"Future of Capital Goods in India" - Webinar Highlights

India's Capital Goods manufacturing industry serves as the strong base for its engagement across sectors such as engineering, construction, infrastructure, and consumer goods. This sector is a robust, multi-level, diversified segment of the Indian industry environment, playing a critical role in driving growth, creating jobs, and boosting exports and thus develop a technologically advanced and globally competitive steel industry to cater to the expansion planned in National Steel Policy 2017.

Indian Steel Association (ISA), an apex steel industry body that represents all the major public and private sector steel enterprises of India, organized a webinar titled "Subcontinental Steel: Future of Capital Goods" on 21st October, 2020, supported by the Ministry of Steel, Government of India. Prominent leaders from the steel and capital goods industry deliberated on issues which will shape the future of capital goods.

Key Highlights:

• As per the National Steel Policy, India aims to grow to 300 Mn t mark of steel capacity by 2030. There is a noticeable gap of 160 Mn t pa as the current crude steel capacity is 142 Mn t pa This indicates the need for setting up additional 16 steel plants of 10 Mn t capacity or 32 plants of 5 Mn t capacity in order to bridge this gap to satisfy the needs of the capital goods industry.
  
  
• India's per capita steel consumption is currently 74 kg of finished steel, much lower than global and geographical averages - 30% of the world average, indicating potential for rapid future growth. The target set by the National Steel Policy 2017 is to move to a per capita consumption of 160 kg of steel by 2030.
  
  
• Steel demand in capital goods sector increased by 6% over FY15 - FY19. Capital Goods are considered as a strategic sector and essential for the development of domestic manufacturing capabilities from a national self-reliance and security perspective.
  
  
• The capital goods sector has immense potential to grow in India as India embarks on its journey to build capacity mark by 2030. Domestic players need to access global capability, partner with large domestic players and frequently dialogue with the Govt. to identify tax incentives and regulatory hurdles for sustained rapid growth.
  
  
• India's cost of capital goods has come down substantially from 3.4-3.5%. Technology providers face challenges pertaining to the environment, raw-material (quality & quantity), transportation logistics and digital technology.
  
  
• Major challenges faced by the domestic capital goods industry - limited technological capability and expertise, operational in-efficiencies leading to higher prices, and limited capacity for domestic consumption.
  
  
• The domestic industry meets only 60% of national demand despite idle capacity in multiple subsectors. Imports in capital goods industry dominate exports. Overall, capital goods exports in India stood at 21.3(USD B) and imports stood at 44.5(USD B) in 2019.
  
  
• Abundance potential and opportunities in capital goods sector across various segments are as follows:
  ~ Cold storage is expected to grow at CAGR 16.09% by 2020
  ~ Investment of INR 1.4 Tn by 2025 for second largest roads and highway network
  ~ Expected to reach USD 23 Bn by 2024 in aerospace and defence sector
  
  
• Market-oriented reforms such as "Power for All" along with plans to add 93 GW by 2022 will generate huge demand for power transmission and distribution (T&D) equipment. Transmission and Distribution (T&D) equipment segment is targeted to reach a size of $ 75 Bn by 2022
  
  
• BHEL set up a 'Make in India (MII) Business Development Group' vertical to identify manufacturing opportunities in India and work with global OEMs for 'Make in India, Make for the World'.
  
  
• The support of the Government is needed to invest in making the technology and designs for steel heavy equipment open source, thus allowing capability to be developed in India, thereby boosting the performance of the capital goods industry