There has been a substantial transformation of India’s export structure in the recent years. India has now emerged as a major exporter of capital equipment and other sophisticated items, including projects and consultancy services. Projects exports are regarded as a key indicator of technological maturity and industrial capabilities of a country. In fact, the future of India’s export trade depends on how far performance in these sectors can be further improved.
Projects exports are defined as:
1. Turnkey projects namely those which involve the rendering of services like design, civil construction, erection and commissioning of plant or supervision thereof along with the supply of equipment.
2. Engineering services contracts, involving the supply of services alone, such as design erection commissioning or supervision of erection and commissioning.
3. Consultancy services contracts, which may include the preparation of feasibility studies, project reports, preparation of designs and advice to the project authority on specification for plant and equipment, preparation of tender documents, evaluation of tenders and purchase of plant and equipment.
4. Civil construction contracts with or without preparation of designs or drawings for the civil work to be undertaken.
The categories mentioned above are not to be treated as mutually exclusive. A project contract includes supply of service or equipment, coming under more than one of the categories.
Project Export Profile:
During the last 26 years, India has achieved a moderate success in the export of capital goods, projects and civil engineering jobs. On an average these categories account for about 40 per cent of India’s total engineering exports.
The success achieved by Indian companies in the field of construction contracts is, however, much more spectacular. The Middle Eastern countries because of their oil revenue emerged as very important markets for infrastructural projects. Till the year 1981, the construction projects worth Rs 5,170 crores approximately were secured. About 80 per cent of these contracts were secured by the Indian construction companies in Iraq and Libya. These contracts were mainly for the constructions of (1) Townships, (2) Airports, (3) High Rise Buildings, (4) Water & Sewerage Treatment plants, (5) Flyovers and (6) New Railway lines. The year 1981 which is considered to be the peak year provided contracts worth Rs 1,594 crores to Indian construction companies. Since 1981 however a decline has set in construction project exports. However, there has been a consistent increase in recent years.
Civil Construction Turnkey projects and consultancy won by Indian Firms:
In the year 1982 Civil Constructions Project value was Rs 451 crores. In the years 2000-01 (Apr-Dec) Civil Construction Project value was Re 1,225 crores and Turnkey Projects was 1,833 and Consultancy services was 4,241 crores.
The decline was basically due to two factors:
1. The fall in oil prices has dramatically reduced the purchasing power of the Middle Eastern countries
2. Most of the basic infrastructural projects have since been completed. Demand is now shifting away from construction to industrial projects.
The contracts secured in the recent years have been quite diverse in nature indicating the growing versatility and technological capabilities of Indian project exporters. The West Asian region still continues to be the major market accounting for half of the total project export contracts. The markets in South East Asia and sub-Saharan African account for the remaining half.