Background PaperFocus : Valves Industry

2© Confederation of Indian Industry

Table of Contents

Background of sector Existing Enablers Future Potential Challenges faced

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Background - Sector

- Evolution of sector- Indian valves sector is an USD 2 billion industry and exports account for almost 40% of its turnover. It has been growing at a CAGR of approx. 12 % over the last 4 years. India is one of the 7th largest producer of valves Worldwide.

- Contribution of Sector to Manufacturing : The Indian valves industry is capable of producing high end engineered products catering to chemicals process and hydrocarbon industries such as Oil and Gas, Petrochemical, Fertilizers, Water & Waste Water, Power Generation in Thermal, Hydro Electric, Nuclear, Metal refining and process sectors.

- Sector Contribution to GDP: Approx. 0.1%- No. of people employed (directly + indirectly) : Approx. 4 Lakhs- Names of major sub-segments: End User segments: Oil& Gas, Power

Generation, Chemical & Petrochemical, Metal & Mining, Water & Wastewater. - Market Overview

- Average growth last 5 years :approx. 12 % - Average growth next 5 years : approx. 8 %

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Existing Enablers – Strategies adopted – Current Growth Drivers

Policy and Eco-system• Focus on Export Promotion • Revision of Indian standards• Indian Valves Quality perception in the

International Market• Blanket approval for stocking of

fluoropolymer lined valves, covered under SCOMET products”. Export restrictions under Scomet for certain types of valves

• Lack of Focus on innovation• Preference in EXIM sponsored overseas

projects

Industry Evolution and Capabilities

Indian valves industry is expected to grow @8% CAGR over the coming year to reach USD 2.8 billion and export is expected to grow @12% to reach USD 1.26 billion by 2020

MarketExport Destinations: USA, Middle East and Africa.For oil and gas: Africa, Middle East and Latin America etc.water and wastewater: US, China, and AustraliaDomestic Market: Namami Ganga Programme, Smart City Development, Irrigation benefit programme (AIBP) & Flood control program, Renewable Energy projects, Refineries, Petroleum Product Distribution

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Advantage India – Potential , Opportunities and growth – Future focused

Reason 1- Make in India: Environment for

Innovation and Entrepreneurship

Reason 2

Improve Infrastructure Planning: Namami Ganga Programme, Smart City Development, Irrigation benefit programme (AIBP) etc.

Reason 4- Increasing Merger & Acquisition

Activities

Reason 3- Greater focus on FDI to boost

exports and enhance productivity

Why Focus

on India?

Potential

-Strong investments in Middle East in Oil & Gas Midstream and Downstream segments-Investments by Indian oil PSUs in Oil & Gas Upstream, LNG, Pipelines, Refinery & Petrochemical projects-Growing Indian economy – Investments in Infrastructure

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Challenges faced by sector- Creation of Global Design and Innovation centers

- Adoption of latest technologies by valve industry and its supply partners such as Foundries and machine shops need to improve

- Valve Industry is capital Intensive industry and high cost of Capital in India would be dampener for Indian manufacturers

- Foundries to be incentivized to move towards low volume, high value steels from low value, high volume Grey iron /SG iron supplies.

- Limited forging suppliers

- Quality perception to be improved by international branding activities

- Non alignment of Indian standard with international standards

- Labor laws reforms and GST implementation

- Blanket approval for stocking of fluoropolymer lined valves covered under SCOMET products ( Special Chemicals, Organisms, Materials, Equipment, & Technologies)

- Export restrictions to be removed for Valves covered under SCOMET products