Light Engineering, as an industry, is of moderate to high importance to the Indian economy by the virtue of its usage in all of the industries. India has a strong engineering and capital goods base. It is a major exporter of light engineering goods, which include a wide range of items, such as forgings, fasteners, bearings, steel pipes and tubes, diagnostic medical instruments, etc.

Today, the Indian engineering industry, including the transport equipment segment, is estimated at around Rs. 1.2 trillion. Light engineering contributes to about 20% of the entire engineering industry amounting to approximately Rs. 20-25 billion, while heavy engineering contributes the rest. The major suppliers to the light engineering industry are the companies supplying them with raw materials like steel, aluminum, etc.

In India, the Department of Industrial Policy and Promotion (DIPP), under the Ministry of Commerce and Industry, is the nodal agency for the development of light engineering industries, that is, monitors their progress at regular intervals and suggests possible policy incentives, as per the requirement. The Department is involved in framing and administering overall industrial policy and Foreign direct investment (FDI) policy as well as promoting FDI inflow into the country. The Government has extended the DEPB Scheme by one year, which will benefit exporters.

Exports of engineering products are expected to grow to around US$27 billion by FY2010. India's engineering exports are likely to increase from 0.5% to about 0.79%.
Despite rising raw material costs and higher imports, players reported a substantial jump in overall profits in 2006-07 (based on 9 months results), on the back of strong volume growth.

Reduction in import duties has led to increased imports of engineering goods. The cut in peak customs duty from 20% to 15% and in customs duty on textile machinery from 20% to 10% in the budget 2005-06 is expected to result in higher competition for domestic players in the engineering industry. Manufacturing sector is allowed to import capital goods at 5% basic customs duty under Export Promotion Capital Goods (EPCG) scheme. Moreover, import duties on some of the raw materials like alloy steel that are used as input by the engineering industry are higher than the import duties on the machines and equipment. This inverted duty structure results in a cost disadvantage for engineering companies. The reduction in customs duties on copper, aluminum and alloy steel from 15% to 10% in budget 2005-06 is a step to correct the inverted duty structure.

Light Engineering is a diverse industry with the number of distinctive sub-sectors. Some of them are-

Utensils:- The Indian stainless steel market is all set to grow at around 9 to 10 percent per annum for the next few years, which is significantly higher than the global average growth of 5.5 to 6 percent. The total stainless steel consumption in 2004-05 was 1.154 million tons, the data released by Indian Stainless Steel Development Association (ISSDA) estimated it to reach 4.084 million tons by 2015-16.

In India, the share of white goods and utensils is predominant. Currently kitchen utensils and utensils alone contribute around 75 percent of the market demand. The domestic appliance sector which includes spin driers of washing machines, almirahs, thermo-ware, decorative trims, water filters, moulded luggage, dish washer, microwave ovens, catering equipments, cutlery, knives, mixers and grinders, gas stoves and furniture have opened up new opportunities for steel consumption. In the case of stainless steel cutlery falling under Chapter 82, the drawback rate is being increased to 17% in line with duty drawback on stainless steel utensils.

Roller Bearing Industry:- The ball bearings is the biggest segment of the industry and contributes to approximately half of the total market size in volume terms. Rollers come in four basic styles, namely, cylindrical, needle, tapered and spherical. The automobile sector accounts for bulk of the total demand of this industry with estimated share of 35 per cent, electrical industry share is 12 per cent, after market (replacement) share is 40 per cent and the remaining 13 per cent consumption is by other industries. The approximate export and import figures of the ball and roller bearings for the year 2005-06 are Rs. 809.3 crore and Rs.1533.1 crore, respectively. While, the production of ball and roller bearings during the same year has been 327.6 million pieces. However, the bearing industry has been delicensed and is eligible for 100 per cent FDI under the automatic route.

Welding Equipment and Consumables:- The welding equipment and consumables (electrodes) market has been estimated at around Rs. 2-14 billion in terms of revenues. The organized sector has a dominating presence in the automatic and semiautomatic welding equipment and higher end electrodes, while the unorganized sector mainly serves manual metal arc welding equipment and low-end electrode segments.

Medical and Surgical Instruments: Indigenous manufacturers are currently in a position to manufacture wide variety of electro medical equipment such as electrocardiograph (ECG ) machine, X-ray scanner, CT scanners, short wave physiotherapy unit, electro surgical units, blood chemistry analyzer, etc. Most of the units manufacturing medical equipments are in the small-scale industrial (SSI) sector. The production for the year 2005-06 in the non-SSI sector has been around 262.8 crores.

Ferrous Castings:- The approximate export and import figures of the casting industry for the year 2005-06 are Rs. 1643.3 crore and Rs.35.95 crore, respectively. The production of steel castings and C.I. castings for the year 2005-06 in the organised sector has been 6.42 lakh tonnes. The industry has been delicensed and is eligible for automatic approval up to 100 per cent of FDI.

Process Control Instruments:- Future technology is for decrease in the sensing and response time of the equipment and greater automation control, i.e., without manual interference. The production for the year 2005-06 in the non-SSI sector is reported to be Rs. 232.8 crore. There has been export for Rs. 108 crores against import of around Rs. 836.9 crore during 2005-06. The Industry has been delicensed and is eligible for 100 per cent FDI under the automatic route.

Seamless Steel Pipes and Tubes:-. Oil sector accounts for around 60 per cent of total requirement of seamless pipes. Bearings and boiler sector contribute around 30 per cent of demand. The industry is able to manufacture tubes up to 14" outer diameter. The approximate export and import figures of the seamless steel pipes and tubes industry for the year 2005-06 are Rs. 760.37 crore and Rs. 1985.93 crore, respectively. The industry has been delicensed and upto 100 per cent foreign equity is allowed for the manufacture of this item under automatic route.

