Large engineering base, coupled with flexible business model are expected to propel the engineering R&D services market in the country The Indian engineering R&D (ER&D) services market is set for a gigantic leap with India poised to become a global hub for engineering services within the next decade, thanks to the growth in sectors such as automobile, telecom, semiconductor etc. According to a survey conducted by Machinist360, a whopping 80% of the respondents feel that ER&D services market in the country will witness robust growth in the near future, while 20% of the respondents feel the other way round.
With India slowly emerging as a core engineering destination for big shots in various domains, the ER&D services market is set to undergo a sea change. According to a report released jointly by NASSCOM and Booz & Co, the country is likely to earn USD 40-45 billion from ER&D services by 2020.
Flexible business model driving growth
According to NASSCOM, India boasts of a large engineering base and flexible business model, which are fuelling the growth of the market. Indian engineering firms are utilising their full capacity to go beyond redesigning products and business models to cater to the needs of the domestic market. Hiring of several experienced professionals from the West to gain technological know-how has also boosted the Indian engineering market and ER&D activities.
 Moreover, according to Manoj Jain, managing director of Hamiton Electronics Pvt. Ltd, a mid-sized manufacturer of magnetic switches in New Delhi, “Better exports to markets in the US and the Middle East will propel the growth of domestic engineering firms. Post-recession, engineering firms in India are getting more orders from these overseas markets, thereby helping the sector to record steady profit margins.”
Another factor driving the growth of the industry is that several firms are cashing on manufacturing expertise of other domains to promote their business. For example, post-recession several auto component makers are foraying into segments such as defence, aviation etc, which require analogous engineering expertise. However, to understand the niche engineering requirements of these sectors, it is imperative to undertake greater R&D activities.
According to Vikas Sehgal, partner at Booz & Co, “The Indian ER&D market needs continuous investment as in future the engineering sector will throw up newer opportunities, which will in turn generate huge employment opportunities.” Opening up to global consumers, coupled with low manufacturing costs in the country have helped the Indian engineering market to grow immensely.
Arup Choudhury |
