Making India manufacturing hub difficult yet achievable

“We have to be competitive for growth globally as well as look at ways and means to draw in more investment into the country,” says Vishnu Agarwal, President, IEEMA
 Indian Electrical and Electronics Manufacturers’ Association (IEEMA) is the apex industry association of electricals and industrial electronics in India. The association is actively involved in addressing the bottleneck issues at all levels. In an exclusive interview with EPR, Vishnu Agarwal talks about the electrical equipment market and how to make it self-sustained.
How are policies and initiatives by the new government affecting the electrical equipment market?The size of the Indian electrical industry is valued at around $28 billion; a fourth of it is made up of power generation equipment. Transmission and distribution is contributing the rest. The industry provides direct employment to about 500,000 people and indirectly to about 1 million. We, as a country, are aspiring to increase the output of the electrical equipment industry to $100 billion by 2022 and become a destination of choice for overseas producers of such equipment.
This ambitious target can not happen without the active support from the government through investment-friendly policies and by focussed efforts of industry. We have to be competitive for growth globally as well as look at ways and means to draw in more investment into the country.
The new government looks very serious about the above and various initiatives such as “Make in India” campaign and skill-development initiatives are being pursued extensively. In order to unlock the power sector growth, which is battling fuel shortages and problems of land acquisition and securing mandatory approvals and suffering from several stalled projects, would be a topmost priority. A lot of actions in all directions are being taken with right earnest at that level.
Imports have captured about 43 per cent of the market for electrical equipment in India. Is it a matter of serious concern? If yes, how should we address this?The time between 2011 and 2013 has been extremely volatile for the Indian electrical equipment industry which showed a positive growth curve of 9 per cent in the first half ( H1) of 2011-2012. However, this was followed by a decline to 4.14 per cent in the second quarter (Q2) of the year from 13.82 per cent in the first quarter (Q1) of that year. Such inconsistency in the performance of the industry can be attributed to a number of factors. One of the main factors had been inflow of huge imports. Imports have grown by nearly 20 per cent from China, South Korea, Germany and other EU countries.
This significant influx in imports had seriously damaged the indigenous electrical equipment industry. There has been a significant hike in the price of the imported raw materials which were making the finish product as uncompetitive and seriously bleeding the domestic industry. China’s share in Indian imports of electrical equipment has dramatically increased in the last few years and stands at 44.92 per cent of the total in 2012-13, from 15.26 per cent in 2005-06. Data show that imports from China have grown at a CAGR of 24.67 per cent in the past 7 years. Imports of electrical equipment have assumed very threatening proportions and have now captured a 38.26 per cent market share of electrical equipment in India, whereas there is significant under-utilisation of installed domestic capacity, resulting in loss of employment .In order to stimulate demand for the domestic electrical equipment industry, we think the government should provide a level-playing field for Indian manufacturers to compete with imported equipment in the domestic market. There is an urgent need to improve fund availability to the power sector and provide fuel linkages and faster regulatory clearances for timely completion of power projects.
Model procurement guidelines for utilities with standardised and fair contract terms and conditions should be framed. Due importance should be given to the entire lifecycle cost of a product while evaluating the bids. Opportunities for new domestic manufacturers should be given by reforming the tendering process to increase transparency and speed.
How is IEEMA helping the Indian electrical equipment market in addressing growing challenges?Indian Electrical and Electronics Manufacturers’ Association (IEEMA), being the APEX industry association of electricals and industrial electronics in India, is actively involved in addressing the bottleneck issues at all levels. It is in constant dialogues with the policy makers for ensuring the level playing fiels for the domestic industry. It has been highlighting the issue of price volatility and availability CRGO steel, which is totally imported and a critical raw material for all types of transformers .
IEEMA ‘s different product groups keep meeting at regular intervals to review the progress on the resolution of pending issues and identifying the new areas where the apex body has to work upon and can contribute .
In order to showcase the technological achievements of Indian electrical industry to oversea customers, IEEMA organises ELECRAMA exhibition every alternate year in Bengaluru. This exhibition is one of the massive shows and gives plateform to the all the Indian and overseas stakeholders to interact and get benefitted.
IEEMA ‘s different product groups keep meeting at regular intervals to review the progress on the resolution of pending issues and identifying the new areas where the apex body has to work upon. We also organise various technical workshops related to different product groups to share the technological improvements and latest engineering and technological advances in the respective fields .