Electrical Resistance Welded (ERW):- Steel Pipes and Tubes:- Electrical Resistance Welded (ERW) Steel Pipes are used in fencing, lining pipes, oil country tubulars, scaffolding, water and gas conveyance, structural, engineering purposes, etc. There has been tremendous increase in the production of ERW steel pipes due to higher demand in oil and gas industry, infrastructure and automobile uses. There are large numbers of units in the SSI sector. The industry has been delicensed and is eligible for automatic approval up to 100 per cent FDI.

Submerged-Arc Welded (SAW) Pipes: - Total installed capacity of SAW pipes in the country is around 6.5 lakh tones. There is huge demand of SAW pipes in the country due to transportation of oil and gas and transmission of water. The approximate export and import figures of the SAW pipes industry for the year 2005-06 are Rs. 2223.47 crore and Rs. 212.77 crore, respectively. This industry has very good export potential. It has been delicensed and upto 100 per cent foreign equity is allowed for the manufacture of this item under automatic route.

Industrial Fasteners:- The approximate export and import figures of the industrial fastener industry for the year 2005-06 are Rs. 844.34 crore and Rs. 650.48 crore, respectively. The production of nuts and bolts in the organized sector for the year 2005-06 has been 77,888 tonnes. There is scope for more export in this sector. The fastener industry has been delicensed and is eligible for 100 per cent FDI under the automatic route.

Steel Forging Industry:- India's forging industry not only meets almost the entire domestic demand of forgings but is also a large exporter and is making a significant contribution to India's exports. The indigenous industry constitutes of about 10 large units followed by large number of medium, small and tiny units. The approximate import and export figures of the forging industry for the year 2005-06 has been Rs.1, 182.03 crore and Rs. 957.00 crore, respectively. The production of stamping and forging for the year 2005-06 in the organized sector has been 3, 31,519 tonnes. The industry has been delicensed and is eligible for 100 per cent FDI under the automatic route.

Bicycle Industry:- There is a significant scope for export of Indian bicycles, bicycle spare parts and bicycle accessories. The approximate export and import figures of bicycle for the year 2005-06 are Rs.111.68 crore and Rs. 20.06 crore, respectively. The total production of all kinds of bicycles in the organized sector has been 82.68 lakh numbers during the year 2005-06. The industry has been delicensed and is allowed 100 per cent FDI under automatic approval.

Food Processing Machinery:- Food Processing Sector is expected to grow at a healthy pace considering the rapid changes in food habits and consumerist culture developing in the country. The machinery manufacturers have honed their expertise in manufacturing dairy machinery and other core equipment of food processing machinery. The food processing machinery is classified under the general category of industrial machinery, which is de-licensed under the current industrial policy, and this sector qualifies for 100 per cent FDI under automatic approval.

Packaging Machinery Industry:- Considering the growth prospects in industrial sector and growing consumer awareness of packaging, it is expected that there would be substantial growth in this area. The packaging machinery industry, like other industrial machinery, is delicensed under the current Industrial Policy and is eligible for 100 per cent FDI under automatic approval.

Water Pollution Control Equipment:- The common industrial equipments are clarifier, separator devices activated sludge filters, biological reactors etc. The industry is capable of meeting major domestic requirements. However, there is need for continuous upgradation in technology especially with regard to power consumption and efficiency. The industry is included in the Industrial Machinery Sector and is a delicensed one and is also eligible for 100 per cent FDI under automatic approval.

Industrial Gears:- Different types and sizes of gears such as spur gears, helical gears, worm gears, spiral gears and many other kinds are manufactured in the country. The demand for gears and gear boxes predominantly depend on the growth of industrial machinery, machine tools, and consumer & automobile sector. Considering the industrial growth prospects, particularly in automobile sector, the demand for gears and gear boxes is expected to grow at a healthy pace. The industry is delicensed and is eligible for 100 per cent FDI under automatic route.

Metal Container Industry:- There are 40 units manufacturing general line containers and OTS cans with an installed capacity of about 1, 27,000 tonnes and 37,000 tonnes respectively. This industry is delicensed. Besides, there are a large number of units in the small scale sector mainly manufacturing 18 litre capacity oil containers. The production during 2005-2006 was 74,333 tonnes and production during 2006-07 (upto December) is 46,851 tonnes. Foreign technical collaborations in some cases have enabled the industry to adopt newer technology, especially for manufacture of OTS cans. The export & import of tin container during 2005-06 was Rs. 50.68 crores and Rs. 80.43 crore, respectively.

Watch Industry:- At present 16 units are manufacturing wristwatches and alarm timepieces. The production of wristwatches during 2005- 2006 was 17,964 thousand numbers. During the current year 2006-2007 (up to December), the production is 10,429 thousand numbers. Apart from above, the production of Alarm timepieces during 2005-06 was 447.9 thousand numbers. During the current year (up to December), the production was 321 thousand numbers. The prospects for the wristwatch industry in the country are encouraging. The demand has been growing over the years. Considerable emphasis has been laid on upgradation of technology in this field. A number of essential raw materials and components required for the wristwatch industry are being allowed to be imported under concessional rate of duty. The export & import of Clocks and Watches during 2005-06 was Rs. 198.60 crore and Rs. 317.37 crore respectively

The initiatives and measures taken by the Government for the overall expansion of all these sub-sectors, along with the establishment of new private units therein, has resulted in higher growth for the light engineering industry. This trend has been continuing due to the increased sector's usage in almost all major industrial groups in the country as well as initiation of many new projects for infrastructure development like power, railways, roadways, etc. The light engineering industry is vital for manufacturing various final products and improving the quality of life of the people. It holds immense potential for accelerating the pace of development of country and thus offers innumerable opportunities for the investors the world over.