What are the important factors leading to the growth of the engineering sector?

 What are the important factors leading to the growth of the engineering sector? Briefly discuss some of the policy initiatives taken in the engineering industry. 

Ans. The Engineering sector is the largest in the overall industrial sectors in India. It is a diverse industry with a number of segments and can be broadly categorised into two segments, namely, heavy engineering and light engineering. The engineering sector is relatively less fragmented at the top, as the competencies required are high, while it is highly fragmented at the lower end (e.g. unbranded transformers for the retail segment) and is dominated by smaller players. The engineering industry in India manufactures a wide rangė of products, with heavy engineering goods accounting for bulk of the production. Most of the leading players are engaged in the production of heavy engineering goods and mainly produces high-value products using high-end technology. Requirement of high level of capital investment poses as a major entry barrier. Consequently, the small and unorganised firms have a small market presence. The light engineering goods segment, on the other hand, uses medium to low-end technology. Entry barrier is low on account of the comparatively lower requirement of capital and technology. This segment is characterised by the dominance of small and unorganised players which manufacture low-value added products. However, there are few medium and large scale firms which manufacture high-value added products. This segment is also characterised by small capacities and high level of competition among the players. Some of the factors that lead to the growth of the engineering industry are as follows: • the engineering industry in India grows due to the growth in the important user-industries. For example, new projects undertaken by railways, infrastructure, power, etc. lead to an increase in demand for commodities produced by the engineering industry. • Boost provided by the Government to the power and construction sector, Capacity expansion in sectors like steel, refinery, automóbiles, etc.