What actions should be taken to enhance competitiveness within the domestic electrical equipment manufacturing sector?While it is an acknowledged fact that increase import of electrical goods has put the domestic industry at the brink of vulnerability, yet it is an opportunity for domestic industry to do serious introspection as well.Strategies for competitiveness for India has become need of the hour. Our country experienced controlled economy till 1990 and then liberised one. Lowering the tariff barriers in domestic market has unleashed growing competition. This situation forced the domestic market to become competitive to earn sufficient foreign exchange to pay off our import requirements. Only way we can stay afloat is by creating competitive edge.
We, therefore, should seriously think as to how can we create competitive edge over the global players in terms of technology, product quality, process innovation, value engineering and so on. Acquiring customers and access the markets, which constitute future profitable growth from anywhere on the globe, call for enhancing competitiveness. A major precondition for competitiveness enhancement is the availability of skilled labour.
The constant changing conditions of international markets forces the stiff conditions that the nations has to face. Therefor innovation is key to the competitive advantages for the country.
Technology advances help lower the cost and risk levels, thereby reducing the manufacturing capital requirements. Therefore, the organisations have to be the learning organisations to have the sustainable competitive edge. Increased spending in R&D will help develop cost-effective technologies.
The Indian Electrical Equipment Industry Mission Plan 2012-2022 has planned 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. According to you, what should be right approach to achieve this mission?In order to accomplish the set target of $100 billion by 2022, a comprehensive short-term and long-term strategy will have to be evolved and goals have to be set and achieved. The task is difficult but not unachievable.
From policy and law makers side, it will call for a strong forward looking political will, ensuring political stability and coming up with investment-friendly policy decisions and their fast implementation, addressing the issues that are bugging power sector. Higher budgetary spending in capital expenditures in infrastructure-related projects will be essential to support the growth.
Industry has to focus on project innovation and superior product quality. We, Indians, spend lot of resources in research; however, there is not much focus on development. Superior manufacturing and process technologies need to be harnessed for cost reduction and becoming competitive.
Skill development has to be taken with right earnest. Our products have to be globally accepted for their quality and value for the money.

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Making India manufacturing hub difficult yet achievable

“We have to be competitive for growth globally as well as look at ways and means to draw in more investment into the country,” says Vishnu Agarwal, President, IEEMA
 Indian Electrical and Electronics Manufacturers’ Association (IEEMA) is the apex industry association of electricals and industrial electronics in India. The association is actively involved in addressing the bottleneck issues at all levels. In an exclusive interview with EPR, Vishnu Agarwal talks about the electrical equipment market and how to make it self-sustained.
How are policies and initiatives by the new government affecting the electrical equipment market?The size of the Indian electrical industry is valued at around $28 billion; a fourth of it is made up of power generation equipment. Transmission and distribution is contributing the rest. The industry provides direct employment to about 500,000 people and indirectly to about 1 million. We, as a country, are aspiring to increase the output of the electrical equipment industry to $100 billion by 2022 and become a destination of choice for overseas producers of such equipment.
This ambitious target can not happen without the active support from the government through investment-friendly policies and by focussed efforts of industry. We have to be competitive for growth globally as well as look at ways and means to draw in more investment into the country.
The new government looks very serious about the above and various initiatives such as “Make in India” campaign and skill-development initiatives are being pursued extensively. In order to unlock the power sector growth, which is battling fuel shortages and problems of land acquisition and securing mandatory approvals and suffering from several stalled projects, would be a topmost priority. A lot of actions in all directions are being taken with right earnest at that level.
Imports have captured about 43 per cent of the market for electrical equipment in India. Is it a matter of serious concern? If yes, how should we address this?The time between 2011 and 2013 has been extremely volatile for the Indian electrical equipment industry which showed a positive growth curve of 9 per cent in the first half ( H1) of 2011-2012. However, this was followed by a decline to 4.14 per cent in the second quarter (Q2) of the year from 13.82 per cent in the first quarter (Q1) of that year. Such inconsistency in the performance of the industry can be attributed to a number of factors. One of the main factors had been inflow of huge imports. Imports have grown by nearly 20 per cent from China, South Korea, Germany and other EU countries.
This significant influx in imports had seriously damaged the indigenous electrical equipment industry. There has been a significant hike in the price of the imported raw materials which were making the finish product as uncompetitive and seriously bleeding the domestic industry. China’s share in Indian imports of electrical equipment has dramatically increased in the last few years and stands at 44.92 per cent of the total in 2012-13, from 15.26 per cent in 2005-06. Data show that imports from China have grown at a CAGR of 24.67 per cent in the past 7 years. Imports of electrical equipment have assumed very threatening proportions and have now captured a 38.26 per cent market share of electrical equipment in India, whereas there is significant under-utilisation of installed domestic capacity, resulting in loss of employment .In order to stimulate demand for the domestic electrical equipment industry, we think the government should provide a level-playing field for Indian manufacturers to compete with imported equipment in the domestic market. There is an urgent need to improve fund availability to the power sector and provide fuel linkages and faster regulatory clearances for timely completion of power projects.
Model procurement guidelines for utilities with standardised and fair contract terms and conditions should be framed. Due importance should be given to the entire lifecycle cost of a product while evaluating the bids. Opportunities for new domestic manufacturers should be given by reforming the tendering process to increase transparency and speed.
How is IEEMA helping the Indian electrical equipment market in addressing growing challenges?Indian Electrical and Electronics Manufacturers’ Association (IEEMA), being the APEX industry association of electricals and industrial electronics in India, is actively involved in addressing the bottleneck issues at all levels. It is in constant dialogues with the policy makers for ensuring the level playing fiels for the domestic industry. It has been highlighting the issue of price volatility and availability CRGO steel, which is totally imported and a critical raw material for all types of transformers .
IEEMA ‘s different product groups keep meeting at regular intervals to review the progress on the resolution of pending issues and identifying the new areas where the apex body has to work upon and can contribute .
In order to showcase the technological achievements of Indian electrical industry to oversea customers, IEEMA organises ELECRAMA exhibition every alternate year in Bengaluru. This exhibition is one of the massive shows and gives plateform to the all the Indian and overseas stakeholders to interact and get benefitted.
IEEMA ‘s different product groups keep meeting at regular intervals to review the progress on the resolution of pending issues and identifying the new areas where the apex body has to work upon. We also organise various technical workshops related to different product groups to share the technological improvements and latest engineering and technological advances in the respective fields .
What actions should be taken to enhance competitiveness within the domestic electrical equipment manufacturing sector?While it is an acknowledged fact that increase import of electrical goods has put the domestic industry at the brink of vulnerability, yet it is an opportunity for domestic industry to do serious introspection as well.Strategies for competitiveness for India has become need of the hour. Our country experienced controlled economy till 1990 and then liberised one. Lowering the tariff barriers in domestic market has unleashed growing competition. This situation forced the domestic market to become competitive to earn sufficient foreign exchange to pay off our import requirements. Only way we can stay afloat is by creating competitive edge.
We, therefore, should seriously think as to how can we create competitive edge over the global players in terms of technology, product quality, process innovation, value engineering and so on. Acquiring customers and access the markets, which constitute future profitable growth from anywhere on the globe, call for enhancing competitiveness. A major precondition for competitiveness enhancement is the availability of skilled labour.
The constant changing conditions of international markets forces the stiff conditions that the nations has to face. Therefor innovation is key to the competitive advantages for the country.
Technology advances help lower the cost and risk levels, thereby reducing the manufacturing capital requirements. Therefore, the organisations have to be the learning organisations to have the sustainable competitive edge. Increased spending in R&D will help develop cost-effective technologies.
The Indian Electrical Equipment Industry Mission Plan 2012-2022 has planned 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. According to you, what should be right approach to achieve this mission?In order to accomplish the set target of $100 billion by 2022, a comprehensive short-term and long-term strategy will have to be evolved and goals have to be set and achieved. The task is difficult but not unachievable.
From policy and law makers side, it will call for a strong forward looking political will, ensuring political stability and coming up with investment-friendly policy decisions and their fast implementation, addressing the issues that are bugging power sector. Higher budgetary spending in capital expenditures in infrastructure-related projects will be essential to support the growth.
Industry has to focus on project innovation and superior product quality. We, Indians, spend lot of resources in research; however, there is not much focus on development. Superior manufacturing and process technologies need to be harnessed for cost reduction and becoming competitive.
Skill development has to be taken with right earnest. Our products have to be globally accepted for their quality and value for the money.

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