74 crs)

SOURCE: Industry: Market Size and Shares, CMIE, 2008.

2006-07, a growth of 34% over the India is also an importer of


previous year. Major markets include switchgears and control gears. In the
UK, USA, Germany, UAE, year 2006-07, India imported
Philippines, Australia and Hong switchgears and control gears (not
Kong. exceeding 1000v) valued
Table 18:
INDIA’S EXPORT OF SWITCHING AND PROTECTING ELECTRICAL
CIRCUITS / APPARATUS (US $ Million in 2006-07)
Sl No Export to Switching Share (%) Switching Share (%)
apparatus apparatus
not exceeding
exceeding 1000v
1000v (HS code
(HS code 8535)
8536)
World 233.82 100.00 89.57 100.00
1. UK 42.17 18.03 11.23 12.54
2. USA 32.61 13.94 17.90 19.98
3. Germany 18.76 8.02 1.77 1.98
4. UAE 15.94 6.81 6.92 7.72
5. Philippines 7.05 3.01 0.60 0.67
6. Australia 6.57 2.81 1.40 0.42
7. Hong Kong 6.55 2.80 0.31 0.35
8. Saudi Arabia 6.09 2.60 2.24 2.50
9. Nigeria 5.66 2.42 0.46 0.51
10. France 5.64 2.41 2.80 3.12

SOURCE: Directorate General of Commercial Intelligence and Statistics

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Table 19:
INDIA’S IMPORT OF SWITCHING AND PROTECTING ELECTRICAL
CIRCUITS / APPARATUS
(US $ Million in 2006-07)
Sl No Import from Switching Share (%) Switching Share (%)
apparatus apparatus
not exceeding
exceeding 1000v
1000v (HS code
(HS code 8535)
8536)
1. Germany 96.23 20.82 11.98 23.61
2. China 64.92 14.05 5.29 10.42
3. USA 21.04 11.05 4.70 9.27
4. France 39.65 8.58 2.35 4.63
5. South Korea 29.98 6.49 1.25 2.46
6. Japan 26.30 5.69 1.15 2.27
7. Singapore 24.65 5.33 1.21 2.39
8. UK 21.64 4.68 1.66 3.27
9. UAE 12.07 2.61 0.40 0.79
10. Switzerland 9.65 2.08 10.54 20.78

SOURCE: Directorate General of Commercial Intelligence and Statistics

US $ 462 million in 2006-07. In the Market for capacitors in India is


same year, the import of switchgears worth more than Rs. 800 crores.
(exceeding 1000v) amounted to US The domestic production is
$ 51 million. estimated to be Rs. 400 crores, of
which exports being around Rs.
Capacitors 200 crores, while the import
Capacitors are used for correcting demand was valued at Rs. 600
power factor at the consumer end, crores. Some of the firms engaged
to improve the efficiency of the in capacitor production are
system and reducing unwanted Tibrewala Electronics, Varroc, ABB,
loses. LT capacitors, HT capacitors, Keltron, and BHEL.
starting / running capacitors, India’s export of electric
electrolytic motor starter capacitors, capacitors amounted to US $ 39
and induction furnace capacitors million in 2006-07, witnessing a
are some of the capacitors growth of 56% over the previous
manufactured in India. year. USA is the major market for

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Indian electric capacitors with a In the year 2006-07, India imported


share of 11.6%, followed by Spain electric capacitors valued US $ 135
and Qatar (10% each), Turkey and million, a growth of 14% over the
UAE (6% each). previous year. China is the main
India’s import of electric source country for India, accounting
capacitors is greater than its exports. for one-fourth of total imports. India’s

Table 20:
MARKET SIZE AND LEADING PLAYERS IN CAPACITOR INDUSTRY
Segments Market Size Leading Players
(2006-07)
(Rs. Crores)
Capacitors 400 Tibrewala Electronics (Rs. 54.16 crs)
Varroc (Rs. 37.19 crs)
ABB (Rs. 32.38 crs)
Keltron (Rs. 20.44 crs)
BHEL (Rs. 19.71 crs)

SOURCE: Industry: Market Size and Shares, CMIE, 2008.

Table 21:
INDIA’S EXPORT OF ELECTRIC CAPACITORS
HS Code 8532 (2006-07)
Sl No Export Destination Value Share (%)
(US $ Million)
World 39.48 100.00
1. USA 4.58 11.60
2. Spain 4.01 10.15
3. Qatar 3.86 9.78
4. Turkey 3.50 6.41
5. UAE 2.53 6.00
6. Brazil 2.37 5.87
7. Portugal 2.32 3.24
8. Germany 1.28 2.96
9. Hong Kong 1.17 2.79
10. Saudi Arabia 1.10 2.71

SOURCE: Directorate General of Commercial Intelligence and Statistics

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Table 22:
INDIA’S IMPORT OF ELECTRIC CAPACITORS
HS Code 8532 (2006-07)
Sl No Import from Value Share (%)
(US $ Million)
World 135.31 100.00
1. China 33.12 24.48
2. USA 18.88 13.95
3. Singapore 17.79 13.14
4. Germany 9.49 7.01
5. Taiwan 7.21 5.32
6. Japan 6.67 4.92
7. South Korea 6.64 4.91
8. Hong Kong 6.62 4.89
9. Czech Republic 5.05 3.73
10. France 2.90 2.14

SOURCE: Directorate General of Commercial Intelligence and Statistics

other major source countries include: Mumbai and Kolkata. Organized


USA (14%), Singapore (13%), sector accounts for 33% of total
Germany (7%), Taiwan and Japan production. Major brands from this
(5% each). segment are Kiloskar Electric and
Crompton Greaves.
Motors and Generators
Electric motor segment on the
The generator industry has two other hand is dominated by the
segments: portable sets, which run organized sector, with around 60
on kerosene, petrol and diesel; and companies engaged in production.
stationary sets, which run primarily In addition, there are nearly 3000
on diesel. Large number of players units in the small and medium sector
are engaged in production of manufacturing low capacity motors.
generators, particularly in the lower
Motors and generators market
KVA generator (3 to 15 KVA) together is worth over Rs 5500
segment. This segment is crores in India. India mainly exports
characterized by simple technology electric generating sets and rotary
and hence dominated by the small converters (HS Code 8502), but
and medium enterprises (SMEs). mainly imports electric motors and
These SME units are concentrated generators (other than generating
mainly in Agra, Rajkot, Kolhapur, sets) (HS Code 8501).

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Table 23:
MARKET SIZE AND LEADING PLAYERS IN MOTORS AND GENERATORS
Segments Market Size Leading Players
(2006-07)
(Rs. Crores)
Motors and Generators 5500 BHEL (Rs. 1354.45 crs)
Crompton Greaves (Rs. 797.36 crs)
Siemens (Rs. 549.66 crs)
Powerica (Rs. 484.39 crs)
Sidhir Gensets (Rs. 398.72 crs)

SOURCE: Industry: Market Size and Shares, CMIE, 2008.

In the year 2006-07, India’s hand, India’s import of electric


export of electric motors and generating sets (HS Code 8502) was
generators (HS Code 8501) was valued at US $ 114 million, and the
valued at US $ 133 million, whereas import of electric motors and
India’s export of electric generating generators (HS Code 8501) was
sets and rotary converters (HS Code valued at US 244 million. China,
8502) amounted to US $ 361 million. Germany, USA and South Korea are
USA is the largest market for export major importers under both the
of both the categories. On the other categories.
Table 24:
INDIA’S EXPORT OF ELECTRIC MOTORS AND GENERATORS
US $ Million (2006-07)
Sl No Export Elec. Share (%) Electric Share (%)
Destination Generating motors and
sets generators
(HS 8502) (HS 8501)
World 361.43 100.00 133.30 100.00
1. USA 274.95 76.07 51.76 38.82
2. Portugal 14.88 4.11 Neg Neg
3. Mali 11.64 3.22 1.49 1.11
4. UAE 6.59 1.82 5.03 3.77
5. Turkey 3.64 1.01 0.76 0.57
6. Japan 3.27 0.90 1.75 1.31
7. Australia 2.55 0.70 0.21 0.16
8. Chad 2.53 0.70 Neg Neg
9. Ghana 2.31 0.64 0.23 0.17
10. Saudi Arabia 2.23 0.62 10.51 7.88

SOURCE: Directorate General of Commercial Intelligence and Statistics

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Table 25:
INDIA’S IMPORT OF ELECTRIC MOTORS AND GENERATORS
US $ Million (2006-07)
Sl No Import from Electric Share (%) Elec. Share (%)
motors and Generating
generators sets
(HS 8501) (HS 8502)
World 244.43 100.00 114.10 100.00
1. China 43.70 17.88 15.63 13.70
2. Germany 38.89 15.91 26.32 23.07
3. USA 21.91 8.96 8.83 7.74
4. South Korea 21.49 8.79 0.12 0.11
5. Italy 15.10 6.18 1.68 1.47
6. Japan 13.75 5.62 7.35 6.44
7. UK 12.94 5.29 2.82 2.47
8. Finland 9.73 3.98 5.63 4.93
9. Singapore 6.67 2.73 13.60 11.92
10. Switzerland 6.62 2.71 0.20 0.17

SOURCE: Directorate General of Commercial Intelligence and Statistics

In sum, the capital goods tools under the category of non-


industry in India is witnessing electrical machinery; and
turnaround since the last few years. transformers, switchgears, electric
The index of industrial production for generating sets under the electrical
the capital goods industry is machinery category. India is a net
witnessing an increasing trend since importer in most of the products, as
2002-03. Exports by various sub- the leading players are expanding
segments of the capital goods their capacities and the country is on
industry is also on the increase, the manufacturing growth path.
especially with regard to machine

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4. EXIM BANK’S SUPPORT TO


INDIAN MACHINE TOOLS
SECTOR: CASE STUDY

BACKGROUND to adopt a cluster approach, seeking


The economic reforms increased support from United Nations
the competition to Indian industry, Industrial Development Organisation
both in domestic and foreign (UNIDO) and the Government of
markets. This resulted in India (the then Department of Small
transformation of Indian Scale Industries), to help the
manufacturing sector, which has member-firms in overcoming the
been increasingly seeking weaknesses, by adopting best
technological solutions that help the practices in the industry across the
sector in sharpening their globe.
competitiveness, both in domestic
and international markets. At this NATIONAL PROGRAMME FOR
juncture, Export-Import Bank of DEVELOPMENT OF MACHINE
India (Exim Bank) identified Indian TOOL INDUSTRY
machine tools sector – a sub-
Following this recommendation, at
segment of Indian capital goods
the instance of the industry, a
industry, and brought a study
National Programme for
identifying appropriate strategies to
Development of Indian Machine
strengthen this sector, and thereby
Tool Industry (NPDMI) was
help contribute to the growth of
Indian manufacturing sector. launched in December 2002, as a
cooperative effort of UNIDO,
The study on Indian machine Government of India, Exim Bank
tools sector, captured the trends in and IMTMA.
global and Indian machine tools
sector, analysed the potential Objectives
competition from countries such as
The objectives of the programme
China and Taiwan, and
include:
recommended an agenda for
development. One such  Strengthening the competitive
recommendation made by the study position of the Indian machine
was that the Indian Machine Tools tool Industry in the global
Manufacturers Association (IMTMA) market;

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 Strengthening the technological improvements in their units.


and market development Followed by this was a group
capacity of players of the participation in BIMU Milan (Italian
industry; and Machine Tools Production Systems
Show) by the machine tool
 To achieve high growth in CNC
manufacturers under the banner of
machine tool production,
India – UNIDO. This event alone
ushering in an era of e-
was estimated to have generated
commerce in machine tool
a business of around US $ 5.5
trade, and establishing ‘Made
million, representing around 5% of
in India’ label in machine tools.
annual exports of the sector in
2002-03.
Steering Committee
A Steering Committee was formed, As a part of the programme,
drawing expertise from various delegations comprising machine tool
fields, to guide successful manufacturers attended the China
implementation of the project. Exim International Machine Tool Show and
Bank’s representation in the Canton Fair (China Import and
Committee significantly contributed Export Fair). Technology Survey was
to the successful implementation of also conducted during the
the programme. International Manufacturing
Technology Show held at Chicago.
Activities Learning through participation in
Range of activities was undertaken international trade shows were
to update the manufacturing and supplemented with showcasing the
management practices of the capabilities of Indian machine tool
players in Indian machine tools manufacturers in India. A group of
sector. Evaluation of machine tool firms were encouraged to participate
technology and market trends in and showcase their capabilities in
USA and Europe was undertaken National Manufacturing and
through surveys. Visit to EMO Milan Technology Show. With the objective
(a biennial trade show for machine of bringing together the machine tool
tools held in Italy) helped the manufacturers and their sub-system
industry to study the global suppliers, a ‘Machine Tool
technological trends in the machine Manufacturers and Vendors Meet’
tools sector, and undertake gap- was organized during this show. End
analysis of technology in Indian user surveys were also conducted in
machine tools sector. Participation various machine tool clusters in
also helped the players to India. During such interactions
undertake appropriate technology improvements needed in Indian

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machine tool designs and quality systems, precision measurement


were passed on to the vendors. In and calibration equipment, heat
addition, a two-day international treatment, machine tool ergonomics
seminar on ‘Machining Technologies’ and aesthetics were also taken place
was organized, focussing on on a regular basis.
emerging technologies in machining
process, and volume production, to Outcome
analyse the international trends in the It may thus be fair to surmise that
metal-cutting machine tool industry. as a result of range of such
To bridge the technology gap, activities, the production and export
especially in the small and medium of Indian machine tools sector have
segment, a series of advanced gone up over the years. ‘Made in
machine tool design courses were India’ label of Indian machine tool
organized at International Centre for sector has gained international
Advancement of Manufacturing reputation making the sector more
Technology (ICAMT), Bangalore. competitive in domestic as well as
Such courses helped the industry in international markets.. Ministry of
creating new breed of machine tool Small Scale Industries, Government
technologists and improvement in of India selected the machine tool
machine design. In addition, training sector as a theme for the Fourth
programmes on foundry SSI Convention, held in the year
technologies and materials 2003. UNIDO declared this initiative
engineering, quality management as a success story.
Exhibit 16:
PRODUCTION AND EXPORT PERFORMANCE OF INDIAN MACHINE
TOOLS SECTOR

SOURCE: Exim Research; Data complied from Indian Machine Tools


Manufacturers Association and Directorate General of Commercial Intelligence
Statistics, Government of India

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FINANCING SUPPORT machine tools sector, has set up


Exim Bank has been closely the Bangalore International
associated with the export efforts Exhibition Centre (BIEC). The focus
at BIEC is not only to house the
of Indian machine tools sector. The
IMTMA’s international machine tool
Bank has been supporting the
exhibition – IMTEX and other
machine tool sector to modernise
IMTMA-organised events, but also
and upgrade their production
to make available the facilties to the
facilities, adaptation of technology
Indian industry for scheduling
and internationally acceptable international events. BIEC has set
standards through its various in place a strategic partnership with
financing products and services. Deutsche Messe AG – owners of
world’s one of the largest exhibition
Bangalore International facilities in Hannover, Germany, for
Exhibition Centre international marketing. Exim Bank,
IMTMA, with the objective of under its export facilitation
showcasing the capabilities of programme, has supported IMTMA
Indian industry, particularly the in setting up this exhibition facility.

