ELECTRICALMACHINERY

SUMMARY
Marketgrowthinpast10years11.6%
DomesticPowerEquipmentindustrygrowthinpast10years11.9%
Exportgrowthinpast10years18.6%
MajorElectricalEquipmentindustrygrowthinpast10years8.3%&inpast5years4%
EstimatedmarketvalueisexpectedtoreachUSD100billionby2022.

REASONSTOINVEST
Marketorientedreforms,suchasthetargetofPowerforAllandplanstoadd88.5GWofcapacityby2017and
93GWby2022whichwillgeneratehugedemandforpowertransmission&distributionequipment.
Incentivesforcapacityadditioninpowergenerationwillincreasethedemandforelectricalmachinery
Indianmanufacturersarebecomingmorecompetitivewithrespecttotheirproductdesigns,manufacturingand
testingfacilities
Alargepoolofhumanresourcesandadequateworkforceavailable
Increasingscopefordirectexportstoneighbouringcountries
InvestmentsinresearchanddevelopmentintheelectricalmachineryindustryareamongstthelargestinIndias
corporatesector
Acomparativeadvantageintermsofmanufacturingcosts,marketknowledge,technologyandcreativity

STATISTICS
Estimatedoutputby2022isUSD100billion
ThemarketexpandedataCAGRof10.5%over200712
Duringthelast10years,exportshaveincreasedataCAGRof18.16%totouchUSD5.76billionin201516
By2022,thegenerationequipmentindustryinIndiaisprojectedtogrowtoUSD2530billion.

GROWTHDRIVERS
Capacitycreationinsectorssuchasinfrastructure,power,mining,oilandgas,refinery,steel,automotiveand
consumerdurablesaredrivingdemandintheengineeringsector
Nuclearcapacityexpansionwillprovidesignificantbusinessopportunitiestotheelectricalmachineryindustry
Rapidincreasesininfrastructureinvestmentandindustrialproductionwillfuelfurthergrowth

FDIPOLICY
 100%FDIisallowedundertheautomaticrouteintheelectricalmachinerysector,subjecttoallapplicable
regulationsandlaws.

SECTORPOLICY
Delicensing:
Theelectricalmachineryindustryhasbeendelicensed.
ThishasfacilitatedtheentryofglobalmajorsintotheelectricalmachineryindustryinIndia.

Tariffs&CustomDuties:
Thecustomsdutyonpowergenerationequipmentis5%atpresentwhereastransmissionanddistribution
equipmentattracts7.5%customsduty.

InitiativestoIncreasePowerGeneration:
Withplannedcapacityadditionof88.5GWprojectedattheendof2017throughtheAcceleratedPower
DevelopmentReformProgram,thegovernmentplanstoprovidereliable,affordableandqualitypowertoall.

NationalElectricityPolicy(NEP):
Thegovernmentaimstoachievepercapitaelectricityconsumptionof1,000kWhthroughitsmissionunderNEP.

Vision2022fortheIndianElectricMachineryEquipmentIndustry:
TomakeIndiathecountryofchoicefortheproductionofelectricalequipmentandreachanoutputofUSD100
billionbybalancingexportsandimports.
AreasoffocusincludetechnologyandR&D,theloweringofcustomsdutiesonarangeofequipment,thesetting
upoftheElectricalEquipmentSkillDevelopmentCouncil(EESDC),theestablishmentofelectricalequipment
industryclusterstheenhancementofproducttestinginfrastructureinthecountryanincreaseofsharesinthe
exportmarketandfinancialsupport.

FINANCIALSUPPORT
KEYPROVISIONSOFTHE20152016UNIONBUDGET:
Inordertoprovideafurtherfilliptocompaniesengagedinthemanufactureofanarticleorthing,thesaidbenefit
ofadditionaldeductionof15%ofthecostofnewplantandmachinery,exceedingUSD3.85millionthatis
acquiredandinstalledduringanypreviousyearendingon31.3.2017.

TaxIncentives:

R&DIncentives:industry/privatesponsoredresearchprogrammes
AweightedtaxdeductionisgivenunderSection35(2AA)oftheIncomeTaxAct.Aweighteddeductionof200%
isgrantedtoassessesforanysumpaidtoanationallaboratory,universityorinstituteoftechnology,orspecified
personswithaspecificdirection,providedthesaidsumisusedforscientificresearchwithinaprogramme
approvedbytheprescribedauthority.

CompaniesengagedinManufacturehavinganinhouseR&Dcentre:
Aweightedtaxdeductionof200%underSection35(2AB)oftheIncomeTaxActforbothcapitalandrevenue
expenditureincurredonscientificresearchanddevelopment.(Expenditureonlandandbuildingsarenoteligiblefor
deduction).

StateIncentives:
 Apartfromtheabove,eachstateinIndiaoffersadditionalincentivesforindustrialprojects.Incentivesareinareas
likesubsidisedlandcost,relaxationinstampduty,exemptiononthesale/leaseofland,powertariffincentives,a
concessionalrateofinterestonloans,investmentsubsidies/taxincentives,backwardareassubsidies,special
incentivepackagesformegaprojects,etc.

ExportIncentives:
Exportpromotioncapitalgoodsscheme.
Dutyremissionscheme.
Focusproductscheme,specialfocusproductscheme,focusmarketscheme.

AreasbasedIncentives:
IncentivesforunitsinSpecialEconomicZones(SEZ)/NationalInvestment&ManufacturingZone(NIMZ)as
specifiedinrespectiveActsorthesettingupofprojectsinspecialareassuchastheNortheast,Jammu&Kashmir,
HimachalPradesh&Uttarakhand.

INVESTMENTOPPORTUNITIES

1.GenerationMachinery:Boilers,Turbines,Generators
2.TransmissionMachinery
3.DistributionMachinery

FOREIGNINVESTORS
MHI(Japan)
Hitachi(Japan)
Babcock(UK)
Alstom(France)
Toshiba(Japan)
Ansaldo(Italy)
ColfaxCorporation(USA)
SchneiderElectric(France)
Legrand(France)
GE(USA)

AGENCIES
TheDepartmentofHeavyIndustries,TheMinistryofHeavyIndustries&PublicEnterprises
Industryassociations,IndianElectricalandElectronicsManufacturersAssociation
EngineeringExportPromotionCouncil

MAKEININDIA
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