Insight- Exports of Engineering Products from India
In the global export market, India is a major contributor when it comes to engineering goods. As per reports, between April to July 2022-23, this country had engineering exports worth USD 38.31 billion. Items in this regard mainly included capital goods, transport equipment, and other machinery, along with light engineering goods like fasteners, forgings, and castings.
The top importers of Indian engineering products in the period were the United States, Germany, Saudi Arabia, the United Kingdom, and Mexico. Given the vast popularity of such products in the international market, many foreign firms are on the lookout to develop India-centric products and services and take advantage of the growing global demand.
However, to do so, they need to first establish a manufacturing plant or partner up with an Indian firm.
India’s Engineering Sector and Its Global Impact
The engineering sector is India’s largest industrial segment and top net foreign currency earner. It accounts for almost 63% of the nation’s global foreign collaborations and 25% of its total exports in the goods sector. In FY 2022, India’s engineering goods exports stood at USD 111.63 billion, showing year-over-year growth of 45.51%.
India is the main exporter of engineering products to regions like North America, ASEAN, North-East Asia, Latin America, the Middle East, etc. The top nations in this regard are the United States, Germany, the United Arab Emirates, and Italy, with the US having the highest share of 15.5%.
Now, exports of engineering products can be subdivided into several categories. When it comes to industrial machinery, the USA, Thailand, and Germany are the top importers. Between April to November 2022, the USA contributed 20% in this particular subsegment.
Coming to the automobile division of engineering exports, South Africa, Mexico, and Saudi Arabia were the largest contributors during the period. In the non-ferrous metals and products division, the USA, South Korea, and the Netherlands were the major buyers. Additionally, in the electrical machinery and components division, the United States, the United Kingdom, and Germany were the biggest contributors.
The above-mentioned data shows that the USA is a major importer when it comes to Indian engineering products. According to a survey, in FY 2022-23, there was a 6.8% year-over-year growth of Indian engineering exports to the US. In figures, this indicates a growth of USD 18.67 billion.
Thus, foreign companies planning to enter this market can get enormous opportunities to gain international exposure and scale their business.
How Foreign Businesses Can Benefit from Exporter of Engineering Products?
Here are some of the advantages that foreign businesses can get by investing in the Indian engineering sector:
One of the biggest benefits of the Indian engineering sector is that companies can manufacture goods at much lower prices in comparison to other countries. This is because raw materials like iron ore, various alloys, plastic, etc. are available in abundance, along with a vast skilled labor force.
These factors help bring down production costs, which enables businesses to manufacture products sustainably and scale their operations.
- High Demand from Different Sectors
The engineering industry makes equipment, machinery, tools, etc., which are used by other segments. As technological innovations take place in these different sectors, there will be a rise in demand for engineering products, leading to the sector’s growth.
The segments that the engineering sector serves are – consumer goods, manufacturing, power, infrastructure, oil, mining, etc.
Over the years, the Indian Government has introduced numerous policies which are contributing to this industry’s growth. For instance, it allows up to 100% Foreign Direct Investment (FDI) in the de-licensed engineering sector. This makes it easier for foreign firms to gain controlling ownership over prospective Indian companies and gain an edge over the existing competition.
Moreover, in the 2023 Union Budget, the Government announced a USD 120 billion outlay for infrastructural development. Apart from this, there is also the Make in India program, which encourages local manufacturing by providing incentives and increases the ease of doing business by reducing compliance burdens.
- Presence of Engineering Products R&D Support
Developing products that are equivalent to Global standards will require foreign companies to take support from local partners. However, finding reliable suppliers in a new environment can be difficult for foreign organizations to do entirely on their own.
Fortunately, there are several Consulting companies that provide QA/QC/QM services for Engineering products which can be helpful in this regard. They can help businesses partner up with vendors and develop Export-centric products and services while maintaining the highest quality.
Tecnova’s Consulting Services for Consumer Products
In India, Tecnova is a leading consulting firm that specializes in helping its clients with Export-centric products and services development. It offers vendor development as well as Quality Management services, which enable businesses to hire reliable suppliers for developing their high-quality products.
With Tecnova, businesses can also avail themselves of partner search services. This allows them to enter a partnership with an Indian company to gain market entry and benefit from its existing marketing channels.
Additionally, Tecnova helps its clients deal with the regulatory and legal compliances that come with establishing an entity in India. Now, foreign companies can do all this on their own. However, any mistake in this regard can lead to several hassles, which can delay the organization’s entry and expansion plans.
Thus, partnering with consulting firms is an effective method for keeping such hassles at bay and facilitating seamless market entry.
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