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5. INDIAN CAPITAL GOODS


INDUSTRY: MARKET ANALYSIS
AND EXPORT POTENTIAL

As the capital goods industry In this chapter, analysis has


provides machinery and equipments been carried out to map the global
for the manufacturing sector, trends in import of select capital
performance of this sector is linked goods, major export destinations for
to the overall growth of the Indian capital goods and potential for
manufacturing sector. Achieving Indian capital goods exporters, to
competitiveness in this sector is expand the market share, especially
possible with continually sustaining in select developing country markets.
the growth in production and While there may also be
productivity, market penetration and opportunities for market expansion
expansion, characterized by growth in developed countries such as USA
in exports. Thus, in a globalized era,
and EU, this study focusses on
the competitiveness of Indian capital
opportunities available in developing
goods industry is influenced by not
country markets, wherein
only the growth in production but also
customization through product
by external factors such as world
market for capital goods, India’s development and price
position vis-à-vis other major competitiveness would help enhance
suppliers. the market share of Indian capital
goods exporters.
Globally the capital goods
industry is worth around US $ 4.5 NON-ELECTRICAL
trillion industry. Germany, and USA MACHINERY
are traditionally large suppliers of
different segments of capital goods. Machine Tools
However, of late, Asian countries
Major categories of machine tools
such as China, Taiwan, and South
Korea have become major players imported in the world include
in production and export of capital machine tools for working metal by
goods. Consumption of capital forging, hammering and die-
goods has also increased stamping (HS Code 8462); machine
substantially in these countries due tools for working in the hand,
to the thrust given to the pneumatic or self-contained non-
manufacturing sector. electric motor (HS Code 8467);

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Table 26:
WORLD IMPORT OF SELECT MACHINE TOOLS (US $ Million)
HS Code Description 2005 2006
8462 Machine tools for working metal by 7235.90 8789.42
forging, hammering and die-stamping
8467 Tools for working in the hand, pneumatic
or with self-contained non-electric motor 6686.53 7918.55
8457 Machining centers and multi station
transfer machines for working metal 6228.92 7193.36
8465 Machine tools for working wood, cork,
bone, hard rubber, hard plastics etc.,. 6147.15 7091.63
8458 Lathes for removing metal 5325.93 5983.42
8460 Machine tools for deburring, sharpening,
grinding, honing, lapping, polishing metals 3424.22 3732.78
8464 Machine tools for working stones,
ceramics, concrete, asbestos-cement or
other mineral materials 3349.85 4271.03
8459 Machine tools for drilling, boring,
milling, threading or tapping by removing
metals other than lathes 3049.85 3646.65
8461 Machine tools for planing, shaping,
slotting, broaching, gear-cutting,
grinding or finishing, working by
removing metals 1956.53 2393.71
8463 Other machine tools for working metal,
sintered metal carbides without removing
materials 1594.65 1809.02

SOURCE: UN COMTRADE

machining centers and multi station hammering and die-stamping (HS


transfer machines for working Code 8462) include China, USA,
metals (HS Code 8457); and Germany and France. India is 15th
machine tools for working wood, largest importer in the world with
cork, bone, hard rubber, hard its import amounting to US $ 275
plastics etc. (HS Code 8465). million in 2006. China’s import
demand has been principally
Machine tools for working catered by countries such as Japan
metal by forging, hammering and Taiwan in the Asia region;
and die-stamping Germany is one of the largest
(HS Code 8462) source countries for China’s imports
Major importers of machine tools outside Asia. Germany has been
for working metal by forging, importing this category of machine

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tools principally from regional these developed countries. Indian


countries such as Italy, Switzerland, machine tool exporters may also
France and Austria. USA has been target UAE as a potential market for
principally importing from countries enhancing their market share. India
such as Germany, Canada, Italy is not a significant source country for
and UK. Iran, though Iran is one of the largest
markets for this category of machine
India has been exporting this
tools. Iran has been principally
category of machine tools primarily
sourcing from developed countries
to Nigeria, UAE and Iran, in addition
such as Germany, Japan and Italy.
to developed countries such as USA
Thus, India has potential to enhance
and Canada. In the year 2005,
its exports to Iran. In addition, Indian
Nigeria imported machine tools
machine tool exporters should also
under this category valued US $ 9
target other developing countries
million. India was the principal source
such as Mexico, Thailand and
country for imports under this
Turkey, who are major developing
category with around one-third
country importers.
share. Other major source countries
for Nigeria include developed
Tools for working in the
countries such as Belgium and
hand, pneumatic or with self-
Germany. For UAE, India is the
contained non-electric motor
eighth largest source country for
import of machine tools under this (HS Code 8467)
category. Though, UAE has been Major importers of machine tools
sourcing principally from developed working in hand, pneumatic or self-
countries such as Italy, Germany and contained non-electric motor
Spain; China is able to compete with category include USA, Mexico,

Table 27:
MARKET ANALYSIS FOR MACHINE TOOLS UNDER HS CODE 8462
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Nigeria Belgium and Germany Mexico USA, Spain and Italy


UAE Italy, Germany and Thailand Japan, Korea and
Spain Taiwan
Iran Germany, Japan Turkey Italy, Germany and
and Italy Brazil

SOURCE: UN COMTRADE

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Germany and France. India is 15th as Nigeria, Sri Lanka and Kenya.
largest importer in the world with
Countries such as Poland,
the value of imports being US $ 62
Indonesia and Czech Republic are
million in 2006. USA has been
leading importers amongst
mainly importing from Taiwan,
developing countries. However, India
Japan and Germany, while the
is not a significant source country for
import demand of Mexico has been
import of machine tools (HS Code
catered by Japan, Brazil and
8467) for these countries. Indian
Belgium. Major source countries for
machine tool exporters may also
Germany include Belgium, Malaysia target these developing countries
and China. through customized product
India’s major markets include development, technology
Belgium, USA, UK and Canada. adaptation, and by offering attractive
Amongst developing countries, price.
Nigeria, Sri Lanka and Kenya are the
major markets for India. It may be Machining centers and multi
noted that developed countries such station transfer machines for
as Singapore, Germany, Italy and working metal (HS Code 8457)
USA are the major source countries Major world importers of machining
for import by Nigeria, Sri Lanka and centers and multi-station transfer
Kenya. China and Brazil, which are machines for working metal (HS
developing countries, are other Code 8457) include USA, China,
major source countries. Thus, India Germany and Belgium. China has
could endeavor to expand the market principally imported from countries
share in developing countries such such as Japan, Germany and

Table 28:
MARKET ANALYSIS FOR MACHINE TOOLS UNDER HS CODE 8467
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Nigeria Germany, Singapore Poland Germany, USA and


and UK Sweden
Sri Lanka Singapore, China Indonesia Singapore, China and
and Italy Canada
Kenya Brazil, Germany and Czech Republic Germany, Italy and
USA Austria

SOURCE: UN COMTRADE

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Taiwan. While the major source leading sources for imports by these
countries for import (of machining developing countries, and thus is a
centers and multi-station transfer major competitor for India’s exports.
machines) by Germany are Japan,
Switzerland, UK and Belgium; USA Machine tools for working
has principally sourced machine wood, cork, bone, hard
tools under this category from rubber, hard plastics etc.,.
countries such as Japan, Germany (HS Code 8465)
and Taiwan. Amongst developing Major world importers of machine
countries, Mexico, Thailand and tools for working wood, cork, bone,
Turkey are the major importers hard rubber, hard plastics (HS
under this category of machine Code 8465) include USA, China,
tools. Germany and Russia. Poland and
Hong Kong are the leading
India, in the year 2006-07,
developing country exporters of
exported machine tools under this
machine tools under this category.
category worth US $ 3.3 million. Italy
USA has principally sourced its
is the major market for Indian
import requirements from Germany
machine tools under this category in
and Italy, whereas, China has
2006-07. However, amongst
sourced its import requirements
developing countries, India has been
from Japan, Hong Kong and
exporting mainly to Nigeria, UAE and
Taiwan. Germany has mainly
Israel. All these developing countries
sourced from Austria and Italy.
are mainly importing from developed
countries, and thus offer potential for In the year 2006-07, India’s
Indian exporters to enhance the export of machine tools under this
market share. Taiwan is one of the category amounted to US $ 6.6
Table 29:
MARKET ANALYSIS FOR MACHINE TOOLS UNDER HS CODE 8457
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Nigeria Italy, Germany Mexico Germany, Japan and


and Taiwan USA
UAE Italy, Germany and USA Thailand Japan, Taiwan and
Singapore
Israel Germany, Taiwan Turkey Taiwan, Germany and
and UK Japan

SOURCE: UN COMTRADE

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million. India has mainly exported to importers of machine tools under


countries such as UAE, USA, this category include Thailand,
Thailand and Sudan. While UAE has Turkey and Hong Kong. USA has
principally sourced from countries principally sourced from countries
such as Taiwan and Germany, major such as Japan, Korea and
source countries for Thailand include Germany. While Germany has
Taiwan, Japan and Germany. Sudan, sourced its import requirements
though not a significant importer of from Japan, Italy and Belgium, the
machine tools under this category, import demand of China has been
has sourced its import requirements primarily sourced from Japan,
from countries such as Austria and Taiwan and Hong Kong.
Turkey. Indian machine tools
In the year 2006-07, India
exporters may thus adopt
exported lathes for removing metals
appropriate product development
(HS Code 8458) valued US $ 20
and pricing strategies to enhance the
million. Main markets for India under
market share in developing countries,
this product category include USA,
such as UAE and Thailand. Australia and Bangladesh. Some
other developing countries that are
Lathes for removing metal major export markets for Indian
(HS Code 8458) lathes include Brazil and UAE. While
Major importers of lathes for India caters to significant volume of
removing metals (HS code 8458) import demand of Bangladesh under
in the world include USA, Germany this category, there is still space for
and China. Developing countries enhancement of exports. India’s
(other than China) that are major competitors in Brazil include Japan,

Table 30:
MARKET ANALYSIS FOR MACHINE TOOLS UNDER HS CODE 8465
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

UAE Taiwan, Germany China Japan, Hong Kong


and India and Taiwan
Thailand Taiwan, Japan and Poland Germany, Italy and
Germany Austria
Sudan Austria, Turkey and Italy Hong Kong Taiwan, Japan and
Germany

SOURCE: UN COMTRADE

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Germany and South Korea. The from Japan, Germany and Italy.
import requirements of UAE, which While USA has mainly imported
is an important market for India, is from Japan, Germany and
met through imports from developed Switzerland, the requirements are
countries such as Germany and UK. met in Germany through imports
China is the third largest source from Switzerland, Italy and Sweden.
country for import of machine tools
India, in the year 2006-07,
under this category by UAE.
exported machine tools (under HS
code 8460) valued US $ 5.5 million,
Machine tools for de-burring,
Major developing country markets for
sharpening, grinding, honing,
India include Nigeria, Malaysia and
lapping, polishing metals (HS
UAE. Nigeria, which is not a major
Code 8460) importer of machine tools under this
Major importers of machine tools category, mainly imported from
(for de-burring, sharpening, honing, South Korea, Italy and China.
lapping and polishing metals) under Malaysia, another major developing
HS Code 8460 in the world include country market for India, imported
China, USA and Germany. Among principally from Japan, Singapore
developing countries, Thailand, and Taiwan, while UAE sourced its
Turkey and Mexico are major import requirements from Japan,
importers of machine tools under Germany and Switzerland. India,
this category. India is also one of thus, has more room for export
the major importers of machine expansion in these developing
tools under this category. China has countries, especially in Malaysia and
principally sourced its requirements UAE.

