Global
The global capital goods sector continued its upward trajectory in 2018, fuelled by a steady increase in the demand for equipment and services across user markets, which had a positive impact on order & revenue growth and sector profitability.
Global Capital Goods
As many waves of Industrial progress swept across the world, industrial activity has been centric to economic growth. Western economies have shifted focus from their commanding manufacturing pedestals to investing in IP, technology and design. Many emerging economies are quickly moving in to fill the resultant gaps in the production ecosystem and are climbing up the value chain by creating an environment conducive for industrial activity. Companies in developed economies are seeking newer markets as growth in their traditional bastions stagnates. Domestic players in these emerging markets are innovating and facing off with competitors armed with advanced technology, better products and global scale. They are responding by increasingboth domestic and cross border expansion & collaboration, in search of either technology, customers or resources. The realignment of supply chains due to trade wars also throws up entry points for new players to participate in global value creation.
As a result of this, the world is moving into a scenario filled with uncertainty and the inherent opportunity – one where a well-designed strategyincluding choice of technology and geography is essential for success in the Engineering and Capital goods sector. Companies also need to be aligned to the inevitable rise of Industry 4.0
India
The Capital Goods industry is the “Umbrella Sector ” of all manufacturing industry and is of strategic importance to the economy. A robust capital goods sector is vital for strengthening national manufacturing capabilities and creating employment opportunities. The sector provides critical inputs like machinery and equipment to a broad set of user industries which are used directly or indirectly in the manufacture of goods and services. Turnover of the organized capital goods industry in India is expected to increase to US$ 115.17 billion by 2025.
According to McKinsey, as India emerges as one of the world’s fastest-growing large economies, it’s not surprising that demand for capital goods has more than doubled in the past decade. In spite of this, one-third of this demand has been met by imports. For a $2 .5 trillion economy, the country’s capital-goods sector remains relatively underdeveloped, offering a significant business opportunity for both Indian and foreign original-equipment manufacturers (OEMs).
India’s domestic capital-goods industry is weighed down by low investment in technology and talent. While India is host to a few globally competitive capital goods manufacturers most of the other companies focus on low-value-add fabrication and assembly work, unable to move up the chain with their designs or technology. Value addition represents only about 22 percent of total outputandthe capital-goods sector as a whole accounts for less than 1 percent of India’s GDP, compared with 4.1 percent for China, 3.4 percent for Germany, and 2.8 percent for South Korea.
This scenario is now on the cusp of rapid change as India has put into place an enabling policy with the required industrial infrastructure facilities to catalyse the growth of the Capital goods industry. These efforts are central to the “Make in India “ programme.
Telangana
This sector is very important for the State to participate in the entire value chain of the automobile, construction, power, aerospace, petrochemicals, domestic appliances, paper, and textile sectors. The thrust areas in this sector will be an integral part of the supply chain to the other thrust sectors.
Telangana has more to offer to this sector than just low wages. An entire ecosystem comprising of talent, infrastructure, active supply chain, industry-friendly policies, 24×7 power, logistics, and support institutions can form the bedrock of any Engineering and Capital goods enterprise. The T-Works facility enables innovation, rapid prototyping, and deployment. The state has identified some important verticals for active promotion of the Capital Goods sector. These are
- Environmental Engineering solutions
- Building logistics infrastructure
- Aerospace and defense
- Urban Infrastructure
- Power generation and distribution
- Basic materials and commodities
To promote the sector Telangana State Industrial Infrastructure Corporation Limited has established the greenfield National Investment and Manufacturing Zone near Zaheerabad in an area of 12,635 acres (5,113 ha) in line with the national Manufacturing Policy of Department of Industry and Policy Promotion of Government of India. The infrastructure development includes water supply, water distribution, internal roads, stormwater drains, electrical distribution networks, internal street lighting, wastewater, and waste management facilities, technical and support buildings, and housing along with allied facilities. Most of the world’s leading original equipment makers (OEMs) are expected to set up their units in the zone. The project site lies about 80 km NW of Hyderabad. With a vibrant technology ecosystem in Hyderabad, this sector is uniquely poised to usher in an era of Smart Manufacturing.
National Capital Goods Policy 2016 Building India of Tomorrow
IBEF India Engineering and Capital goods Sector Report December 2017
