Introduction

In recent years, the Indian government has attempted to improve the manufacturing capabilities in the country

  • In order to achieve this goal, the country has launched schemes such as Make in India and Self-Reliant India. In addition to this, India also launched the National Capital Goods Policy in the year 2016
  • Although the true benefits of these schemes are yet to be seen on a large scale, there are certain positives that are springing up
  • For example, India’s exports of capital equipment have grown at a strong rate in recent years
  • This indicates that the country’s manufacturers are now adept at producing high-quality equipment that can be used around the world
  • Further, the cost of manufacturing such equipment continues to be comparatively low, thereby providing them with a competitive advantage over producers from Europe or North America

This blog discusses India’s export of capital equipment as well as the key reasons behind its rapid growth 

India’s Exports of Capital Equipment Continue to Grow

During the year 2019, India’s exports of capital equipment stood at nearly $10 billion

  • The industry generates direct employment for nearly 1.4 million individuals. In addition to this, it also generates indirect employment for another 7 million people
  • The demand for India-made capital equipment around the world has been growing in recent years
  • It is estimated that the transmission and distribution equipment output of the country will reach $75 billion by the year 2025

However, the industry continues to face certain challenges

  • Firstly, the transaction cost of exporting products from India is quite high compared to other parts of the world. This means that the cost of the equipment becomes higher, thereby eating into the margins
  • Secondly, the Indian manufacturing capabilities are still far behind other exporters such as Japan and China
  • India needs to be much quicker in adopting the latest technologies that could help the country in improving productivity and minimising delays

In the past ten to fifteen years, India’s capital equipment exports have undergone a significant change

  • Earlier, the country only used to export specific equipment such as machinery and mechanical equipment
  • However, the country now has the ability to produce other related items such as turbojets, turbo propellers and gas turbines
  • The Indian capital equipment sector is now moving towards diversification as well. The industry is now aiming to develop value-added products so that its overall margins can be improved significantly
  • Indian capital equipment is now being exported to different parts of the world including Europe, North America, as well as China
  • The duty structure related to the export of these products has also been altered in recent years, making it easier for the exporters to target different countries around the world

Overall, the prospects for capital equipment exports from India continue to be bright

  • If the country is able to leverage technology and improve the quality of its products even further, then there is no reason why it can catch up with China in terms of capital equipment exports

To conclude, it is clear that there are several reasons why India is among the leading exporters of capital equipment and related products. Institutions such as Euro Exim Bank offer customised support to traders in the form of financial instruments and bespoke trade advisory services. Euro Exim Bank offers financial instruments such as Bank Guarantees and Letters of Credit (LCs). Further information about Euro Exim Bank and its key product offerings is available here