Table 31:
MARKET ANALYSIS FOR MACHINE TOOLS UNDER HS CODE 8458
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Bangladesh Japan, Singapore Thailand Japan, Taiwan and


and China China
Brazil Japan, Germany and Turkey Taiwan, Japan and
South Korea Korea
UAE Germany, UK and China Hong Kong Taiwan, Japan and
China

SOURCE: UN COMTRADE

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Table 32:
MARKET ANALYSIS FOR MACHINE TOOLS UNDER HS CODE 8460
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Thailand Japan, Thailand and Nigeria South Korea, Italy


Taiwan and China
Turkey Germany, Switzerland Malaysia Japan, Singapore
and Italy and Taiwan
Mexico USA, Japan and Italy UAE Japan, Germany and
Switzerland

SOURCE: UN COMTRADE

Machine tools for working category worth US $ 3.5 million.


stones, ceramics, concrete, Major markets for India under this
asbestos-cement or other category include developing
mineral materials countries such as Yemen, Egypt and
(HS Code 8464) Oman. Although in small quantity,
Major importers of machine tools India is one of the major exporters
for working stones, ceramics, of machine tools under this category
concrete, asbestos-cement (HS to Yemen, Egypt and Oman. India’s
Code 8464) in the world include principal competitors in these
Taiwan, USA and China. Other than countries include Italy, Egypt and
Taiwan and China, the developing Jordan.
country importers include Iran and
India. India, in the year 2006-07, Machine tools for drilling,
imported machine tools under this boring, milling, threading or
category valued US $ 150 million. tapping by removing metals
Taiwan has principally sourced its other than lathes (HS Code
import requirements from Japan, 8459)
USA and South Korea, whereas, Major importers of machine tools
China has principally sourced its
for drilling, boring, milling, threading
requirements from Japan,
or tapping, by removing metals (HS
Switzerland and Italy. Iran has
Code 8459) in the world include
sourced its requirements from Italy,
China, USA and Germany. Select
Germany and Turkey.
developing countries that are
India, in the year 2006-07, importers of machine tools under
exported machine tools under this this category include Thailand,

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Table 33:
MARKET ANALYSIS FOR MACHINE TOOLS UNDER HS CODE 8464
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Yemen Italy, Jordan and China Taiwan Japan, USA and


South Korea
Egypt Italy, Japan and Belgium China Japan, Switzerland
and Italy
Oman Italy and Spain Iran Italy, Germany and
Turkey

SOURCE: UN COMTRADE

Hong Kong and Indonesia. India is and Singapore. Thus, Indian


also one of the developing country machine tool exporters may
importers of machine tools under concentrate in the markets of
this category. In the year 2006-07, Ukraine and Thailand for expansion
India’s imports were valued at US of market share.
$ 147 million. China has principally
sourced its import requirements Machine tools for planing,
under this category from Japan, shaping, slotting, broaching,
Germany and Taiwan. Thailand and gear-cutting, grinding or
Hong Kong have principally finishing, working by
sourced from countries such as removing metals (HS Code
Japan, Taiwan, Singapore and 8461)
China.
Major importers of machine tools
In the year 2006-07, India for planing, shaping, slotting,
exported machine tools, under this broaching, gear-cutting, grinding or
category, valued US $ 14.9 million. finishing by removing metals (HS
Ukraine, Thailand and UAE are Code 8461) in the world are USA,
major markets for Indian machine China, Germany and Japan.
tools under this category. While India Among the developing countries,
is largest source country for imports India, Poland, Thailand and
by UAE, Ukraine has been principally Indonesia are the leading importers.
importing its requirements from In the year 2006-07, India imported
neighboring countries such as machine tools under this category
Russia, Belarus and Germany. valued US $ 137 million. China,
Thailand, on the other hand, has Poland and Thailand have
imported mainly from Japan, Taiwan principally imported from countries

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Table 34:
MARKET ANALYSIS FOR MACHINE TOOLS UNDER HS CODE 8459
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Ukraine Russia, Belarus and China Japan, Germany and


Germany Taiwan
Thailand Japan, Taiwan and Thailand Japan, Taiwan and
Singapore Singapore
UAE UK, Germany and Hong Kong Japan,
China Taiwan and China

SOURCE: UN COMTRADE

such as Japan, Germany, Taiwan, Italy, China and USA. Similar is the
Italy and Singapore. case with regard to Turkey and
In the year 2006-07, India Sudan, other major developing
exported machine tools under this country markets for Indian machine
category valued US $ 6.6 million. tools. These two countries have
Major markets for India’s exports sourced their import requirements
include USA, UAE, Germany, from Germany, Italy, USA and
Turkey, UK and Sudan. Though UAE Taiwan. Indian machine tool
is one of the largest market for India exporters have to formulate
for machine tools under this appropriate strategies to enhance
category, the country has met its their market presence in these
requirements through imports from developing countries.

Table 35:
MARKET ANALYSIS FOR MACHINE TOOLS UNDER HS CODE 8461
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

UAE Italy, China and USA China Japan, Germany and


Taiwan
Turkey Germany, Italy and USA Poland Japan, Germany and
Italy
Sudan Italy, Turkey and Taiwan Thailand Japan, Taiwan and
Singapore

SOURCE: UN COMTRADE

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Textile Machinery Washing machines


Major categories of textile (HS code 8450)
machinery imported in the world Major importers of washing
include general purpose washing machines in the world include USA,
machines (HS Code 8450); Russia, UK and Germany. Among
machinery for washing, drying, developing countries, principal
wringing, ironing, pressing and importers include Ukraine, Poland
bleaching (HS Code 8451); and Mexico. Though India is not a
auxiliary machinery such as significant importer of this item, in
dobbies and jacquards (HS Code the year 2006-07, India imported
8448); machines for preparing washing machines valued US $ 34
textile fibres, spinning and twisting million. Major source countries for
(HS Code 8445); knitting and Ukraine, Poland and Mexico are
embroidery machines (HS Code Italy, China, Slovakia and South
8447), and weaving machines (HS Korea.
Code 8446).

Table 36:
WORLD IMPORT OF SELECT TEXTILE MACHINERY
(US $ Million)
HS Code Description 2005 2006
8450 Washing machines 10621.89 10808.17
8451 Machinery for washing, drying, wringing,
ironing, pressing, bleaching, dyeing,
dressing and finishing 5521.33 5781.94
8448 Auxiliary machinery such as dobbies,
jacquards etc 4310.48 4364.64
8445 Machines for preparing textile fibres,
spinning, twisting and other yarn
making machinery 3139.69 3551.21
8447 Knitting / stitch-bonding machines,
and other machines for making laces,
embroidery and trimmings 3120.17 3537.48
8446 Weaving machines (looms) 1563.5 2266.15
8449 Machinery for manufacture of finishing
felts or non-wovens 586.38 560.30
8444 Machines for extruding, drawing, texturing
or cutting man-made textile materials 541.63 635.10

SOURCE: UN COMTRADE

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In the year 2006-07, India ironing, pressing, bleaching, dyeing,


exported washing machines valued dressing and finishing in the world
US $ 7.3 million. Major markets for are USA, China and Germany.
Indian washing machines include Major developing countries that are
USA, Australia and UAE. Developing importing machineries under this
countries such as Chile and Sri heading include Turkey, Hong Kong
Lanka were also major markets for and Pakistan. India is also one of
Indian washing machines, though the significant importers of
not very significant. India’s major machineries under this category. In
developing country markets such as the year 2006-07, India imported
UAE, Chile and Sri Lanka have machineries valued at US $ 248
sourced its import requirements from million. Developing countries such
mostly developing countries such as as Turkey, Hong Kong and
China, Thailand, South Korea and Pakistan have mainly imported their
Brazil. Indian exporters have thus machinery requirements from
room for market expansion in these countries such as Germany, Italy,
countries which could be achieved USA and China.
through greater emphasis on
In the year 2006-07, India’s
innovation and product development.
export of textile machineries under
this category amounted to US $ 9.3
Machinery for washing,
million. Major markets for India
drying, wringing, ironing,
include USA, Egypt, Indonesia and
pressing, bleaching, dyeing,
Bangladesh. Developing countries
dressing and finishing such as Egypt, Indonesia and
(HS code 8451) Bangladesh imported principally
Major importers of textile machinery from countries such as Italy,
for washing, drying, wringing, Germany, Taiwan, South Korea and
Table 37:
MARKET ANALYSIS FOR TEXTILE MACHINERY UNDER HS CODE 8450
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

UAE China, Thailand and Ukraine Italy, China and


South Korea Poland
Chile China, Thailand and Poland Italy, Slovakia
Brazil and Germany
Sri Lanka China, Thailand and Mexico USA, South Korea
Singapore and China

SOURCE: UN COMTRADE

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Table 38:
MARKET ANALYSIS FOR TEXTILE MACHINERY UNDER HS CODE 8451
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Egypt Italy, Germany and Turkey Germany, Italy and


Japan USA
Indonesia Germany, Taiwan and Hong Kong China, Germany and
China USA
Bangladesh Germany, South Korea Pakistan Germany, Italy and
and Taiwan USA

SOURCE: UN COMTRADE

China. Indian exporters, through such as Germany, France, Belgium


product and technology and Italy. Asian countries such as
development, could enhance their Japan and Singapore were also
export opportunities in such major suppliers of auxiliary textile
developing country markets. machinery to these countries.
India’s export of auxiliary textile
Auxiliary machinery such as
machinery in the year 2006-07
dobbies, jacquards etc
amounted to US $ 61.3 million. Major
(HS Code 8448)
developing country markets for India
Major importers of auxiliary textile include Indonesia, China and
machinery in the world include Bangladesh. In addition, India has
China, USA and Italy. Some of the also exported to developed country
major developing country importers markets such as Germany and USA.
include Turkey, Hong Kong and Close competitors for India in these
Taiwan. India is also one of the developing countries include Japan,
major developing country importers Germany, Switzerland, Italy, China
of auxiliary textile machinery in the and Taiwan. Indian exporters should
world. In the year 2006-07, India thus undertake customized product
imported auxiliary machinery worth development to cater to the market
US $ 241 million. Main source requirements and be price
countries for Turkey, Hong Kong competitive to enhance market share
and Taiwan are European countries in these countries.

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Table 39:
MARKET ANALYSIS FOR TEXTILE MACHINERY UNDER HS CODE 8448
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Indonesia Japan, Switzerland, Turkey Germany, France and


and Germany Belgium
China Germany, Japan and Hong Kong Germany, Japan and
Italy Italy
Bangladesh Switzerland, China and Taiwan Singapore, Japan and
Taiwan Germany

SOURCE: UN COMTRADE

Machines for preparing textile spinning / yarn making machinery


fibres, spinning, twisting and worth US $ 4 million to Chad alone,
other yarn making machinery and stood as the single largest
(HS Code 8445) supplier. Both Bangladesh and India
have been sourcing their import
Importing of spinning and yarn
requirements from China, in addition
making textile machinery in the
to Germany, Japan and Switzerland.
world is dominated by developing
countries. These include China,
Knitting / stitch-bonding
Pakistan, Turkey and Bangladesh.
machines, and other
India is third largest importer of
machines for making laces,
spinning / yarn making machinery
embroidery and trimmings
in the world, the import value being
(HS Code 8447)
US $ 841 million in 2006-07. China,
Pakistan and Turkey, the largest Major importers of knitting / switch-
importers in the world have bonding machines in the world are
principally sourced their import developing countries such as
requirements from countries such China, Hong Kong, and Turkey.
as Germany, Japan, Switzerland, India is also one of the leading
Italy and USA. importers of knitting and switch-
bonding machines in the world. In
India is also an exporter of the year 2006-07, India imported
spinning and yarn making machines, textile machinery, under this
with the export value being US $ 18 category, valued US $ 389 million.
million in 2006-07. India’s exports China, Germany, Japan, South
were mainly destined to Chad, Korea and Taiwan are the leading
Bangladesh and Indonesia. In the suppliers to these developing
year 2006-07, India exported country importers.

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Table 40:
MARKET ANALYSIS FOR TEXTILE MACHINERY UNDER HS CODE 8445
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Chad Germany China Japan, Italy and USA


Bangladesh Germany, China and Pakistan Japan, Germany and
Switzerland China
Indonesia Japan, China and Turkey Germany, Switzerland
Germany and Italy

SOURCE: UN COMTRADE

Table 41:
MARKET ANALYSIS FOR TEXTILE MACHINERY UNDER HS CODE 8447
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Hong Kong Germany, China and Bangladesh Taiwan, China and


Italy Germany
Turkey Italy, Japan and Pakistan Japan, South Korea
Germany and China
China Germany, Japan and Thailand Germany, Japan and
Italy China

SOURCE: UN COMTRADE

India’s export of knitting and Weaving machines (looms)


stitch-bonding machines in the year (HS Code 8446)
2006-07 was valued at US $ 3 Major importers of weaving
million. Machinery under this machines in the world are
category has been mainly exported developing countries, such as
to Hong Kong; other developing China, India, Turkey and Pakistan.
country markets include Turkey and India is the second largest importer
China. These countries have of weaving machines in the world,
principally sourced from developed next to China, with the import value
countries such as Germany, Japan amounting to US $ 278 million in
and Italy. 2006-07. Japan, Italy, USA,

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Germany and Switzerland are unloading machinery (e.g. lifts,


leading suppliers of weaving conveyors, escalators) (HS Code
machines to these importing 8428); Fork-lift trucks, other trucks
countries. fitted with lifting or handling
India also exported weaving equipments (HS Code 8427); Ships
machines to the tune of US $ 5.4 derricks, cranes, mobile lifting
million in 2006-07. Major export frames, straddle carriers (HS Code
markets for India include Thailand, 8426); Other moving, grading,
UAE and Vietnam. The competitors leveling, scrapping, excavating,
for India in these markets are mainly compacting equipments (HS Code
developed countries such as Japan, 8430); and Pulley tackle and hoists
Germany, Switzerland, USA and other than skip hoists, winches and
Italy. In UAE, Pakistan is one of the jacks (HS Code 8425).
leading suppliers of weaving
machines. Self propelled bulldozers,
single-dozers, graders,
Construction and Mining levelers, scrapers, mechanical
Machinery shovels, excavators, and road
Major categories of construction rollers (HS Code 8429)
and mining machinery imported in Major importers of self-propelled
the world include: Self propelled bulldozers, single-dozers, graders,
bulldozers, singledozers, graders, levelers, scrapers, mechanical
levelers, scrapers, mechanical shovels and road rollers (HS Code
shovels, excavators, and road 8429) in the world are USA,
rollers (HS Code 8429); Other Canada, France and Italy. Amongst
lifting, handling, loading or developing countries, the major

Table 42:
MARKET ANALYSIS FOR TEXTILE MACHINERY UNDER HS CODE 8446
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Thailand Japan, Germany and China Japan, Italy and


