The Indian EE industry has witnessed a record double-digit growth of 12.8 per cent in 2017-18. Here is a detailed analysis on what went right for India’s emergence at the global level.
India has been one of the fastest growing markets for new electricity generation capacity since 1990. The Indian electrical industry is multifaceted; manufacturing a diverse range of products which range from high technology equipment to low technology electrical components
India’s emergence at the global level
The electrical industry is also an employment intensive sector, providing direct employment to 5,00,000 people and a further indirect employment to about one million people.
Anil Kadam, General Manger, Business Development, Solution Architect, Schneider Electric says, “To make India the country of choice for the production of electrical equipment and reach an output of $ 100 billion by balancing exports and imports, the Indian Electrical Equipment Industry Mission Plan 2012- 2022 has been evolved through an elaborate exercise involving all stakeholders. Five critical areas that need to be addressed by the industry, with support from the government are industry competitiveness, technology upgradation, skills development, exports and conversion of latent demand.”
Indian power sector is not only growing, but also undergoing a significant change that has redefined the industry outlook. Total installed capacity recently reached 344 GW, with state sector, central sector and private sector commanding 24.6 per cent, 30.2 per cent and 45.2 per cent respectively.
Sunil Misra, Director General, IEEMA claims,” A substantial improvement in growth was experienced in the 3rd and 4th quarter of 2017-18 which resulted in a sharp rise in the performance. The government is procuring smart and prepaid meters to be deployed across the country. It has urged electricity meter manufacturers to scale up production in India, as it plans to shift all connections to smart prepaid meters over the next three years. Energy Efficiency Services Limited (EESL) has floated two global tenders for procuring a total of 10 million smart meters. “
Key growth drivers behind India’s performance
The primary demand drivers for the Indian Electronic Industry are sectors such as telecom, defence, IT and e-governance, automotive, consumer electronics, and energy. To meet these demand levels, India needs to create its own high-tech, modern and competitive electronics industry. Otherwise, the imports of these products will create the single largest trade deficit item, which would even be larger than petroleum products. “Policy changes and various initiatives undertaken by the government and industry are eventually showing signs of revival for the sector. During this period, the industry grew by 25 per cent in Q3 and 14 per cent in Q4. The astonishing growth of 12.8 per cent is propelled by growth in segments like rotating machines by 12 per cent, HT Motors 18 per cent, cables 20 per cent and meters 28 per cent,” says Anil Kadam.
India to meet the current and future demand of the power and other sectors
The Indian electrical equipment industry must has increased its preparedness and enhanced its competitiveness to meet the current and future demands of our power sector and also other sectors of the economy. The next 10 years will be crucial for the Indian electrical equipment industry as it gears up to meet the rapidly rising domestic demand and also establish its presence as an important player in the global electrical equipment arena.
Sunil Misra is of the opinion, “The country’s demand is ever increasing and therefore, power and other sectors has not only geared to grow but be at par with having the latest technology. In order achieve so and get deeper into global markets, significant addition to the installed generation capacity is required. With this, it is inevitable that the need for electrical equipments shall increase substantially in coming years.”
How much of the demand would be available to Indian industry depends upon various factors, some in control of the industry and some not in control of the industry such as reforms in domestic (taxes, processes and procedures) and international policies. We need a plan to steer, coordinate and synergise the efforts of all stakeholders, in an effective manner, to accelerate and sustain the growth of the domestic electrical equipment industry.
“It is believed that this growth momentum will be sustained since major chunk of transmission and distribution projects are likely to be ordered in next fiscal. However, most of the orders would be through EPC route with more new players entering the business and sub-contracting the same to existing contractors. The sectors seem to be reviving from the dark days. Talking about the renewable sector, the solar capacity has increased rapidly in last three years from around 2.6 GW to 22 GW. The government is taking proactive steps to achieve the RE generation targets,” adds Anil Kadam.
Capacity utilization of the BTG and T&D equipments
India‘s electrical equipment industry is expected to grow steadily and witness growth opportunities as a result of government focus on capacity augmentation across generation, transmission and distribution. Significant infrastructure investments have been planned across the generation, transmission and distribution segments to realize this target. The demand for electrical equipment in India is expected to encounter significant expansion vis-à-vis growth of the power sector. The GOI has set high capacity targets of 72 GW and 93 GW respectively for the 12th and 13th FY Plan. Basis which the requirement of BTG as well as T&D equipments is surely to increase. India’s electrical equipment industry is expected to p lay a critical role in improving its power infrastructure. Undoubtedly, the health of the Indian electrical equipment industry is of prime importance. The industry faces challenges both domestically and internationally. Low capacity utilisations, especially in the transmission & distribution (T&D) segment, and the growing threat of low cost imports are some of the key challenges.
According to Anil Kadam,” The IEE industry has shown positive prospects of growth in past 5-6 years’ basis which it is expected that it will meet the aggressive market expansion target of $ 100 billion by the end of 2022. In addition, the acceptance of Indian electrical equipments and machinery shown by the international players may size up the volume of international demand well in the upcoming years.” GOI has been very conducive so far in their approach towards the growth of electrical equipment industry moreover the government has adopted several policy measures which has not only boosted the EE industry but the entire E&M industry has been benefitted.
Is India ‘the country of choice’ for production of electrical equipment?
Indian domestic manufacturers have invested heavily in technology transfer from their principals or have developed technology indigenous for creating and expanding manufacturing capacities, manpower and skill development to meet the growing demand which is in line with the ‘Make in India’.
Sunil Misra says,” Some PSU companies are being told to step on the gas by the government, but private power players are a bit reluctant to join in. With few power plants coming up, equipment manufacturers are twiddling their thumbs. In the current scenario, private players are waiting for recovery to happen before they invest further in capacity expansion. As the industry is grappling with an excess capacity scenario, power equipment manufacturers are forced to look at neighbouring markets such as Nepal, Bhutan, Bangladesh beside other export markets. “
The policy initiatives of Power Ministry such as coal auction, renewable policies for generation; schemes such as IPDs, DDUGJY etc. for T&D has also helped the sector. Also, support from the government through procurement policies, more capital in-flows domestically and increased competitiveness of Indian manufacturers viz-a-viz imports and thereby, reducing imports in some sectors.
To make India the ‘country of choice’ for the production of electrical equipment and reach an output of US$ 100 billion by balancing exports and imports, the Mission Plan 2012- 2022 was evolved through an elaborate exercise involving all stakeholders. According to Anil Kadam, “Five critical areas that need to be addressed by the industry, with support from the government, are industry competitiveness, technology up gradation, skills development, exports and conversion of latent demand. The time-bound implementation of the Indian Electrical Equipment Industry Mission Plan 2012–2022 will ensure that the Indian electrical equipment industry takes centre-stage and becomes a preferred choice for production of electrical equipment globally.”
A lot of government reforms is long due for reaching the $ 100 billion mark. Though GOI has offered full support to the Indian EE industry, it would take a more to curtail the internal losses and make the industry self-sufficient and make it par with those international EE industries. The growth trajectory of the Indian EE industry can be accelerated. Based on the push under the “Make in India” campaign and the trends in key end-use sectors, there are multiple growth opportunities on the horizon in India for the electrical equipment industry.
Automation equipment, analytical instruments, power electronics, testing and measurement devices and industrial control systems are some of the key segments of this industry. Companies are putting into use state-of-the art systems such as 3D coordinate systems, decision analysis, smart image processing and the introduction of robotics to manage processes. Artificial intelligence has also been made available which would help the industrial electronics sector improve its quality control, thereby making it more efficient.
The government has urged electricity meter manufacturers to scale up production in India, as it plans to shift all connections to smart prepaid meters over the next three years.
Sunil Misra, Director General, IEEMA
The IEE industry has shown positive prospects of growth in past 5-6 years’ basis which it is expected that it will meet the aggressive market expansion target of $ 100 billion by the end of 2022.
Anil Kadam, GM, Business Development, Solution Architect, Schneider Electric