Capital Goods

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Capital Goods Sector comprises of plant and machinery, equipment/accessories required for manufacture/production, either directly or indirectly, of goods or for rendering services, including those required for replacement, modernization, technological up gradation and expansion. It also includes packaging machinery and equipment, refrigeration equipment, power generating sets, equipment and instruments for testing, research and development, quality and pollution control.  The capital goods industry contributes 12% to the total manufacturing activity which translates to about 1.8% of GDP. Transmission & Distribution (T&D) segment accounts for 40% share in the capital good industry. The sector employs 1.4 million people directly and 7 million people indirectly in the country.

Capacity and Production

Production of machine tools registered a CAGR of 8.5 percent during the period 2014-15 to 2018-19. Meanwhile, the production of textile machinery registered a CAGR of 2.4 percent between 2014-15 to 2018-19, whereas the production of construction machinery grew at a CAGR of 11.2% during the same period.

Production of Machinery (Rs Million)
  Textile Machinery y-o-y growth Machine Tools y-o-y growth Construction y-o-y growth
2014-15 29,008.60   19,987.70   10,571.90  
2015-16 30,599.60 5.5% 22,009.90 10.1% 11,310.10 7.0%
2016-17 32,773.90 7.1% 22,433.10 1.9% 13,116.00 16.0%
2017-18 32,438.40 -1.0% 24,354.80 8.6% 14,817.90 13.0%
2018-19 31,928.30 -1.6% 27,663.70 13.6% 16,150.80 9.0%
Source: CMIE Industry database

The sector witnessed increasing number of projects in the country by public, private and foreign owners. As at year end March 2019, total of 185 projects are yet to be implemented under capital goods manufacturing sector.

Status of Projects under Machinery sector as at year end March 2019
Owners Projects outstanding Projects under implementation
INR million Numbers Million Numbers
Government Sector 125,047.0 35 38,698.20 17
- Central Government 68,354.8 12 7,390.00 3
- Government State 56,692.2 23 31,308.20 14
Private Sector 2,142,904.9 153 419,857.9 47
- Indian Private Sector 1,551,983.0 122 387,254.7 42
- Foreign Private Sector 590,921.9 31 32,603.2 5
Total 2,267,951.9 188 458,556.1 64
Source: CMIE Industry database


Exports of machinery, witnessed a y-o-y growth of 18.1 percent in 2018-19, amounting to US$ 29.1 billion, as compared to US$ 24.6 billion in the previous year. Machinery exports accounted for 8.8 percent of India’s total exports in 2018-19. Among machinery items, electric machinery and equipment accounted for the highest value of exports in 2018-19, amounting to US$ 8.4 billion, followed by industrial machinery for dairy (US$ 5.9 billion, IC engines and parts (US$ 2.8 billion), and other miscellaneous engineering items (US$ 2.7 billion).

India’s Exports of Machinery (US$ Million)
PRODUCT LABEL 2017-18 2018-19 Y-O-Y Change (%) % share in India's total exports
ELECTRIC MACHINERY AND EQUIPMENT 6,708.29 8,424.50 25.58 2.55
INDUSTRIAL MACHINERY FOR DAIRY 5,344.58 5,884.97 10.11 1.78
IC ENGINES AND PARTS 2,402.94 2,759.27 14.83 0.84
OTHER MISC. ENGINEERING ITEMS 2,435.91 2,689.36 10.4 0.81
AC, REFRIGERATION MACHINERY 1,294.63 1,983.70 53.22 0.6
OTHER CONSTRUCTION MACHINERY 1,441.75 1,660.74 15.19 0.5
ATM, INJCTNG MLDING MCHNRY ETC 1,521.53 1,631.19 7.21 0.49
PUMPS OF ALL TYPES 966.99 1,002.73 3.7 0.3
INDUSTRIAL BOILERS, PARTS 606.55 824.42 35.92 0.25
HAND TOOLS/ CUTTING TOOLS OF METALS 711.6 765.08 7.51 0.23
CRANES, LIFTS AND WINCHES 385.44 503.66 30.67 0.15
MACHINE TOOLS 470.38 494.59 5.15 0.15
ACCUMULATORS AND BATTERIES 277.43 381.84 37.64 0.12
ELECTRODES 43.92 54.2 23.4 0.02
PRIME MICA AND MICA PRODUCTS 20.77 34.34 65.29 0.01
TOTAL 24,632.72 29,094.57 18.11 8.81
Source: DGCIS


Capacity of capital goods industry has grown significantly since liberalization, supported by the inward direct investments in the sector. The engineering and capital goods industry has been de-licensed and 100 % FDI has been permitted in the sector with foreign technology agreements allowed under the automatic route. Within the machinery industry, FDI inflows into electrical equipment sector were the highest, with a share of 1.9 percent in India’s total FDI inflows, amounting to US$ 8 billion during the period April 2000 to March 2019. This was followed by industrial machinery (US$ 5.2 billion, with a share of 1.2 percent), miscellaneous mechanical and engineering sector (US$ 3.58 billion, with a share of 0.85 percent), and machine tools (US$ 951.9 million, with a share of 0.23 percent) during the same period.