Switzerland Hong Kong
UAE Switzerland, USA and Turkey Italy, Switzerland and
Pakistan Germany
Vietnam Japan, USA and Italy Pakistan Japan, USA and Italy

SOURCE: UN COMTRADE

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Table 43:
WORLD IMPORT OF SELECT CONSTRUCTION AND MINING MACHINERY
(US $ Million)
HS Code Description 2005 2006
8429 Self propelled bulldozers, single-dozers, 29976.90 39109.45
graders, levelers, scrapers, mechanical
shovels, excavators, and road rollers
8428 Other lifting, handling, loading or 14718.39 18109.77
unloading machinery
(e.g. lifts, conveyors, escalators)
8427 Fork-lift trucks, other trucks fitted with 11208.56 11711.07
lifting or handling equipments
8426 Derricks, cranes, mobile lifting frames, 7981.73 10593.10
straddle carriers
8430 Other moving, grading, leveling, 6420.98 8947.39
scrapping, excavating,
compacting equipments
8425 Pulley tackle and hoists other than 3504.87 4223.10
skip hoists, winches and jacks

SOURCE: UN COMTRADE

importers are China, Indonesia, Other lifting, handling,


Turkey and Mexico. India has loading or unloading
imported construction machinery machinery (e.g. lifts,
under this category to the tune of conveyors, escalators)
US $ 283 million in the year 2006- (HS Code 8428)
07. Major developing country
Major importers of lifting, handling,
importers have principally sourced
their requirements from Japan, loading or unloading machinery
South Korea, Germany and UK. (under HS Code 8428) in the world
are USA, Germany, China and UK.
India’s export of construction Amongst developing countries, the
machinery under the category (HS major importers include Taiwan,
Code 8429) amounted to US $ 27 Mexico and UAE. India is also one
million. Major export markets for of the major developing-country-
India include Singapore, Tunisia, Sri importers of construction machinery
Lanka and Togo. These countries under this category, and imported
have principally sourced their import worth US $ 343 million in 2006-07.
requirements from countries such as
Belgium, Japan, UK, France, South India’s export of construction
Korea and China. machinery under this category

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Table 44:
MARKET ANALYSIS FOR CONSTRUCTION AND
MINING MACHINERY UNDER HS CODE 8429
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Tunisia Belgium, South Korea China Hong Kong, Japan


and UK and South Korea
Sri Lanka Japan, UK and Indonesia Japan, Singapore
China and Germany
Togo China, France and Turkey Japan, South Korea
Belgium and UK

SOURCE: UN COMTRADE

amounted to US $ 27 million in importing from Germany, Italy,


2006-07. Major markets for India Japan, China and Thailand. India is
include Belgium, Kenya, the second largest source country for
Netherlands, USA and UAE. The Kenya; however, with regard to
developing country markets such as export to UAE and Turkey, India’s
Kenya, UAE and Turkey are mainly ranking is not significant.

Table 45:
MARKET ANALYSIS FOR CONSTRUCTION AND MINING MACHINERY
UNDER HS CODE 8428
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Kenya Germany, South Africa China Japan, Germany,


and China Taiwan
UAE Germany, China and Taiwan Japan, Germany and
Thailand USA
Turkey Germany, Italy and Mexico USA, Spain and Italy
Japan

SOURCE: UN COMTRADE

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Fork-lift trucks, other trucks UK and USA, developing countries


fitted with lifting or handling such as Tanzania, Chad and UAE
equipments (HS Code 8427) were prominent markets for India’s
Major importers of fork-lifts or other total exports under this category.
trucks fitted with lifting / handling However, these countries have been
equipments (HS Code 8427) importing from developed countries
include USA, France, UK and such as UK, Italy, USA, Netherlands
Germany. Among developing and Japan.
countries, China, Poland, Mexico
and South Africa are leading Derricks, cranes, mobile
importers. India is also an importer, lifting frames, straddle
and its import in 2006-07 was carriers
amounting to US $ 34 million. (HS Code 8426)
These developing countries have Major importers of derricks, cranes,
mainly sourced their import straddle carriers, mobile lifting
requirements from developed frames, under HS Code 8426, in
countries such as Japan, UK, USA, the world are USA, Belgium, UAE
France and the Netherlands. and France. Developing countries
India exported construction and that are major importers under this
mining machinery, under this category include Hong Kong, China
category, valued US $ 6.8 million in and Brazil. India’s import under this
2006-07. While the products under category in 2006-07 was US $ 266
this category have also been million. Major source countries for
exported to developed countries like Hong Kong, China and Brazil

Table 46:
MARKET ANALYSIS FOR CONSTRUCTION AND
MINING MACHINERY UNDER
HS CODE 8427
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Tanzania Netherlands, UK and China Japan, Hong Kong


Italy and Italy
Chad USA Poland UK, France and
Netherlands
UAE Japan, UK, Mexico USA, UK and Japan
and Netherlands

SOURCE: UN COMTRADE

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Table 47:
MARKET ANALYSIS FOR CONSTRUCTION
AND MINING MACHINERY UNDER
HS CODE 8426
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

UAE China, Japan and Hong Kong China, Japan and


Ireland Sweden
Oman China, Italy and Japan China Germany, Japan and
Malaysia
Iran China, Germany and Brazil Norway, China and
Italy Sweden

SOURCE: UN COMTRADE

include developed countries such Canada. Developing countries that


as Japan, Norway and Sweden. are major importers under this
China has been one of the principal category are China, Angola and
suppliers to Hong Kong and Brazil. UAE. India is also one of the major
importers amongst developing
India’s export of derricks, countries under this category, with
cranes, straddle carriers, mobile import value of US $ 285 million in
lifting frames in the year 2006-07 2006-07. Major source countries for
was valued at US $ 18 million. Major import by China, Angola and
export destinations for India under Kazakhstan are Germany, USA,
this category are developing Italy and Finland. While South
countries such as UAE, Oman, Iran Africa is one of the major source
and Nigeria. Other than developed countries for Angola; China is one
countries such as Japan, Italy and of the major source countries for
Germany, China has also been one Kazakhstan.
of the major source countries for
UAE, Oman and Iran. India’s export under this
category, in 2006-07, was valued at
Other moving, grading, US $ 44 million. Major markets for
leveling, scrapping, India include developed countries
such as Singapore, Australia and
excavating, compacting
USA, and developing countries such
equipments (HS Code 8430)
as UAE, Togo and Qatar. These
Major importers of construction and countries have principally sourced
mining equipments under the from developed countries such as
category, HS Code 8430, in the Italy, Germany, France and the
world are USA, Spain, Russia and Netherlands. China is one of the

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Table 48:
MARKET ANALYSIS FOR CONSTRUCTION
AND MINING MACHINERY UNDER
HS CODE 8430
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

UAE Italy, Germany and China Germany, USA and


China Japan
Togo France, Netherlands Angola USA, South Africa and
and Spain Italy
Qatar Italy, France and Kazakhstan China, Finland and
Netherlands Germany

SOURCE: UN COMTRADE

principal source countries among France. Amongst developing


developing countries. countries, major importers include
China, Indonesia and UAE. These
Pulley tackle and hoists other countries have principally sourced
than skip hoists, winches and from Japan, Singapore, China,
jacks (HS Code 8425) Germany and USA. India’s import
Major importers of pulley tackle and of pulley tackle and hoists in the
hoists (HS Code 8425) in the world year 2006-07 was valued at US $
are USA, Germany, Canada and 24 million.
Table 49:
MARKET ANALYSIS FOR CONSTRUCTION
AND MINING MACHINERY UNDER
HS CODE 8425
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

UAE China, Germany and China Japan, South Korea


Japan and Singapore
Mauritius France, South Africa Indonesia Singapore, Japan and
and Italy China
Kuwait USA, Netherlands Mexico USA, China and
and Qatar Germany

SOURCE: UN COMTRADE

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India’s export of pulley tackle Convertors, ladles, ingot moulds


and hoists in the year 2006-07 was and casting machines used in
valued at US $ 7 million. Major metallurgy or metal foundries (HS
markets for India’s exports under this Code 8454); Furnace burners for
category include developed liquid fuel, mechanical stokers,
countries such as USA, Germany including their mechanical graters,
and Singapore, and developing ash discharges etc. (HS Code
countries such as UAE, Mauritius (8416); Calendaring or other rolling
and Kuwait. While UAE has machines other than for metals or
principally sourced from China, glass (HS Code 8420); Auxiliary
Germany and Japan, source plant for use with boilers of heating
countries for Mauritius were France, (HS Code 8404); Hydraulic
South Africa and Italy. Kuwait has turbines, water wheels (HS Code
principally sourced from countries 8410); and Presses, crushers and
such as USA, Netherlands and Qatar. similar machinery used in
manufacture of wine, cider or fruit
Process Plant Machinery juices (HS Code 8435).
Major categories of process plant
machinery imported in the world Centrifuges, including
include: Centrifuges, including centrifugal dryers, filtering or
centrifugal dryers, filtering or purifying machinery and
purifying machinery and apparatus apparatus (HS Code 8421)
(HS Code 8421); Refrigerators, Major importers of process plant
freezers and other refrigerating or machinery under HS code 8421 in
freezing equipment (other than air the world are USA, Germany,
conditioners) (HS Code 8418); France and Canada. Among
Machinery, plant or lab equipment developing countries, China,
for treatment of materials through Mexico and Taiwan are the leading
a process involving temperature importers. Major source countries
(HS Code 8419); Machinery not for these developing countries
specified elsewhere but used in include Germany, Japan, USA and
preparation or manufacture of food
Italy. India imported US $ 343
or drink (HS Code 8438); Central
million worth of process plant
heating boilers other than those
machinery under this category in
heading 8402 (HS Code 8403);
the year 2006-07.
Metal rolling mills and rolls thereof
(HS Code 8455); Industrial or India’s export under this
laboratory furnaces and ovens, category during the same year was
including incinerators (HS Code valued US $ 116 million. USA, Italy
8417); Steam or other vapour and Germany are leading developed
generating boilers (HS Code 8402); country markets for India’s exports.

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Table 50:
World Import of Select Process Plant Machinery
(US $ Million)
HS Code Description 2005 2006
8421 Centrifuges, including centrifugal dryers, 27264.48 33880.62
filtering or purifying machinery and
apparatus
8418 Refrigerators, freezers and other 25286.32 30712.24
refrigerating or freezing equipment
(other than air conditioners)
8419 Machinery, plant or lab equipment for 21731.81 25650.96
treatment of materials through a
process involving temperature
8438 Machinery not specified elsewhere but 7762.71 8149.26
used in preparation or manufacture
of food or drink
8403 Central heating boilers other than 4614.04 5622.85
those heading 8402
8455 Metal rolling mills and rolls thereof 3876.29 5022.34
8417 Industrial or laboratory furnaces and 3185.45 3864.04
ovens, including incinerators
8402 Steam or other vapour generating boilers 2835.84 2503.21
8454 Convertors, ladles, ingot moulds and 2519.18 2991.45
casting machines used in metallurgy or
metal foundries
8416 Furnace burners for liquid fuel, 1839.80 2060.87
mechanical stokers, including their
mechanical graters, ash discharges etc.
8420 Calendaring or other rolling machines 1056.65 957.57
other than for metals or glass
8404 Auxiliary plant for use with boilers 922.45 1014.43
of heating
8410 Hydraulic turbines, water wheels 792.22 889.32
8435 Presses, crushers and similar machinery 314.48 300.02
used in manufacture of wine, cider or
fruit juices

SOURCE: UN COMTRADE

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Amongst developing countries, UAE, Hong Kong. While, Mexico has


Saudi Arabia, China, and Thailand mainly sourced from USA, other
are leading importers for India under sources for import of process plants
this product category. USA, under this category include Asian
Germany and Japan are leading countries such as China and South
suppliers to these developing Korea. Ukraine has principally
countries. sourced from regional suppliers
such as Russia and Belarus, in
addition to sourcing from Asian
Refrigerators, freezers and
supplier, South Korea.
other refrigerating or freezing
equipment (other than air India also exported refrigerating
conditioners) (HS Code 8418) and freezing equipments, with the
export value being US $ 93 million
Major importers of refrigerating and
in 2006-07. Major markets for Indian
freezing equipments (HS Code
refrigerating and freezing
8418) in the world are USA, equipments include UAE, Sri Lanka,
Germany, France and UK. Amongst USA and Saudi Arabia. India is the
developing countries, China, largest source country for Sri Lanka
Mexico and Ukraine are the leading under this product category. Other
importers. In the year 2006-07, major suppliers to Sri Lanka include
India imported equipments under Indonesia, Singapore and Thailand.
this category to the tune of US $ UAE and Saudi Arabia have sourced
176 million. China has mainly their import requirements, under this
imported from regional suppliers product category, from USA, South
such as Singapore, Japan and Korea and China.

