Heavy Engineering Industries in India

11238: 11246: 11247: 11251: Chitra Ranade Smrutee Sathaye Shaliwahan Naik Shraddha Kotbagi

Introduction
Heavy Industries is defined as a type of business that typically carries :

HIGH CAPITAL COST

HIGH BARRIERS TO ENTRY LOW TRANSPORTABILITY

Classification
Two major segments

Electrical Machinery

Non electrical Machinery

The Heavy Electrical Industry

Turbines and Generator Sets
Manufacturing capacity- 7000 MW + BHEL-Largest installed capacity

Boilers
1000 MW size capacity BHEL- 60% market share

Transformers
HVDC transmission upto 500KV Capability to manufacture large range

The Heavy Electrical Industry

Switchgear and control gear
Covers entire range-240V to 800KV Fully developed industry

Electrical Furnaces
Used in metallurgical and engg. industries Forging, foundry, automobiles etc

Shunting locomotives
Internal transport facilities Railways, steel plants, thermal power plants

Leading Players in Heavy Electrical Industry

The Heavy Non-Electrical Industry

Textile
Over 600 units engaged to manufacture of machinery parts Sorting, cording, processing of yarns machines

Cement
Manufacture complete cement plants Capacity upto 7500 TPD

Rubber
Currently 19 units for manufacture of rubber machinery Machines for tyre curing presses, moulds, cutters etc

The Heavy Non-Electrical Industry

Material Handling
Caters to host of core industries feeders, wagon loaders/unloaders etc

Oil field Equipment

BHEL, Hindustan Shipyard, Mazagon dock are leading producers of machinery Manufactures drilling rigs for on shore drilling

Metallurgical
Equipments for mineral benefication, ore dressing Size reduction, steel plant eqipments

The Heavy Non-Electrical Industry

Mining
Around 23 mining companies are present in India Mining equipments include conveyors, pumps, haulage winder, ventilation fan

Dairy
Requirements of stainless steel dairy equipments, evaporators, storage tanks Milk refrigerators, heat exchangers etc

Leading Players in Heavy NonElectrical Industry

Historical Perspective

Agriculture most dominant sector

Growth in Economy was just 1%

: Jamshetji Tata established central India spinning weaving and Manufacturing company in Bombay

TISCO founded in Jamshetpur (marked the beginning of heavy industries in India)

1907

1877

1880-1920

Pre 1991 Scenario

2nd 5 Year Plan 1. 2. 3. Public Sector Undertakings Era of licensing, Control & Barriers to trade Heavy investments in PSUs & infrastructure

1973: FERA Introduced 1. 2. Regulation on flow of FDI Protection from Foreign Competitors

1985: MRTP Act 1. Contain concentration of power

Post 1991 Reforms

Dilution of Public Sector Rangarajan Committee
Changes in MRTP SEZs and EOUs

Delicensing

FERA changed to FEMA

Present Scenario
Sector Industrial Sector Capital Goods Consumer Goods Basic Goods Intermediate Goods Consumer Durables Consumer Non durables April July 2011-12 (%) 5.8 7.6 4.6 7.9 0.8 4.2 4.9 April- July 2010-2011(%) 9.7 23.1 10 5.2 10.1 18.4 3.8

Challenges
Shortage of skilled labour Infrastructure High cost of capital Inadequate R&D and technology development - for sustained competitiveness in domestic as well as international markets Competition - Chinese imports are cheaper by a margin of 15% to 20%, even if import duties are imposed they pose a competition to local players

Future prospects
Government Impetus: Planning Commission constituted a Working Group on Capital Goods and Engineering Sector for the 12th Five Year Plan (2012-2017) under the Chairmanship of Secretary, Department of Heavy Industry

Five key objectives for the 12th Five Year Manufacturing Plan
a. Increase manufacturing sector growth to ~ 2-4% more than GDP growth to make it the engine of growth for the economy and increase its share to ~ 25% of overall GDP by 2025 b. Increase the rate of job creation in manufacturing sector to create ~100 million additional jobs by 2025

c. Increase depth in manufacturing, with focus on the level of domestic value addition
d. Enhance global competitiveness of Indian manufacturing through appropriate policy support e. Ensure sustainability of growth, particularly with regard to the environment
Source : Dept. of Heavy Industry Min. of Heavy Industries & Public Enterprises Oct.2011 Report of the working group on capital goods & engineerring sector for 12th 5 Year Plan (2012-2017)

Strategies
Address Shortage of skilled labour High cost of capital Infrastructure development construction of highways, airports, ports Power: generation and reduce T&D losses Oil & gas: high domestic and international demand, focus on increasing output from old wells and developing new wells

Capacity addition by steel, power, refineries etc

 Import substitution - HMT Export promotion - BHEL Global Champions - Indian PSUs Increase technology content in domestic production Need for automation Engineering Process outsourcing: new product development, improvement, maintenance, designing manufacturing systems

potential to exceed $40 billion by 2020

THANK YOU