Exports: A bright spot for India’s electrical equipment industry

India exported ` 35,276 crore worth of electrical equipment between April to February in 2016-17. How does Indian electrical equipment industry compare with global peers?

The electrical equipment industry in India is witnessing lukewarm growth in most of the segments. Though the sluggish demand and higher imports are hampering the industry growth, exports in certain categories of products is helping the industry to maintain its growth momentum. As per the data compiled by the Indian Electrical and Electronics Manufacturers’ Association (IEEMA), the growth in exports is helping the industry to grow especially in power transformer and high voltage switchgear products, energy meters and cables.

According to Sanjeev Sardana, President, IEEMA, exports in power sector have been growing at about 10 per cent CAGR, while imports have been declining at a rate of about 4 per cent in last 5 years. Sunil Misra, Director General, IEEMA adds, “There is significant global reputation of Indian electrical equipment for sourcing of base products and components and also of Indian transmission and other EPC contractors.”

IEEMA report said that the electrical and industrial electronics industry has witnessed a 4.25 per cent growth in the year 2016-17 over the previous year. The industry exported `38,580 crore worth of electrical equipment in 2015-16 (`35,276 crore between April to February in 2016-17).

Exports to reach $ 25 bn by next decade
The value of India’s export of electrical equipment was approximately $ 540 million in fiscal 2015, which contributed to less than 1 per cent of the global trade in electrical equipment. “The power sector is a sunrise sector across the developing world presenting a significant potential for India to tap export markets. It is estimated that India’s export of electrical equipment will reach $ 25 billion over the next decade and approximately 5 per cent of the global trade in electrical equipment,” informs Gautam Seth, Joint Managing Director, HPL Electric & Power Ltd.

Because of increasing ecological concerns and stringent governmental regulations in respect of pollution, globally, power generation companies are exploring opportunities for clean energy power generation such as wind energy, solar energy and hydro energy. This has led to an increase in demand for electrical equipment such as turbines, power cables, generator and sets.

Over the years, the Indian electrical equipment industry has developed a diversified, mature and strong manufacturing base, with a robust supply chain and rugged performance design of products. Globally, brand India presents a huge opportunity and hence, it is imperative to promote the growth of exports of electrical equipment. Further, Seth said, “Manufacturers need to move up the value chain to be able to cater to technologically superior products and value added services, with focus on research and development.”

Export figures are not very promising!
The Indian electrical equipment industry is expected to cross $100 billion by 2022 as per the Indian Electrical Equipment Industry Plan released by the Ministry of Heavy Industries and Public Enterprises. While India is seeking to balance the imports and exports, the export figures are not very promising, reveals Rajesh More, Project Sales Head, Anchor Electricals Pvt Ltd. He says, “China occupies majority market share in the export market across several categories right from lighting, switches, switchgear, fans, wires and cables. The other aspect includes incorporating global level standard adherence when it comes to manufacturing for exports particularly for developed countries as they are pioneers in technology.”

More further adds, “While the official figures state that exports contribute to 1 per cent for the Indian electrical equipment industry, going forward it may scale up to 5 per cent eyeing the boost received by ‘Make in India’ and with the companies expanding their territories to Middle East and South Asian markets.”

Gaining global acceptance
Indian electrical equipment industry has made significant progress in the past decade. “With modernised, automation-enhanced manufacturing processes and a strong focus on meeting international standards and specifications, the electrical components and systems manufactured in India are increasingly achieving the level of quality and performance that is acceptable to spec-influencers on major international projects,” says Rajiv Kumar, Director – Marketing, Electrical Sector – India, Eaton Power Quality Pvt Ltd.

Explaining another trend, Kumar said, “Leading multinational electrical equipment manufacturers who initially localised the production of their products in India to be commercially competitive in the domestic market are now leveraging the techno-commercial advantage of their India-manufactured product portfolio to be competitive on global projects, in the process expanding their India manufacturing footprint.”