Provide level-playing field to domestic industry

Provide level-playing field to domestic industryThe Rs. 1.30 lakh crore electrical equipment industry is going through a turbulence over the past 4 years. Though the industry has experienced a miniscule growth of 2 per cent during the first quarter of the current fiscal due to increase in export, the growth in domestic orders is continuing to be negative.Based on the government’s ambitious plans on capacity additions, the domestic manufacturing sector has strengthened its capacity vigorously. Today, the domestic manufacturing capacity of generation equipment is ramped up to 25,000 MW per annum against a requirement of about 16,000-17,000 per annum. However, due to the slowdown in the power sector, this enhanced built-up capacity currently stands under-utilised across several products. In addition, a surge in imports of electrical equipment is also lowering the demand from domestic player drastically. According to the data released by IEEMA, India’s imports of electrical equipment have increased at a CAGR of 24.67 per cent in rupee terms during the past 7 years and were at Rs. 64,674 crore in 2012-13. Seeing the opportunity, our neighbouring country China has taken the giants leap in capturing the market share in India. And, China has aggressively captured 44.92 per cent (2012-13) of Indian imports of electrical equipment.On top of all these, the government recently announced its plan to allow Chinese companies setting up power equipment service centres in India, which will give Indian companies access to spares and after-sales services for equipment imported from China. This is making Indian manufacturers concerned over losing market share further to Chinese players. Though the domestic manufacturing sector is not against any kind of import from any country, it demands a “level-playing field” to compete with “cheap” imports. Suppressing domestic industry and “disproportionate reliance” on import will not only hamper the growth of Indian manufacturers, these may also result in long-term risks.In an aim to achieve manufacturing excellence through indigenisation, the Indian government should initiate all possible measures to encourage domestic manufacturers and stimulate demand for the domestic electrical equipment industry. Otherwise, the domestic sector will be fizzed out gradually, and power sector will lose its self-reliance depending on higher import.Please do send me your comments at editor@enpreview.com

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