Table 51:
MARKET ANALYSIS FOR PROCESS PLANT MACHINERY
UNDER HS CODE 8421
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

UAE USA, Germany and China Germany, Japan and


Japan USA
Saudi Arabia USA, Germany and Italy Mexico USA, Germany and
Italy
Thailand Japan, USA and Taiwan Japan, USA and
Germany Germany

SOURCE: UN COMTRADE

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Table 52:
MARKET ANALYSIS FOR PROCESS PLANT MACHINERY
UNDER HS CODE 8418
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

UAE USA, South Korea China Singapore, Japan and


and China Hong Kong
Sri Lanka Indonesia, Singapore Mexico USA, Korea and
and Thailand China
Saudi Arabia Thailand, South Korea Ukraine Russia, Belarus, and
and USA South Korea

SOURCE: UN COMTRADE

Machinery, plant or lab imports include China, UAE, Oman,


equipment for treatment of UK and Saudi Arabia. India is fourth
materials through a process largest supplier to Oman. Italy,
involving temperature Germany and South Korea are the
(HS Code 8419) leading source countries for UAE,
Major markets for process Oman and Saudi Arabia.
equipments under HS Code 8419
in the world include USA and Machinery not specified
Germany. Developing countries that elsewhere but used in
are major importers of process preparation or manufacture of
equipments under this category food or drink (HS Code 8438)
include China, Taiwan and Mexico. Major importers of food/beverages
These countries have principally processing machinery under the HS
imported from USA, Germany and Code 8438 in the world are USA,
Italy. India is also one of the major Russia, Germany and UK. Among
developing country importers of developing countries, major
process equipments. In the year importers of food / beverages
2006-07, India imported process processing machinery include
equipments under this category
China, Poland, Mexico and Chile.
valued US $ 293 million.
These developing countries have
India’s export of process been principally importing from
equipments under HS Code 8419 developed countries such as USA,
amounted to US $ 257 million in Germany, Italy, Japan, Netherlands
2006-07. Major markets for India’s and Denmark. India imported food

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Table 53:
MARKET ANALYSIS FOR PROCESS PLANT MACHINERY UNDER
HS CODE 8419
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

UAE Italy, Germany and China Germany, Japan and


France Taiwan
Oman South Korea, Italy Taiwan Japan, USA and
and Germany Germany
Saudi Arabia Italy, Germany and Mexico USA, Germany and
South Korea Italy

SOURCE: UN COMTRADE

/ beverages processing machinery, Lanka. India is the largest source


under HS Code 8438, to the tune country for import of food /
of US $ 61 million in 2006-07. beverages processing machinery for
Uganda and Sri Lanka, and second
India’s export of food /
largest source country for import by
beverages processing machinery,
Kenya. Other major source countries
under HS code 8438, was valued US
include Germany, Netherlands,
$ 37 million. Major markets for India
Japan, UK and Denmark.
include Kenya, Uganda and Sri

Table 54:
MARKET ANALYSIS FOR PROCESS PLANT MACHINERY UNDER
HS CODE 8438
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Kenya UK, Denmark and China Germany, Japan and


Netherlands Netherlands
Uganda Iceland, UK and Poland Germany, Italy and
Germany Denmark
Sri Lanka Germany, Japan and Mexico USA, Germany and
Netherlands Italy

SOURCE: UN COMTRADE

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Central heating boilers other Kenya has also sourced its import
than those heading 8402 requirements from countries such as
(HS Code 8403) Israel, South Africa and UK, while
Major importers of heating boilers Chile has sourced from Italy, Belgium
(HS Code 8403) in the world and Switzerland. Other major source
include UK, Germany, Italy and countries for Vietnam are Korea,
France. Among developing Thailand and Japan.
countries, major importers are:
Turkey, Poland and Romania. Metal rolling mills and rolls
These developing countries have thereof (HS Code 8455)
primarily sourced their import Major importers of metal rolling
requirements from countries such mills (HS Code 8455) in the world
as Germany, Italy, France and include China, USA, Russia, Saudi
Hungary. India’s import of heating Arabia and Iran. The developing
boilers under this category was countries have principally imported
valued at US $ 2 million in 2006- from developed countries such as
07.
Germany, Italy, Spain and Japan.
India’s export of heating boilers Turkey has served as one of the
(HS Code 8403) amounted to US $ major suppliers to Saudi Arabia,
12 million in 2006-07. Major markets while Malaysia has catered supplies
for India include Kenya, Chile, UK to import by Iran. India imported
and Vietnam. India is the largest metal rolling mills (HS Code 8455)
source country for Kenya and third worth US $ 244 million, in 2006-
largest source country for Vietnam. 07.

Table 55:
MARKET ANALYSIS FOR PROCESS PLANT MACHINERY UNDER
HS CODE 8403
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Kenya Israel, South Africa Turkey Germany, Italy and


and UK France
Chile Italy, Belgium and Poland Germany, Italy and
Switzerland France
Vietnam Korea, Thailand and Romania Italy, Germany and
Japan Hungary

SOURCE: UN COMTRADE

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Table 56:
MARKET ANALYSIS FOR PROCESS PLANT MACHINERY UNDER
HS CODE 8455
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Columbia USA, Brazil and Sweden China Japan, Germany and


Italy
UAE Italy, China and Taiwan Saudi Arabia Italy, Germany and
Turkey
Vietnam China, Italy and Japan Iran Italy, Spain and
Malaysia

SOURCE: UN COMTRADE

India’s export of metal rolling India imported laboratory furnaces


mills (HS Code 8455) in the year and ovens valued US $ 127 million
2006-07 amounted to US $ 105 in 2006-07.
million. Major markets for India’s
India’s exports, under this
exports include China, Columbia,
product group, in the year 2006-07,
UAE, Iran and Vietnam. India is the
largest supplier of this product group amounted to US $ 29 million. India
to UAE, and fourth largest supplier exported mainly to South Africa,
to Vietnam. UAE, Iran and Qatar. These
countries have principally imported
Industrial or laboratory from developed countries such as
furnaces and ovens, including Germany, Italy, USA, France and
incinerators (HS Code 8417) Spain. China and India are the
second and third largest source
Major importers of industrial or countries for import by UAE, under
laboratory furnaces and ovens in this product category.
the world (HS Code 8417) include
China, USA, Russia, Germany, Steam or other vapour
Brazil and Taiwan. China has
generating boilers
sourced from Belgium, Germany
(HS Code 8402)
and Japan; China also served as
major source country for Brazil. Major importers of steam or other
Germany is one of the largest vapour generating boilers in the
source countries for China and world (HS Code 8402) are USA,
Taiwan under this product group. Thailand, China, South Korea and

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Table 57:
MARKET ANALYSIS FOR PROCESS PLANT MACHINERY UNDER
HS CODE 8417
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

South Africa USA, Germany China Belgium, Germany


and Italy and Japan
UAE France, China Brazil China, Luxemburg
and Italy and Italy
Iran Germany, Italy and Taiwan Japan, Germany and
Spain Austria

SOURCE: UN COMTRADE

Indonesia. The developing India has also exported steam


countries such as Thailand and or vapour generating boilers; the
Indonesia have sourced this exports in value terms stood at
product primarily from Japan and around US $ 75 million in 2006-07.
China; whereas China has sourced Major markets for India include west
its requirements through imports Asian countries such as UAE, Oman,
from Japan, Taiwan and Denmark. Saudi Arabia and Kuwait. These
India imported US $ 20 million countries have principally sourced
worth of steam or other vapor their import requirements from
generating boilers in 2006-07. developed countries such as UK,
Table 58:
MARKET ANALYSIS FOR PROCESS PLANT MACHINERY UNDER
HS CODE 8402
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

UAE Italy, UK, and Spain Thailand Japan, China and


Taiwan
Oman South Korea, USA China Japan, Taiwan and
and Denmark Denmark
Saudi Arabia USA, UK and Japan Indonesia China, Japan and
Malaysia

SOURCE: UN COMTRADE

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USA, Japan, Italy, Spain and served as major source country for
Denmark. India served as fourth and the import requirements of
fifth largest source country for import Indonesia.
of steam or other vapour generating
India has also exported metal
boilers for Oman and UAE,
processing machinery valued US $
respectively.
37 million in 2006-07. Major markets
Converters, ladles, ingot for India, for this product group,
moulds and casting machines include Iran, USA, Nigeria, UAE and
Hong Kong. India is the largest
used in metallurgy or metal
source country for UAE, and second
foundries (HS Code 8454)
largest source country for Nigeria, for
Major importers of metal processing imports under this product category.
machinery, such as converters, Other major source countries for
ladles, ingot moulds and casting import of this product group by Iran,
machines (HS Code 8454) in the Nigeria and UAE include China,
world are China, USA, Russia, Austria, UK, USA, South Africa and
Germany and Ukraine. India is China.
fourth largest importer in the world
under this product category and Furnace burners for liquid
imported US $ 163 million worth of
fuel, mechanical stokers,
metal processing machinery, under
including their mechanical
this product group, in 2006-07.
graters, ash discharges etc.
Austria, Japan and Italy are the
(HS Code (8416)
major source countries for the
developing country importers under Major importers of process
this product group. China has also machinery (HS Code 8416) such as

Table 59:
MARKET ANALYSIS FOR PROCESS PLANT MACHINERY UNDER
HS CODE 8454
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Iran South Africa, Chile China Austria, Japan and


and Armenia Italy
Nigeria China, Italy and UK Ukraine Austria, Italy and
Poland
UAE USA, Austria Indonesia Japan, China and
and China Taiwan

SOURCE: UN COMTRADE

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furnace burners, mechanical Calandering or other rolling


stokers and graters in the world machines other than for metals
include Germany, USA, France and or glass (HS Code 8420);
UK. Amongst developing countries,
Major importers of calandering or
major importers under this product
other rolling machines, other than
category include China, Turkey and
used for processing metals and
Iran. These developing countries
glass (HS Code 8420), in the world
have principally imported from
Germany, Italy, UK and USA. include Sweden, USA, Canada and
India’s import of process plants Belgium, amongst developed
under the category amounted to US countries; and China, Taiwan and
$ 30 million in 2006-07. Turkey, amongst developing
countries. Germany, Taiwan, Japan
India’s export of process plants and USA are major source
(HS Code 8416) amounted to US $ countries for import of this product
10 million in 2006-07. Major group by these developing
destinations of India’s exports under countries. India imported
this product category include Oman, calendaring and rolling machines
Germany, Nigeria, UAE and under this category to the tune of
Singapore. Luxemburg and UK have US $ 14 million in 2006-07.
principally served as source
countries for import of this product India’s exports of calendaring
group by Oman and Nigeria. UAE and rolling machines (HS Code
has principally sourced from 8420) in the year 2006-07 amounted
Germany, USA and China. to US $ 10 million in 2006-07. Major

Table 60:
MARKET ANALYSIS FOR PROCESS PLANT MACHINERY UNDER
HS CODE 8416
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Oman Luxemburg, UK and China Germany, USA and


Netherlands Italy
Nigeria UK, Japan, and Turkey Italy, Germany
Luxemburg and UK
UAE Germany, USA and Iran Germany, UK
China and Italy

SOURCE: UN COMTRADE

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Table 61:
MARKET ANALYSIS FOR PROCESS PLANT MACHINERY UNDER
HS CODE 8420
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Sudan Italy China Germany, Finland and


Taiwan
UAE USA, Italy and Qatar Taiwan Japan, Germany and
USA
Iran Italy, Germany and Turkey Italy, Germany and
Croatia Taiwan

SOURCE: UN COMTRADE

export destinations for India under US $ 8 million. While China has


this product category include for sourced its import requirements
Sudan, USA, UAE, Nepal and Iran. from countries such as Japan,
Sudan and Nepal, India is the sole Spain and South Korea, it had
exporter, except in some years, in served as a major supplier to other
which negligible imports have been developing countries such as
witnessed from countries such as Indonesia and Mexico. South Korea
Italy and South Africa. UAE has is another major supplier for these
principally imported from USA, Italy developing countries.
and Qatar, while Iran has principally
imported from countries such as Italy, India’s export of auxiliary plants
Germany and Croatia. for use with boilers for heating
purposes (HS Code 8404) amounted
Auxiliary plant for use with to US $ 24 million in 2006-07. Major
boilers of heating markets for India under this product
(HS Code 8404) category include Sudan, UAE,
Major importers of auxiliary plant for Australia and Egypt. India is second
use with boilers (HS Code 8404) largest source country for UAE, and
in the world are China, USA, third largest source country for
Indonesia, India, Canada and Sudan, under this product category.
Mexico. India’s imports in the year Other major source countries include
2006-07 under this product developed countries such as UK,
category amounted to USA, Italy and Netherlands.

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Table 62:
MARKET ANALYSIS FOR PROCESS PLANT MACHINERY UNDER
HS CODE 8404
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Sudan UK, Italy and China China Japan, Spain and


South Korea
UAE UK, Netherlands and Indonesia Finland, South Korea
Spain and China
Egypt France, USA and UK. Mexico South Korea, USA
and China

SOURCE: UN COMTRADE

Hydraulic turbines, water source countries for Vietnam include


wheels (HS Code 8410) China, Russia and Japan. Malaysia
Major importers of hydraulic imported products under this
turbines and water wheels (HS category mainly from Germany,
Code 8410) in the world are China, Singapore and Italy; and Saudi
USA, India, Iran and Turkey. India Arabia imported this product group
imported hydraulic turbines and mainly from Belgium, UK and
water wheels to the tune of US $ France.
21 million in 2006-07. China Presses, crushers and similar
imported hydraulic turbines and machinery used in manufacture of
water wheels from Austria, wine, cider or fruit juices
Germany and Brazil. Major source (HS Code 8435).
countries for import by Iran include
Austria, Switzerland and China; and Major importers of presses,
Austria, Russia and France for crushers or other machinery used in
Turkey. manufacture of wine and fruit juices
in the world include Spain, USA and
India’s export of hydraulic France. Amongst developing
turbines and water wheels (HS Code countries major importers were
8410) in the year 2006-07 was China, Venezuela and Iran. Major
around US $ 10 million. Major source countries for these
markets for India include Malaysia, developing countries include
Vietnam, Saudi Arabia, Sudan and Switzerland, Germany, Italy, USA
UAE, under this product category. and China. India’s import under this
India was the fourth largest source product group amounted to US $ 10
country for Vietnam. Other major million in 2006-07.

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Table 63:
MARKET ANALYSIS FOR PROCESS PLANT MACHINERY UNDER
HS CODE 8410
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Malaysia Germany, Singapore China Austria, Germany and


and Italy Brazil
Vietnam China, Russia and Iran Austria, Switzerland
Japan and China
Saudi Arabia Belgium, UK and Turkey Austria, Russia and
France France

SOURCE: UN COMTRADE

India’s export of presses, country for UAE and Kenya. Other


crushers or other machinery used in major source countries for UAE
manufacture of wine and fruit juices include France, Italy and Spain; and
(HS Code 8435) were valued at US major source countries for Kenya
$ 6 million in 2006-07. Major include South Africa and Italy. Nigeria
destinations of India’s exports principally sourced its import
include USA, Nigeria, UAE and requirements from China, Malaysia
Kenya. India is the largest source and USA.