Increasing industrialization and economic development drives growth in the capital goods market. Turnover of the capital goods industry is estimated to grow to US$ 115.17 billion by 2025. Demand in the capital goods sector is currently propelled by the manufacturing, power and mining industries, and is expected to rise, driven by the government’s initiatives for infrastructure development. Additionally, investments in power, oil and gas extraction, mining and petrochemicals are expected to provide a positive boost for the industry. Industrial growth and development in the manufacturing industry will add to the momentum of the capital goods industry.



  • The Government of India and the Government of Karnataka have come into a joint venture in order to enhance global competitiveness of Indian capital goods sector. Under this, 500 acres of land has been earmarked for the first of its kind Integrated Machine Tools Park to be set up near the Japanese park in National Manufacturing Investment Zone(NMIZ), Tumkur.
  • In order to give fillip to the quality and numbers of welding professionals required for ‘Make in India’, PSG has proposed to set up a modern welding technology centre of excellence in collaboration with major stake holders like Welding Research Institute, Manufacturers of welding equipment/ products and FICCI etc. The Centre of Excellence will support Indian manufacturers by proving latest technologies developed by the Centre for home -made welding machine tools, consumables and locally trained manpower particularly in high-end welding jobs required by strategic sectors.
  • Approval has been given to HMT Machine Tools Limited, a PSU, which pioneered setting up and growth of machine tool industry in India. HMT is modernizing its product portfolio through this proposal by manufacturing latest lathe and turning mill centre.
  • Heavy Engineering Corporation Ltd(HEC) has collaborated with Messrs CNIITMASH – a Russian Government Industrial Technology Research Institute for strategic significant technology flow to the public sector in India. The proposal is for imparting training to 1350 engineers in three years in the latest technologies relating to electro slag re-melting, welding, gear box manufacturing and non-destructive testing. The project size is envisaged at INR 50 crores, out of which the Government component will be INR 30 crores, which will be given to the Russian institute for their knowledge support in creating the four training centers. HEC will sign MoU with other stakeholder’s units and run nine courses for the benefit of Indian manufacturing sector.
  • The government has approved a significant number of SEZs across the country for the engineering sector, including the Delhi-Mumbai Industrial Corridor being developed across 7 states.




Companies selling electrical and electronic goods in the EU must conform to the EU legislation for electrical and electronic equipment (EEE), which includes:

The waste Electrical and Electronic Equipment Directive (WEEE), which sets out the financial and other responsibilities of EEE producers with regard to the collection and recycling of waste from a broad range of EEE at their end of life.

The Restriction of Hazardous Substances Directive (RoHS), which bans the use of certain hazardous substances (such as lead, mercury, cadmium, hexavalent chromium and some polybrominated flame retardants) in EEE.

For further details on regulations applicable in various geographies, refer to this link:


China’s “Measures for Administration of the Pollution Control of Electronic Information Product (EIP)”, commonly known as RoHS, is intended to restrict the use of hazardous materials in electrical and electronic equipment. All products manufactured on or after March 1st 2007 for sale in China must adgere to stage 1 requirement.

Products imported into the country for the purpose of re-export or for manufacturing of other export products are excluded. The following requirements need to be adhered to:

  • The hazardous substances which come under the ambit of this measure are Lead (Pb), Hexavalent Chromium (Cr6+), Mercury (Hg), Cadmium (Cd), Polybrominated Biphenyls (PBBs) and Polybrominated Diphenyl ethers (PBDEs). If an EIP doesn’t contain any of these, then the following symbol needs to be used:
  • If any of the above mentioned hazardous substance is present above the maximum concentration value, then the following symbol needs to be used, with the number inside it representing the Environmental Friendly Use Period (EFUP):
  • The user manual of the EIP should contain table of names and contents of toxic and hazardous materials if the product contains them in quantities above the maximum concentration values. China’s maximum concentration values are 0.1 % for all hazardous substances other than cadmium for which the level is set at 0.01 %.
  • Packaging of EIPs should be in accordance with GB 18455- 2001 standard.

China Compulsory Certification (CCC) mark is required to be obtained by the manufacturers before exporting or selling products in China. Several electronic products require the CCC mark.

For further details on regulations applicable in various geographies, refer to this link:

South Korea

South Korea promulgated the Act for Resource Recycling of Electrical and Electronic Equipment and Vehicles on April 2, 2007. This regulation has aspects of RoHS and WEEE.

For further details on regulations applicable in various geographies, refer to this link:

North America

California has passed the Electronic Waste Recycling Act of 2003 (EWRA). This law prohibits the sale of electronic devices after January 1, 2007, that are prohibited from being sold under the EU RoHS directive, but across a much narrower scope that includes LCDs, CRTs and the like, and only covers the four heavy metals restricted by RoHS. EWRA also has a restricted material disclosure requirement.

For further details on regulations applicable in various geographies, refer to this link: