The mining and construction equipment industry in India is expected to grow robustly in the coming five to seven years as localization levels can increase to a whopping 70% – 80% as stated in an ICRA report. This shift to localization can help the whole industry save close to $3 billion annually in foreign exchange and turn, help India have a strong hold on this industry with competitive costs, and increased export potential.
From the ICRA report on the MCE industry, it can be derived that this growth is mainly due to the booming infrastructure growth in the country. In the past 10 years, the MCE industry has witnessed a whopping CAGR of 12%, which makes the sales of this industry reach 1.36 lakh units in FY24.
Factors behind the growth in MCE Industry and localization
- Production Linked Incentive Sachem (PLI) run by the government for the specialty steel sector, auto components, and similar sectors encourages domestic production and thus boosts localization of the MCE industry.
- Significant change in global business strategies such as China +1 which the original equipment manufacturers are opting for helping India get the businesses and investments.
- Increasing ease of doing business in India, as the government is continuously thriving to make India business & investment-friendly.
- Infrastructural growth in the country is a major cause of the localisation of the MCE industry attracting major investments from around the globe and making the industry more dynamic with cost competitiveness.
Current MCE Industry Overview
While the MCE industry is growing as of now it is highly dependent on imports. Around 50% of the components get imported in India from original equipment manufacturers (OEMs) who are based in Japan, China, South Korea, Germany, and others. Even key materials are important from OEMs, which is the main challenge for the industry presently.
Outlook of MCE Industry
The MCE industry has been evolving with time, and even though there are challenges, the industry is expected to become a $25 billion industry by 2030 as per ICRA. If this target is achieved, then India can save around $3 billion in forex savings annually. To achieve this target, a strong supply chain ecosystem is required which can help India realize its MCE Industry’s 2030 vision of making India the second-largest MCE market in the world as well as a manufacturing and export hub worldwide.
Source: TheEconomicTimes
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