Table 64:
MARKET ANALYSIS FOR PROCESS PLANT MACHINERY UNDER
HS CODE 8435
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Nigeria China, Malaysia and China Switzerland, Germany


USA and Italy
UAE France, Italy and Spain Venezuela USA, China and Italy
Kenya South Africa and Italy Iran South Africa
and Italy

SOURCE: UN COMTRADE

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Electrical Machinery Electrical transformers, static


Major categories of electrical converters and inductors (HS
machinery imported in the world Code 8504)
include: Electrical transformers, Major importers of electric
static converters and inductors (HS transformers, static converters, and
Code 8504); Electrical apparatus inductors (HS Code 8504) in the
for switching or protecting electrical world include USA, Germany and
circuits (exceeding 1000v) (HS Japan among developed countries,
Code 8535); Electrical apparatus and China, Hong Kong, Mexico and
for switching or protecting electrical Taiwan, among developing
circuits (below 1000v) (HS Code countries. In the year 2006-07,
8536); Electrical capacitors, fixed, India imported electrical
adjustable or variable (HS Code transformers and static converters
8532); Electric motors and to the tune of US $ 557 million.
generators (excluding generating Major source countries for China,
sets) (HS Code 8501); and Electric Hong Kong, Mexico and Taiwan for
generating sets and rotary their import under this category
converters (HS Code 8502). include Japan, USA and South

Table 65:
WORLD IMPORT OF SELECT ELECTRICAL MACHINERY
(US $ Million)
HS Code Description 2005 2006
8504 Electrical transformers, static converters 44762.43 58350.41
and inductors
8535 Electrical apparatus for switching or 5674.36 5765.59
protecting electrical circuits
(exceeding 1000v)
8536 Electrical apparatus for switching or 55589.42 69930.51
protecting electrical circuits
(below 1000v)
8532 Electrical capacitors, fixed, 16153.77 20649.51
adjustable or variable
8501 Electric motors and generators 26833.51 33216.81
(excluding generating sets)
8502 Electric generating sets and 10666.41 15320.19
rotary converters

SOURCE: UN COMTRADE

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Korea. There has also been lot of Electrical apparatus for


trading amongst the triad, China, switching or protecting
Hong Kong and Taiwan. electrical circuits (exceeding
In the year 2006-07, India 1000v) (HS Code 8535)
exported transformers and static Major importers of switchgears and
converters valued US $ 645 million. control gears (over 1000v) (HS
Major countries to which India’s Code 8535) in the world include
transformers were exported include USA, Germany and Spain.
USA and the Netherlands. Amongst Amongst developing countries,
developing countries, India’s China, UAE and Mexico are the
transformers were exported to Syria, leading importers in the world.
China and Mexico have principally
Malaysia and UAE. India is the
sourced their import requirements
largest supplier of transformers to
of products under this category
Syria. Other major source countries
from Germany, Switzerland and
for import of transformers by Syria
USA. Hong Kong has sourced its
include China, France and Spain. In requirements from Singapore,
both Malaysia and UAE, China is a Japan and Germany. India’s import
major supplier. Other major suppliers of switchgears and control gears
to these countries include Singapore, (over 1000v) amounted to around
Hong Kong, Germany and Japan. US $ 51 million in 2006-07.

Table 66:
MARKET ANALYSIS FOR TRANSFORMERS UNDER
HS CODE 8504
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Syria China, France and China Hong Kong,


Spain South Korea and
Japan
Malaysia Singapore, China and Hong Kong China, Japan and
Hong Kong USA
UAE Germany, China and Mexico USA, China and
Japan Hong Kong

SOURCE: UN COMTRADE

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Table 67:
MARKET ANALYSIS FOR SWITCHGEARS / CONTROL GEARS
(EXCEEDING 1000V) UNDER HS CODE 8535
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

UAE France, Germany and China Japan, Germany and


Japan Switzerland
Brazil Germany, Sweden and Mexico USA, Germany and
France Switzerland
Vietnam Germany, Australia and Hong Kong Singapore, Japan and
Sweden Germany

SOURCE: UN COMTRADE

India’s export of switchgears and USA, Germany and France


control gears in the year 2006-07 amongst developed countries, and
amounted to around US $ 90 million China, Hong Kong and Mexico
in 2006-07. Major destinations of amongst developing countries.
India’s exports under this product While significant trade has been
category include USA, UK, and happening between China and
France. Amongst developing Hong Kong, countries such as
countries, UAE, Brazil and Vietnam Japan, USA and Germany
are the leading importers of Indian remained as major supplier
switchgears and control gears (over countries for these markets. India,
1000v). Germany, Sweden and in the year 2006-07, imported
France are major source countries switchgears and control gears
for UAE, Brazil and Vietnam. In valued US $ 462 million.
addition, Japan is one of the major
India’s export of switchgears and
source countries for UAE, while
control gears (below 1000v) in the
Sweden is one of the major source
year 2006-07 was valued at US $
countries for Vietnam.
234 million. Major markets for India
include UK, USA and Germany.
Electrical apparatus for
Amongst developing countries, UAE,
switching or protecting
Philippines and Saudi Arabia were
electrical circuits
major markets for India. Import
(below 1000v) (HS Code 8536) requirements in these developing
Major importers of switchgears and country markets were catered by
control gears (below 1000v) (HS developed countries such as
code 8536) in the world include Germany, UK, France and Japan.

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Table 68:
MARKET ANALYSIS FOR SWITCHGEARS / CONTROL GEARS
(BELOW 1000V) UNDER HS CODE 8536
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

UAE France, UK, Germany China Hong Kong, Japan


and Taiwan
Philippines Japan, Singapore and Hong Kong China, Japan and
Hong Kong USA
Saudi Arabia USA, UK, and France Mexico USA, Japan and
Germany

SOURCE: UN COMTRADE

Electrical capacitors, fixed, Qatar has principally sourced from


adjustable or variable India, Turkey has sourced its
(HS Code 8532) requirements from China, Italy and
Major importers of electrical South Korea. UAE has principally
capacitors (HS Code 8532) in the sourced from China, Germany and
world are China, Hong Kong, USA Sweden.
and Taiwan. Significant trade
happen amongst the major Electric motors and
developing country importers, viz., generators (excluding
Hong Kong, China and Taiwan. generating sets) (HS Code
These three countries supply to 8501)
each other with regard to this Major importers of electric motors
product category, in addition to and generators (HS Code 8501) in
sourcing their requirements from the world are USA, Germany and
Japan. India’s imports under this China. Amongst developing
product category in the year 2006-
countries, China, Hong Kong and
07 were of the order of US $ 135
Mexico are the leading importers.
million.
China has also served as one of
India’s exports under this the major source countries for
product category in the year 2006- imports, under this product
07 were valued at US $ 39 million. category, to Hong Kong and
Major markets for India include USA, Mexico. Similarly, Hong Kong has
Spain, Qatar, Turkey and UAE. While served as one of the major source

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Table 69:
MARKET ANALYSIS FOR ELECTRIC CAPACITORS UNDER
HS CODE 8532
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Qatar USA and Italy China Hong Kong, Japan


and Taiwan
Turkey China, Italy and Hong Kong China, Japan and
South Korea Taiwan
UAE China, Germany and Taiwan Japan, China and
Sweden Hong Kong

SOURCE: UN COMTRADE

countries for import by China, under India’s exports, in the year 2006-
this product category. In addition, 07, under this product category,
these countries have sourced their amounted to US $ 133 million. Major
import requirements from Japan, markets for India include USA, Saudi
Germany, USA, Thailand and Arabia, Switzerland and UAE.
Singapore. India’s imports of Developing country markets, such as
electric motors and generators in Saudi Arabia, UAE and Nigeria have
the year 2006-07 amounted to US principally sourced their
$ 244 million. requirements from China, Germany
and USA.
Table 70:
MARKET ANALYSIS FOR MOTORS AND GENERATORS UNDER
HS CODE 8501
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Saudi Arabia USA, Germany and China Hong Kong, Japan


China and Germany
UAE Germany, China and Hong Kong China, Thailand and
USA Singapore
Nigeria China, Germany and Mexico USA, Germany and
South Africa China

SOURCE: UN COMTRADE

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Electric generating sets and Portugal, Mali and UAE. Portugal


rotary converters (HS Code has sourced its import requirements
8502) under this product category from EU
countries such as UK, Spain and
Major importers of electric
Germany, whereas, Mali has
generating sets and rotary
sourced its requirements from
converters (HS Code 8502) in the
France, UK and Senegal. UAE has
world are USA, China and UK. In
sourced from China, UK and USA.
addition to China, developing
countries such as UAE, Nigeria, Inferences
Hong Kong and Indonesia are other
major importers under this product Globally, the capital goods industry
category. India’s import of electric is worth around US $ 4.5 trillion.
generating sets in the year 2006- Japan Germany and USA are
traditionally large suppliers of
07 amounted to US $ 114 million.
different sub-segments of capital
USA, UK and France are major
goods. Of late, Asian countries
suppliers to China, Nigeria and
such as China, Taiwan and South
France, respectively. China and
Korea have become major players
Hong Kong have also served as
in production and export of capital
suppliers to each other. goods. Consumption of capital
India’s export of electric goods has also increased
generating sets in the year 2006-07 substantially in developing Asian
amounted to US $ 361 million. Major countries due to thrust given to the
markets for India include USA, value-added manufacturing.

Table 71:
MARKET ANALYSIS FOR ELECTRIC GENERATING SETS UNDER
HS CODE 8502
Existing Major Major Major Major
Developing competitors Developing Competitors
Country Country
Markets Importers
for India in the World

Portugal Spain, UK and China Hong Kong, USA,


Germany and Japan
Mali France, UK, and Nigeria UK, China and
Senegal France
UAE China, UK, and USA Hong Kong UK, Singapore and
China

SOURCE: UN COMTRADE

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Under the machine tools export-import ratio of textile


category, though there has been machinery sector has also come
growth in exports, in the last three down significantly in the last three
years, the import of machine tools years (Annexure -4), especially in
have outgrown in several sub- sub-segment non-woven machinery.
segments, bringing down the export- Major developing country importers
import ratio (Annexure – 3). This of textile machinery in the world
indicates that there is significant include China, Hong Kong, Turkey
room for market expansion in the and Pakistan. On the other hand,
domestic market. Market analyses India’s major developing country
reveal that major developing country markets for textile machinery include
importers of machine tools in the Bangladesh, Indonesia and UAE.
world include Mexico, Thailand, There is ample scope for exporting
Turkey, Poland and China. India’s to other developing countries of
major developing country markets South Asia, especially to Pakistan
for machine tools have been UAE, and Sri Lanka. In addition, countries
Nigeria and Thailand. In addition, such as Turkey and Egypt could also
India exports machine tools to host be targeted for expanding exports
of developing countries of Africa, and and enhancing market share.
West and South Asia, such as
Construction and mining
Kenya, Sudan, Bangladesh, Iran and
equipment is another area in which
Sri Lanka. Though some of the sub-
the export-import share has come
segments of machine tools are
down in the last three years
exported to leading developing
(Annexure - ), except under the
country markets, in many cases the
product group pulley tackle and
share of India in these markets are
hoists (HS Code 8425). This
insignificant. Thus, careful targeting
indicates that there is significant
of export markets need to be
room for capacity expansion in
undertaken by the players in the
construction and mining equipment
Indian machine tool sector for
sector also. Amongst developing
penetration in new markets and
countries, China, Mexico and
expansion of market share in existing
Indonesia are the leading importers
markets.
in the world. While developed
The technology upgradation countries cater most of their import
fund scheme of Government of India requirements, India could explore the
has contributed to the capacity opportunities in these countries.
expansion in the domestic textile India’s export markets include UAE,
sector significantly. Most of such Kuwait and Qatar in west Asia and
capacity expansion has occurred African countries such as Kenya,
through imports. As a result, the Tanzania, Togo, Tunisia and

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Mauritius. The share of India in the generators. Major developing


import of these countries is not country importers in the world are
always significant. Thus, these China, Hong Kong, Taiwan and
countries could be targeted for Mexico. Another interesting trend in
market expansion by the world trade is that there has been
construction and mining equipment significant trade amongst these
companies in India. countries, especially China, Hong
Kong and Taiwan, trading with each
Analysis of process plant
machinery sub-segment (Annexure other. India’s main developing
-6) revealed that in some product country export destinations of
groups, export is greater than electrical machinery include UAE
imports, and export-import ratio in and Saudi Arabia. Other developing
most such product groups has also countries to which India has been
improved in the last three years. exporting the electrical equipments
However, in many product groups, include Qatar, Mali, Nigeria, Syria
there has been reduction in export- and Philippines. However, India’s
import ratio. Major developing share in total import of many of these
country importers include China, countries is not significant, indicating
Mexico, Taiwan, Indonesia and the opportunities for market
Turkey. Though India’s exports of expansion in these countries.
process plant equipments are In sum, the analyses show that
oriented towards these countries, the there need to be capacity expansion
volume is not consistent with the in the Indian capital goods industry
potential. India’s major export to cater to the rising demand, both
markets for process plants include from domestic and export markets.
UAE, Saudi Arabia, Nigeria, Kenya
Technological solutions through
and Vietnam. Except for few
research and development are to be
products in few countries, India’s
offered to capture new markets;
share is insignificant even in these
effective market enhancement and
markets.
customer retention strategies are
Mixed results are also observed required to sustain and expand in the
in the sub segment of electrical existing developing country markets.
machinery and equipments A comprehensive analysis of
(Annexure -7 ). While in most of the challenges faced by the Indian
product groups the export-import capital goods industry is carried out
ratio, has increased, reduction has in the next chapter, along with a set
been witnessed in product groups of focussed strategies to overcome
such as electric motors and such challenges.

