Industries in India have been expanding by leaps and bounds since independence. Despite the global economy experiencing downturns, the resilience of Indian entrepreneurs has driven the country from nothing to its zenith position. The fabrication industry is a crucial component to the country’s overall manufacturing status.
The engineering and fabrication industry is the largest out of all the industrial segments of India, accounting for about 3% of the country’s GDP and providing employment to more than 4 million semi-skilled and skilled workers.
The future outlook of the industry is expected to grow even more, owing it to the development of infrastructure, favorable policies, new investments in the oil and gas, power projects, and petrochemical industries. Further growth in the manufacturing industries will also boost the growth of the fabrication industry. Since the export market is offering more opportunities for exploration, the contribution of India in global fabrication exports is anticipated to grow.
The emerging trends such as outsourcing of fabrication services create opportunities for growth of the industry in India. Design services such as product improvement and maintenance, designing of manufacturing systems and product designing are increasingly being outsourced to Asian countries and India is among the top countries receiving the contracts. It is estimated that by the year 2020, India will be a $40 billion market for fabrication and engineering outsourcing services.
Additionally, the Department of Commerce set a $125 billion target for engineering and fabrication exports for the 2013-2014 period. And so far, much has been achieved and many more opportunities are showing off in the Indian fabrication sector. The capital goods and turnover in India is expected to hit US$125.4 billion by the year 2017. The fabrication exports in India for the financial year 2014-2015 registered at US$70.7 billion, which was a 14.6% growth. This was greatly attributed to demand growth in the UAE and US. Apart from these typical markets, markets in Central and European nations such as Poland gives a huge promise.
Most of the exports in India for its fabrication and engineering goods were directed to Europe and US, which accounts for more than 60% of all the exports. Recently, the exports from India to South Korea and Japan are also on the increase, rising to about 60%.
Much of the growth experienced in the fabrication industry has also been attributed to the Indian government. The fabrication industry has a strategic importance to Indian economy owing it to the integration with other industrial segments. With the aim of improving the manufacturing sector, the Indian government has reduced excise duties on capital goods, factory gate tax, vehicles, and consumer durables. The government has also reduced basic custom duties from 10 to 5% on forged steel rings that are used in manufacturing bearings of electricity generators that are wind operated.
Much of the developments experienced in the fabrication industry has been accounted by the government’s positive initiative. On its 2014-2015 Union Budget, the government offered an investment allowance at a rate of 15% to manufacturing companies that invest over $4.17 million within a year in machinery and new plants. Several steps have also been put in place to encourage companies to grow and perform even better.
In general, the fabrication industry is a promising market. With the development in the associated industries such as infrastructure, the industry is expected to hit over $150 billion by 2017.