Rising domestic demand gives some respite to electrical equipment industry

Production registers 6 per cent growth in H1, on account of 9.8 per cent growth in Q2, after a weak 2 per cent growth in Q1Q2 growth due to rise in domestic demand, after negative growth in domestic orders in Q1 and preceding quartersDelays in project execution and non-adherence of payments still a concern for manufacturers
India’s ` 1.30 lakh crore electrical equipment industry has witnessed a 6 per cent growth in the first 6 months (H1) of 2013-14, due to a rise in domestic demand, according to production data released by the Indian Electrical and Electronics Manufacturers’ Association (IEEMA).
After a weak growth in the first quarter (Q1) of the current fiscal, mainly on account of growth in exports, the 2nd quarter (Q2) has witnessed a growth of 9.8 per cent in the production of the electrical equipment industry due to a welcome rise in domestic demand. This has led to a moderate growth in H1 of FY’13-14 as compared to H1 of FY’12-13.
Some progress in power transmission and sub-station projects, power generating stations, especially renewable energy like wind, R-APDRP projects and orders from select core sectors like construction and real estate have helped in the moderate growth, although the electrical equipment industry continues to face very severe credit availability, enormous delays in project execution and non-adherence of payment terms by customers, mainly power utilities, resulting in unmanageable cash flow problems across the industry.
The depreciated rupee has made critical imported raw material and inputs for electric equipment more costly, but given the continued threat from imports of electrical equipment in the Indian market, domestic manufacturers are being forced to absorb this additional cost to remain competitive.
“The Indian electrical equipment industry has shown some revival in the 1st half of the current fiscal, after a negative growth of 7.8 per cent in production in 2012-13. Domestic demand, coupled with increase in exports, has managed to keep the industry afloat. The industry needs to build a robust export portfolio so that it can optimally utilise its built-up capacity which is currently under-utilised across all sub-sectors,” said Raj Eswaran, President, IEEMA.
The transformer industry, both power and distribution transformers, has seen a turnaround in growth from -4.5 per cent in Q1 to 18.76 per cent reported in Q2 of this fiscal. Power cable, capacitors, energy meters, transmission line towers and high-voltage switchgears have also improved their growth numbers in Q2 over Q2. However, segments like conductors, low-voltage switchgears and rotating machines have further declined in Q2 FY13-14.
Although, overall imports of electrical equipment have shown a negative growth, imports of power transformers, insulators, cables (mainly through power project import route), and AC motors and generators have continued to increase. In 2012-13, imports had captured 38.26 per cent of the market for electrical equipment in India, whereas there was significant underused of installed domestic capacity.

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