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6. CHALLENGES AND STRATEGIES

Indian capital goods industry has manufacturers, are also limited.


significant opportunities both in Transfer of technology from other
domestic and export markets. developed countries has also not
However, there are also challenges been significant despite
engulfing this sector; appropriate liberalization of policies for
strategies need to be adopted by this technology transfer and foreign
sector to emerge as a leading player direct investments.
in both domestic and export markets.
Some of the challenges and Import of Second Hand
strategies identified are briefly Capital Goods
discussed below: Under the Export Promotion Capital
Goods (EPCG) Scheme, import of
CHALLENGES second hand capital goods is
Technological Competency permitted in India for pre-
production, production and post-
The technologies used for production activities. The capital
production as also in assembly of goods that may be imported under
Indian capital goods are not always this scheme include spares
updated in tune with the global (including refurbished/
technological trends. While there reconditioned spares), tools, jigs,
are some players who have fixtures, dies and moulds. Import of
technological competencies, capital goods under this scheme
especially in design capability, would attract only 5% customs duty
application innovation and process subject to an export obligation,
innovation, the technological equivalent to 8 times of duty saved
capabilities of large number of on the capital goods imported. It
players, especially in the SME may be mentioned that machine
sector, are limited. In addition, the tools, refinery equipments,
technological competencies of construction and mining machinery,
players in the SME sector, who plastic processing machinery and
provide components or printing machinery are some of the
intermediates to original equipment second hand capital goods

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imported into India. During the tax and service tax) are levied adding
period April – December 2007, over up to the end user cost. This makes
14300 EPCG applications have the indigenous supplies costlier vis-
been sanctioned with licenses / à-vis imported capital goods. Some
authorizations, with a CIF duty estimates have put the cost
credit of nearly Rs. 12,000 crores. disadvantage, due to such levies, to
While the main objective of this an extent of over 20%.
scheme is to help modernization of
the industry by offering duty Delivery Schedules
concessions, the imported capital It may be mentioned that most of
goods pose stiff competition to the the capital goods are not supplied
indigenous capital goods off-the-shelves and are custom-
manufacturers.
made to suit the requirements of
end users. Thus, the delivery
Cost Competitiveness
schedule to cater to the order is
The Indian capital goods industry longer than many other engineering
largely uses crucial inputs such as products. However, due to various
iron and steel that are of domestic reasons, including infrastructure
origin. Over the years, there has constraints, the delivers schedules
been significant increase in cost of of Indian capital goods suppliers
inputs, but the players in this are longer than their foreign
industry are unable to pass on the counterparts. Industry sources
price increase to the end estimate that the delivery time of
consumers, due to competition
Indian capital goods manufacturers
from imports.
are two times longer than their
The capital goods industry also global counterparts affecting the
has high incidence of taxation; a competitiveness in delivery
number of indirect duties (such as schedules. In such circumstances,
excise duty, octroi, entry tax, sales imported capital goods are

Table 72:
TRENDS IN LICENSES ISSUED UNDER EPCG SCHEME
Year Number of licenses / CIF Duty Credit
authorisations (Rs. Crore)
2005-06 16387 6397
2006-07 21226 15233
2007-08 (Apr-Dec) 14361 11936

SOURCE: Directorate General of Foreign Trade

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preferred over Indian capital goods, and automobiles. Precision


though they are technologically and measuring, materials engineering,
functionally comparable with and process innovation are some
international standards. of the areas for strengthening R&D
in Indian capital goods industry. It
STRATEGIES is also important to increase the
linkages between the public
Transformation in Objective research systems and industry to
and Approach facilitate technology transfer and
Sale of capital goods is not an one enhance the responsiveness of the
time business but require technical capital goods industry.
support in transportation, erection, Common R&D facilities under
staff training (for operation and the cluster approach or under the
minor repairs), continuous service public-private partnership approach
maintenance and periodical would enhance the technological
upgradation in technology. All over strengths of the Indian capital goods
the world, the capital goods industry. In this context, it may be
manufacturers are turning mentioned that the textile machinery
themselves as engineering services industry, with the support of
companies, offering turnkey academia and Government, has set
solutions to retain the customers. up a R&D center at Indian Institute
Players in Indian capital goods of Technology (IIT), Mumbai. It is
industry may also increasingly reported that textile engineering
reorient their approach to transform related projects undertaken by post-
into service based organizations. graduate students in IIT, Mumbai, in
Such service orientation would help this R&D center, would be useful in
the industry in sharpening the product development and innovation
competitive advantage. in process engineering in the textile
engineering industry. Such R&D
Strengthening Research and centers may be encouraged to
Development contribute to the technology
Consistent with global trends, development in other capital goods
Indian capital goods industry also sub-sectors also.
needs to grant high priority to
innovation, and research and Strengthening Technological
development. The R&D intensity of Competencies
firms in Indian capital goods In order to enhance productivity,
industry is less than 1%, far below product quality and operating
than the R&D intensity of other efficiency, the players in the sector
sectors such as pharmaceuticals need to constantly upgrade their

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technological competencies. The sector as also the overall


Department of Heavy Industry, economic growth;
Government of India, has proposed
b) Capacity constraints to cater to
to undertake a comprehensive
the technological demands that
scheme for technology upgradation
may improve efficiency in
and R&D facilities for modernization
operations and cost control.
of capital goods industry. The
proposed scheme may endeavour While fiscal incentives would
to help the players in the Indian help attract investments in the capital
capital goods industry in tracking goods industry in general, adding
global trends in product and production capacity, a fund for
process technologies, with specific supporting technology upgradation in
objective of cost control, besides the capital goods industry may be
enhancing productivity, energy considered in order to achieve
efficiency, eco-friendliness, product quality, standardization and
quality, operating flexibility and benchmarking with international
efficiency. The scheme may also products.
help enhance the usage of
information technology that Enhancing Market Position
provides convenience to the Analysis of trends in imports by
customers, and help enhance major countries reveals that there
customer base and new avenues is vast scope for market expansion
for profitability. Such R&D Centres in many developing countries to
may also be conceived as training which India is currently exporting.
platforms for skill upgradation of the Various market entry strategies
shop-floor technicians in the capital may be adopted including attaining
goods industry. market leadership, through
acquisition and consolidation, and
Fund for Technology achieving economies of scale in the
Upgradation in Capital Goods price sensitive markets. Mergers
Industry and acquisitions routes may also be
adopted by players in the Indian
It may be fair to surmise that there
capital goods industry, to build and
are capacity constraints at the
nurture brands in export markets.
following two levels in the capital
Value-based supply chain may be
goods industry:
created through building
a) Capacity constraints to cater to customized products and offer of
the demand in volume, engineering services to create
considering the growth exclusiveness in competitive
momentum in the industrial markets. Sales approach should be

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transformed to provide solutions billion in 2004, which is expected


that add value to the clients through to cross US $ 1 trillion in 2020.
enhancement of process efficiency While only 15-20 billion (2% of total
and product quality. Effective of demand) is being at present off-
Lines of Credit mechanisam also shored, the off-shoring market is
help the exporters in entering expected to grow to US $ 150
unexplored markets (Box - 1). billion to US $ 225 billion (around
20% of total demand) by 2020.
Introducing New Product Capital goods industry, one of the
Lines potential players in India in the
Over the years, players in the engineering services segment,
Indian capital goods industry has holds significant potential to tap the
been diversifying the product lines growing business opportunities in
offered with the objective of the outsourcing arena.
mitigating risks associated with
business and cyclical trends. Increasing Interaction with
However, more focus should be End-Users
given in building new generation
Capital goods manufacturers also
machines that may be in demand
in future. Such new generation need to closely interact with end-
machines should have greater users, (especially with sectors such
flexibility to produce a variety of as automobile, defense, aeronatics,
products. Such new generation space, metals, construction,
machineries also create textiles, chemicals and
opportunities for offering pharmaceuticals), to understand the
engineering services that are less latest trends in manufacturing; the
sensitive to business and cyclical expectations of end users in
fluctuations. performance of machinery; areas
for improvement in process
Tapping Outsourcing efficiency, energy efficiency, product
Opportunities quality, and cost control strategies.
Globally, OEMs are increasingly The trends in shifting of
outsourcing their design and manufacturing base from
engineering services to developing developed to developing countries
countries like India to add value at could also be unearthed through
lower cost and to focus on their interactions with end-user
core competencies. According to a industries. Such interactions would
NASSCOM study, spending on help the players in capital goods
engineering services across the industry to source appropriate
world is estimated to be US $ 750 technologies, in addition to making

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Box 1:
LINES OF CREDIT: A MARKET ENTRY MECHANISM FOR CAPITAL
GOODS INDUSTRY
Exim Bank has been placing special emphasis on extension of Lines of Credit
(LOCs), as an effective market entry mechanism, with particular focus on small
and medium enterprises. Exim Bank extends LOCs to overseas financial
institutions, regional development banks, sovereign governments and other entities
overseas to enable buyers in those countries to import equipments, goods and
services for their developmental and infrastructure projects, on deferred credit
terms. The Bank, as of end March 2008, has 89 operating LOCs in Africa, Asia,
CIS, Europe and Latin America with credit commitments aggregating US $ 2.96
billion, including the LOCs extended at the behest of Government of India.
Some of the LOCs are with specific objective of capacity development in
manufacturing and infrastructure sectors of other developing countries, and thus
provide opportunities for Indian capital goods industry. These include: agro-
processing and food processing projects (Cote d’Ivoire, Ethiopia); power generation
/ transmission electrification projects (Mali, Ghana, Sudan, Ethiopia, Mozambique,
Myanmar, Cambodia, Vietnam, Nepal); setting up of / rehabilitation of
manufacturing plants (cement in DR Congo and Djibouti; cotton yarn, steel,
agricultural implements in Chad; tractor assembly in Gambia; Sugar in Fiji); and
export of select capital goods (machineries to Equatorial Guinea; agricultural
implements to Senegal, Burkina Faso, Guinea Bissau; water drilling equipments
to Mozambique; and water pumps to Jamaica). It may be mentioned that, in
addition, the LOC extended, at the behest of Government of India, to Iran, is
meant for export of capital goods.
Indian capital goods industry has been increasingly using the LOC mechanism
to export the machineries and equipments to other developing countries. In the
year 2006-07, the year for market analysis in this study, about US $ 250 million
worth capital goods were exported using these LOCs. These include electrical
equipments to Ghana, Lesotho, Vietnam, Ethiopia, Jamaica and Mozambique;
process plants and equipments to D.R.Congo, Tobago and Trinidad, Ghana,
Kenya, Myanmar, Vietnam and Senegal; and textile machinery to Vietnam. Thus
it may be construed that such market entry mechanisms help establish products
abroad and generate export opportunities subsequently.
Indian capital goods exporters could make effective use of such LOCs in
expanding their market share in other developing countries.

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Box 2:
ASSESSMENT OF CONFORMITY STANDARDS FOR MACHINERIES IN
USA AND EUROPE
In USA, all machines are assessed with two separate technical standards,
ANSI/UL508A for Industrial Control Panels, and NFPA 79 for Electrical Standard
for Industrial Machinery. UL508A, being an OSHA-recognized standard, is the
primary standard, and applies to all industrial control enclosures on the machine.
The overall machine is also assessed based on NFPA 79, which addresses wiring
outside the machine enclosures, as well as machinery-related requirements such
as interlocking devices, guarding, and such other safety issues. In addition, special
requirements exist for special types of machines. These requirements are applied
over and above the basic requirement for ANSI/UL508A and NFPA 79 for
compliance. Examples of these requirements are the ANSI B11 series of standards
for metal working machines, the ANSI B151 series of standards for injection
molding machines, the ASME B20.1 and B30.13 standards for factory automation
machinery, and the ANSI RIA R15.06 standard for industrial robots.
The CE marking is a mandatory in European Union marking for certain
product groups to indicate conformity with the essential health and safety
requirements set out in host of European Union Directives. The Directives
governing the safety standards of capital goods include Machinery Directive 98/
37/EC, Lifts Directive (95/16/EC), Directive on Personal Protective Equipments
89/686/EEC, Directive on Noise Emissions 2000/14/EC. In addition, the EU
Directive concerning Liability for Defective Products make EU importers liable for
the products they import, including the machinery they provide to their employees
for work. To permit the use of a CE mark on a product, proof that the item meets
the relevant requirements must be documented. This is mostly achieved using an
external test house which evaluates the product and its documentation.

