ENGINEERING PROCESS OUTSOURCING TO BE KEY ELEMENT IN INDIA’S EXPORT STRATEGY
INDIA’S OVERALL EXPORTS MAY EXCEED $ 126 BILLION – KAMAL NATH ADDRESSES
COMMERCE CONSULTATIVE COMMITTEE
Date : 07 Sep 2006
Location : New Delhi
ENGINEERING PROCESS OUTSOURCING TO BE KEY ELEMENT IN INDIA’S EXPORT STRATEGY INDIA’S OVERALL EXPORTS MAY EXCEED $ 126 BILLION – KAMAL NATH ADDRESSES COMMERCE CONSULTATIVE COMMITTEE
New Delhi, 7th September, 2006
Engineering Process Outsourcing (EPO) services from India will be a key element of the country’s engineering export strategy, and the development of the EPO sector will have a far-reaching impact on India’s engineering industry as a whole. This was stated by Shri Kamal Nath, Minister of Commerce and Industry, at the meeting of the Parliamentary Consultative Committee of the Ministry of Commerce and Industry here last evening. “ The EPO market in India has the potential to exceed US $ 40 billion by 2020, which will catapult India’s market share in this category to 30 % from the current 12 %. And to tap the EPO market all the important stakeholders, including government, service providers and trade bodies will need to boost investments in infrastructure and improve marketing efforts”, he said. Engineering goods exports from India have crossed US $ 5 billion in the first quarter of the current financial year, showing a growth of 20 %. But it has the potential to grow at a rate of 30 % annually, the minister indicated citing a recent strategy paper prepared for the Engineering Export Promotion Council (EEPC) by A.F.Ferguson.
The government is giving high priority to engineering which represent an important segment of India’s manufacturing sector (comprising capital goods, iron and steel items, non-ferrous metals and products, consumer durables etc),he said , adding that 19 product and 34 sub-product categories had been identified as thrust products for identified for thrust countries and markets.
The members who participated in the discussions were S/Shri Sambasiva Rao, S.Sathyanarayana, Basangouda Patil, Ram Singh Kaswan, Sudhangshu Seal, Mohammed A. Shahid, J.M.Aaron Rashid, Rajeev Shukla, N.R.Govindarajan, Shantaram Naik, M.Rajasekhara Murthy, and Sharad Joshi. The meeting was also attended by Dr. Ahwani Kumar, Minister of State for Commerce and Industry; Shri S.N. Menon, Commerce Secretary,; Dr. Ajay Dua, Secretary (Industrial Policy and Promotion) and other senior officials.
Stating that India’s merchandise exports had crossed the US $ 100 billion mark to reach US $ 103 billion in 2005-06, recording a growth of 23 % , Shri Kamal Nath indicated that the target of US $ 126 billion set for the current financial year 2006-07 was likely to be exceeded going by the 40 % growth momentum seen the first quarter of this fiscal.
Shri Rakesh Shah, Chairman/EEPC pointed out that Indian Engineering exporters faced a disability factor of 16 to 18 % in comparison with just 6 to 8 % faced by their competitors in South East Asia and urged the minister to take up the taxation issues such as service tax, state levies etc which amounted to “exporting taxes” and eroded the competitiveness of Indian exports.
Shri Rajiv Kher, Joint Secretary, Ministry of Commerce, in a power point presentation on “The Scenario of Engineering Exports – Challenges, Opportunities and the Road Ahead” brought out the following points about EPOs : 1) EPO services are India’s next billion dollar opportunity; 2) EPOs are no more just a part of R and D services;3) EPOs have grown by CAGR of 37 % between 2003 and 2006; 4) EPO potential could be US $ 10 to 20 billion in the next 5 years from the present level of US $ 3.5 billion; and 5 ) EEPC is conducting a study on a Strategy Paper for the promotion of EPO services from India.