Domestic EE industry: Scaling up India’s economy

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,
Director General, IEEMA

IEEMA is the apex industry association of manufacturers of electrical, industrial electronics and allied equipment in India. In an interview with EPR, Sunil Misra, Director General, IEEMA, gives us an insight into the tremendous growth of the Indian EE industry and its role in securing the health of Indian economy.

The Indian EE industry has recorded a whopping growth of 12.8 per cent for 2017-18. Your comments?
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. 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. 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 such as rotating machines by 12 per cent, HT Motors 18 per cent, cables 20 per cent and meters 28 per cent. 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.

How critical is the electrical equipment industry’s role in securing the health of the power infrastructure?
The country’s demand is, however, ever increasing and therefore, power sector 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.

Given the exponential demand for the Indian EE industry over the last decade can we say India is now ‘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’.

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 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.

What are the major challenges that the Indian electronic manufacturing market is facing?
The domestic electrical equipment manufacturing industry has over the years installed sufficient capacity to cater to the demand of power sector. However, the domestic electrical equipment manufacturing industry face severe problems on account of the following factors:
• Issues/ bottlenecks related to coal/fuel linkages, land, environmental clearances etc. resulting in a sharp decline in orders maturing in the domestic market
• Orders get deferred or are put on hold because of weak investment sentiments and financing constraints from the lending institutions
• Intensified competition due to increased number of new players
• Joint ventures are formed in the private sector of the country for super-critical boilers and turbine generators; thereby, affecting price realization and impacting margins.
• Lack of level playing field including infrastructure bottlenecks suffered by the domestic industry vis-à-vis foreign suppliers/ manufacturers
• Global slowdown and political turmoil resulting in lower demand for exports
• Lack of domestic availability of critical inputs/ raw material
• Shortage of skilled manpower.