SOURCE: OSHA, USA; and the European Commission

plans towards capacity multi-tiered regulatory environment


enhancement to cater to the for machinery and the
growing demand. manufacturers need to define the
method of indicating compliance
Thrust on Safety Standards with regulatory issues in most
and Product Liability acceptable manner. The
Exporting to USA and EU requires Occupational Safety and Health
the machinery manufacturers to Administration (OSHA), the agency
carefully consider the requirements in USA, which is responsible for
for both regulatory and liability regulating machinery used in the
protection. USA has a complex, workplace, has defined the product

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requirements and safety standards, infrastructure would boost the


as also the periodicity of evaluating manufacturing sector and there by
safety audits. In European Union, provide growth opportunities for
there are host of Directives, such capital goods such as machine
as Machinery Directive 98/37/EC, tools, textile machinery and process
Lifts Directive (95/16/EC), Directive plant machinery.
on Personal Protective Equipments
The consultation paper on
89/686/EEC, Directive on Noise
‘Investment in Infrastructure During
Emissions 2000/14/EC, governing
the safety standards of capital the Eleventh Five Year Plan’, has
goods. In addition the EU Directive estimated that about US $ 500 billion
concerning Liability for Defective investments are required in Indian
Products make EU importers liable infrastructure sector to sustain the
for the products they import, GDP growth of 9%, during the
including the machinery they Eleventh Five Year Plan. This works
provide to their employees for work. out to approximately 2.3 times higher
Exporters of capital goods, as compared to the actual
particularly to USA and EU should investments in the infrastructure
carefully follow the trends in sector that have taken place in the
product standards and conform Tenth Five Year Plan. If this volume
their products to safety such of investment demand in the
requirements. infrastructure sector is met
systematically, the capital goods
Accelerating Investments in industry would get further
Infrastructure momentum.
Growth in investments in
Accelerating Capital
infrastructure sectors, especially for
construction of road / rail network, Investments in Indian
bridges and dams, ports (both air Manufacturing Sector
and sea), and handling facilities in Government may also consider
such ports and power stations offering incentives to the
boost the demand for capital manufacturing sector for
equipments. This would be upgradation of technology and
significant in the case of electrical equipments. The incentives that
machinery (investments in power may be considered are tax
sector) and construction / earth concessions, accelerated
moving equipments (investments in depreciation allowances and excise
road / rail infrastructure), which duty relief. Such strategy may be
would have direct impact. In particularly relevant for SME sector
addition, investments in that would be encouraged to

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upgrade their technological would contribute to the scale


competence, manufacturing economies significantly.
process and product quality.
Technology sourcing, from
countries such as Germany,
IN SUM
Switzerland, Italy and Spain, may be
India should leverage its inherent encouraged, especially in the context
strengths, such as availability of of shift in manufacturing base from
pool of skilled workforce, low cost developed to developing countries.
operations and existence of large The strengths of machining
domestic demand, in strengthening technologies in other developing
capital goods industry. Leveraging countries such as China and Taiwan
the abundant availability of software should be effectively learnt and
skills in engineering design and adapted by Indian players.
drawing would strengthen
technological competitiveness. Changing trends in product
Continuous training and skill quality and safety standards should
upgradation would help the human be monitored and complied to
resources in the industry to capture sustain market presence in
the trends in new processes and developed countries. Developing
technologies. countries of Asia, Africa, Latin
America and central and east Europe
Scale economies would position should be targeted for market
India further as a cost-effective expansion as these countries are
manufacturing base for capital having almost similar raw material
goods. Strategies such as and manufacturing base, like India.
transformation of the shop-floors fully Effective supply chain management
flexible to produce different types of and thereby optimizing the product
machineries and redesigning the delivery schedules should be given
machining process to accommodate top priority to retain the existing
usage of common components / customers as also to fetch new
parts in various types of machineries, customers.

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ANNEXURE - 1

List of Capital Goods Items Covered in Index of Industrial


Production

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ANNEXURE-2

Shipment of Textile Machinery: Various Segments


Country 2005 2006
Shipments % Share Shipments % Share % Change
(‘000) (‘000) (2006/05)
Short staple spindles
China 5910.5 59.6 6680.7 56.9 13.0
India 1429.8 14.4 2779.2 23.7 94.4
Pakistan 1037.8 10.5 668.6 5.7 -35.6
Bangladesh 540.7 5.4 433.7 3.7 -19.8
Turkey 307.6 3.1 187.7 1.6 -39.0
World 9925.2 11740.5 18.3
Long staple spindles
China 82.9 45.3 101.1 52.4 22.0
Iran 10.8 5.9 28.5 14.8 163.9
Turkey 42.3 23.1 13.9 7.2 -67.1
India 0.0 0.0 11.4 5.9 N/a
Italy 14.0 7.6 8.8 4.6 -36.8
World 182.8 193.1 5.6
Open end rotors
China 246.1 65.8 195.0 55.4 -20.8
Turkey 18.4 4.9 33.9 9.6 84.2
India 20.1 5.4 32.8 9.3 63.5
Brazil 22.1 5.9 9.9 2.8 -55.1
Russia 4.3 1.2 9.9 2.8 128.1
World 374.2 352.0 -5.9
Double heater, false twist spindle draw texturing machinery
China 259956 84.3 152768 69.3 -41.2
India 13176 4.4 31088 14.1 126.7
Hong Kong 7656 2.5 7680 3.5 0.3
Egypt 1488 0.5 4416 2.0 196.8
Vietnam 5920 1.9 3120 1.4 -47.3
World 308330 220288 -28.6
Single heater, false twist spindle draw texturing machinery
China 3384 49.2 6912 67.2 104.3
Turkey 1008 14.7 852 8.3 -15.5
Italy 192 2.8 656 6.4 241.7
Peru 0 0.0 576 5.6 N/a
South Korea 0 0.0 432 4.2 N/a
World 6872 10288 49.7

SOURCE: Textile Outlook International, July –August 2007, No.130

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118
ANNEXURE-3

India’s Export, Import, and Export-Import Ratio of Select Machine Tools


HS Description 2004-05 2005-06 2006-07
Code Exports Imports Exp-Imp Exports Imports Exp-Imp Exports Imports Exp-Imp
(US $ Mn) (US $ Mn) Ratio (%) (US $ Mn) (US $ Mn) Ratio (%) (US $ Mn) (US $ Mn) Ratio (%)

8457 Machining centers and multi station


transfer machines for working metal 2.24 94.10 2.38 2.00 190.57 1.05 3.30 207.43 1.59
8458 Lathes for removing metal 11.71 42.22 27.73 14.12 79.03 17.87 20.42 107.72 18.95
8459 Machine tools for drilling, boring,
milling, threading or tapping by
removing metals other than lathes 6.25 62.84 9.95 8.70 107.45 8.10 14.90 146.94 10.14
8460 Machine tools for deburring,
sharpening, grinding, honing, lapping,
polishing metals 5.10 52.40 9.73 4.63 116.69 3.97 5.46 135.17 4.04
8461 Machine tools for planing, shaping,
slotting, broaching, gear-cutting,
grinding or finishing working by
removing metals 4.36 47.87 9.11 7.23 77.56 9.32 6.57 137.09 4.79
8462 Machine tools for working metal by
forging, hammering and die-stamping 19.02 100.26 18.97 25.14 175.25 14.34 25.31 275.66 9.15
8463 Other machine tools for working metal,
sintered metal carbides without
removing materials 5.33 17.01 31.33 6.43 31.49 20.42 6.22 38.78 16.04
8464 Machine tools for working stones,
ceramics, concrete, asbestos-cement
or other mineral materials 2.16 34.79 6.21 1.97 40.34 4.88 3.55 49.61 7.16
8465 Machine tools for working wood, cork,
bone, hard rubber, hard plastics etc.,. 9.87 35.57 27.75 6.84 52.03 13.14 6.59 72.38 9.10
8467 Tools for working in the hand, pneumatic
or with self-contained non-electric motor 17.76 29.04 61.15 22.90 41.92 54.62 26.93 62.82 42.86

SOURCE: Directorate General of Commercial Intelligence and Statistics, Government of India


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ANNEXURE-4

India’s Export, Import, and Export-Import Ratio of Select Textile Machinery


HS Code Description 2004-05 2005-06 2006-07
Exports Imports Exp-Imp Exports Imports Exp-Imp Exports Imports Exp-Imp
(US $ Mn) (US $ Mn) Ratio (%) (US $ Mn) (US $ Mn) Ratio (%) (US $ Mn) (US $ Mn) Ratio (%)

8444 Machines for extruding, drawing,


texturing or cutting man-made textile
materials 2.00 26.19 7.64 1.49 21.61 6.89 2.93 15.90 18.42
8445 Machines for preparing textile fibres,
spinning, twisting and other yarn
making machinery 21.61 205.32 10.55 15.43 480.18 3.21 17.92 841.20 2.13
8446 Weaving machines (looms) 3.44 179.48 1.92 2.69 344.97 0.78 5.44 278.18 1.96
8447 Knitting / stitch-bonding machines,
and other machines for making laces,
embroidery and trimmings 3.13 137.65 2.27 1.75 314.21 0.56 3.20 388.61 0.82
8448 Auxiliary machinery such as
dobbies, jacquards etc 51.09 130.48 39.15 54.34 190.70 28.49 61.30 241.47 25.38
8449 Machinery for manufacture of finishing
felts or non-wovens 2.59 2.88 89.93 0.82 5.55 14.77 0.51 36.02 1.41
8450 Washing machines 14.91 15.57 95.76 19.54 24.37 80.18 7.34 34.10 21.52
8451 Machinery for washing, drying,
wringing, ironing, pressing, bleaching,
dyeing, dressing and finishing 7.06 92.68 7.62 11.40 221.73 5.14 9.28 247.96 3.74

SOURCE: Directorate General of Commercial Intelligence and Statistics, Government of India

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120
ANNEXURE-5

India’s Export, Import, and Export-Import Ratio of Select Construction and Mining Machinery
HS Code Description 2004-05 2005-06 2006-07
Exports Imports Exp-Imp Exports Imports Exp-Imp Exports Imports Exp-Imp
(US $ Mn) (US $ Mn) Ratio (%) (US $ Mn) (US $ Mn) Ratio (%) (US $ Mn) (US $ Mn) Ratio (%)

8425 Pulley tackle and hoists other than


skip hoists, winches and jacks 3.65 12.79 28.53 6.13 19.09 32.11 6.99 24.22 28.86
8426 Derricks, cranes, mobile lifting frames,
straddle carriers 32.12 122.93 26.13 21.63 235.00 9.20 18.43 265.90 6.93
8427 Fork-lift trucks, other trucks fitted with
lifting or handling equipments 2.70 7.57 35.67 4.70 21.50 21.86 6.82 34.05 20.02
8428 Other lifting, handling, loading or
unloading machinery
(e.g. lifts, conveyors, escalators) 18.05 60.06 30.05 17.59 123.20 14.28 27.44 342.97 8.00
8429 Self propelled bulldozers, single-dozers,
graders, levelers, scrapers, mechanical
shovels, excavators, and road rollers 18.14 108.54 16.71 17.93 186.34 9.62 26.59 283.05 9.39
8430 Other moving, grading, leveling,
scrapping, excavating,
compacting equipments 79.94 253.91 31.48 34.73 166.36 20.87 44.03 285.40 15.42

SOURCE: Directorate General of Commercial Intelligence and Statistics, Government of India


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ANNEXURE-6
India’s Export, Import, and Export-Import Ratio of Select Process Plant Machinery
HS Description 2004-05 2005-06 2006-07
Code Exports Imports Exp-Imp Exports Imports Exp-Imp Exports Imports Exp-Imp
(US $ Mn) (US $ Mn) Ratio (%) (US $ Mn) (US $ Mn) Ratio (%) (US $ Mn) (US $ Mn) Ratio (%)
8402 Steam or other vapour generating boilers 41.00 16.57 247.43 42.23 29.82 141.62 74.89 19.56 382.87
8403 Central heating boilers other than those
heading 8402 10.45 0.47 2223.40 12.51 6.25 200.16 12.31 2.09 588.99
8404 Auxiliary plant for use with boilers of heating 7.63 7.64 99.87 14.01 19.54 71.70 24.12 8.49 284.10
8410 Hydraulic turbines, water wheels 5.50 4.43 124.15 4.48 14.50 30.90 9.89 21.11 46.85
8416 Furnace burners for liquid fuel,
mechanical stokers, including their
mechanical graters, ash discharges etc. 3.52 20.22 17.40 5.33 33.96 15.69 10.32 30.49 33.84
8417 Industrial or laboratory furnaces and
ovens, including incinerators 17.87 44.44 40.21 26.14 103.51 25.25 28.77 126.99 22.66
8418 Refrigerators, freezers and other
refrigerating or freezing equipment
(other than air conditioners) 53.33 106.16 50.23 74.99 119.21 62.91 92.61 175.92 52.64
8419 Machinery, plant or lab equipment for
treatment of materials through a process
involving temperature 103.37 170.99 60.45 186.78 252.41 74.00 257.54 293.25 87.82
8420 Calendaring or other rolling machines
other than for metals or glass. 8.19 6.48 126.39 7.24 32.72 22.13 10.46 14.04 74.50
8421 Centrifuges, including centrifugal dryers,
filtering or purifying machinery and
apparatus 71.20 171.26 41.57 90.64 234.95 38.57 116.25 342.99 33.89
8435 Presses, crushers and similar machinery
used in manufacture of wine, cider or
fruit juices 4.10 4.00 102.50 4.92 2.94 167.35 5.81 9.90 58.68
8438 Machinery not specified elsewhere but
used in preparation or manufacture of
food or drink 24.30 25.85 94.00 37.65 28.25 133.27 36.95 60.72 60.85
8454 Convertors, ladles, ingot moulds and
casting machines used in metallurgy
or metal foundries 36.45 46.00 79.24 38.36 127.67 30.04 37.45 163.36 22.92
8455 Metal rolling mills and rolls thereof 57.82 57.06 101.33 82.47 143.48 57.47 104.70 243.72 42.96

SOURCE: Directorate General of Commercial Intelligence and Statistics, Government of India

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ANNEXURE-7

India’s Export, Import, and Export-Import Ratio of Select Electrical Machinery


HS Code Description 2004-05 2005-06 2006-07
Exports Imports Exp-Imp Exports Imports Exp-Imp Exports Imports Exp-Imp
(US $ Mn) (US $ Mn) Ratio (%) (US $ Mn) (US $ Mn) Ratio (%) (US $ Mn) (US $ Mn) Ratio (%)

8501 Electric motors and generators


(excluding generating sets) 110.26 155.19 71.04 136.87 189.02 72.41 133.30 244.43 54.53
8502 Electric generating sets and rotary
converters 31.16 92.84 33.56 65.41 160.02 40.87 361.43 114.10 316.77
8504 Electrical transformers, static
converters and inductors 207.68 298.41 69.59 370.39 405.74 91.29 645.46 557.12 115.86
8532 Electrical capacitors, fixed,
adjustable or variable 13.69 93.45 14.65 25.02 118.56 21.10 39.48 135.31 29.18
8535 Electrical apparatus for switching or
protecting electrical circuits
(exceeding 1000v) 56.40 29.08 193.94 66.93 47.72 140.05 89.57 50.72 176.60
8536 Electrical apparatus for switching or
protecting electrical circuits
(below 1000v) 112.70 256.32 43.97 183.48 334.91 54.78 233.82 462.06 50.63

SOURCE: Directorate General of Commercial Intelligence and Statistics, Government of India


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