“Although higher imports still plague the industry but policy changes and various initiatives undertaken by the industry and government are eventually showing signs of revival for the sector,” says Babu Babel, President, IEEMA.
In an interview with EPR, Indian Electricals & Electronics Manufacturers’ Association (IEEMA) President, Babu Babel, speaks about the current scenario, challenges and the steps needed to revive the industry growth. He also talks on how to enhance the competitiveness of domestic electrical equipment industry. Edited excerpts:
What is the status of Indian electrical equipment Industry? The size of the industry is valued at around $28 billion; a fourth of it is made up of power generation equipment. Transmission and distribution are contributing the rest. The industry provides direct employment to about 5,00,000 people and indirectly to about 1 million. India aspires 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 cannot happen without the active support from the government through investment-friendly policies and by focused efforts of industry. We have to be competitive for growth globally and also look at ways and means to draw in more investment into the country.
New government in centre looks very serious about the above and various initiatives such as “Make in India” campaign, skill development initiatives are being pursued extensively. 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.
What overall transformation in the Indian electrical equipment industry you have witnessed in the recent past? The electrical and industrial electronics industry has witnessed a 13per cent growth in fourth quarter (Q4) of FY 2014-15. Although higher imports still plague the industry but policy changes and various initiatives undertaken by the industry and government are eventually showing signs of revival for the sector.
What are the several factors that are refuting the growth of domestic electrical equipment manufacturers?The domestic electrical equipment manufacturing industry has over the years installed sufficient capacity to cater to the demand of power sector. However, it is facing severe problems like issues related to coal or fuel linkages, land, and environmental clearances resulting in a sharp decline in orders maturing in the domestic market.
The orders are also getting deferred or being put on hold due to weak investment sentiments and financing constraints from the lending institutions.
There are intensified competition due to increased number of new players or joint ventures formed in the private sector in the country for super-critical boilers and turbine generators thereby affecting price realisation and impacting margins. There is lack of level playing field including infrastructure bottlenecks suffered by the domestic industry vis-à-vis foreign suppliers or manufacturers.
Global slowdown and political turmoil are resulting in lower demand for exports. Lack of domestic availability of critical inputs or raw materials is a serious concern.
Shortage of skilled manpower is also a major hindrance to growth of domestic electrical equipment manufacturing industry in India.
Why the domestic manufacturers have slammed the decision to award power contracts to Chinese companies? 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 last seven 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 underutilisation of installed domestic capacity, resulting in loss of employment.
In order to stimulate demand for the domestic electrical equipment industry, we think 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 weightage 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.
Is it (the decision) a threat to the domestic manufacturers?Yes, as the period of 2011 to 2013 has been extremely volatile for the electrical equipment industry of India. The industry 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 was making the finish product as uncompetitive and seriously bleeding the domestic industry.
What are the government policies to push the power transformer market in India? The central government’s recent announcement to expand across the country the initiative like the Gujarat’s Jyoti Gram Yojana, where specially designed transformers were used to create a parallel network for providing 24X7 reliable availability of electricity for the rural Gujarat. This expansion is going to create additional demand for special DTs with different type of technology and innovation.
There has been noticeable development in the field of FACTS like phase shifting transformers and controlled shunt reactors. The environmental conditions are pushing us to take lead in use of green transformers having very low losses, using environmentally friendly materials like ester fluids. How is the industry reacting on these initiatives? The industry is reacting positively as the transformer growth in all the three categories has been positive by about 4 to 5 per cent in 2013-14 as compared to 2012-13. The gap between the demand and supply is expected to narrow down in next few years with more number of projects coming on stream.
What necessary steps should be taken to enhance the competitiveness of domestic electrical equipment industry? 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 have become need of the hour. Our country experienced controlled economy till 1990 and then liberated 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 should therefore seriously think as to how we can 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 calls for enhancing competitiveness. A major precondition for competitiveness enhancement is the availability of skilled labour. The constant changing conditions of international markets force the stiff conditions that the nation has to face. Therefore innovation is the 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.

  “Although higher imports still plague the industry but policy changes and various initiatives undertaken by the industry and government are eventually showing signs of revival for the sector,” says Babu Babel, President, IEEMA.
In an interview with EPR, Indian Electricals & Electronics Manufacturers’ Association (IEEMA) President, Babu Babel, speaks about the current scenario, challenges and the steps needed to revive the industry growth. He also talks on how to enhance the competitiveness of domestic electrical equipment industry. Edited excerpts:
What is the status of Indian electrical equipment Industry? The size of the industry is valued at around $28 billion; a fourth of it is made up of power generation equipment. Transmission and distribution are contributing the rest. The industry provides direct employment to about 5,00,000 people and indirectly to about 1 million. India aspires 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 cannot happen without the active support from the government through investment-friendly policies and by focused efforts of industry. We have to be competitive for growth globally and also look at ways and means to draw in more investment into the country.
New government in centre looks very serious about the above and various initiatives such as “Make in India” campaign, skill development initiatives are being pursued extensively. 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.
What overall transformation in the Indian electrical equipment industry you have witnessed in the recent past? The electrical and industrial electronics industry has witnessed a 13per cent growth in fourth quarter (Q4) of FY 2014-15. Although higher imports still plague the industry but policy changes and various initiatives undertaken by the industry and government are eventually showing signs of revival for the sector.
What are the several factors that are refuting the growth of domestic electrical equipment manufacturers?The domestic electrical equipment manufacturing industry has over the years installed sufficient capacity to cater to the demand of power sector. However, it is facing severe problems like issues related to coal or fuel linkages, land, and environmental clearances resulting in a sharp decline in orders maturing in the domestic market.
The orders are also getting deferred or being put on hold due to weak investment sentiments and financing constraints from the lending institutions.
There are intensified competition due to increased number of new players or joint ventures formed in the private sector in the country for super-critical boilers and turbine generators thereby affecting price realisation and impacting margins. There is lack of level playing field including infrastructure bottlenecks suffered by the domestic industry vis-à-vis foreign suppliers or manufacturers.
Global slowdown and political turmoil are resulting in lower demand for exports. Lack of domestic availability of critical inputs or raw materials is a serious concern.
Shortage of skilled manpower is also a major hindrance to growth of domestic electrical equipment manufacturing industry in India.
Why the domestic manufacturers have slammed the decision to award power contracts to Chinese companies? 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 last seven 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 underutilisation of installed domestic capacity, resulting in loss of employment.
In order to stimulate demand for the domestic electrical equipment industry, we think 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 weightage 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.
Is it (the decision) a threat to the domestic manufacturers?Yes, as the period of 2011 to 2013 has been extremely volatile for the electrical equipment industry of India. The industry 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 was making the finish product as uncompetitive and seriously bleeding the domestic industry.
What are the government policies to push the power transformer market in India? The central government’s recent announcement to expand across the country the initiative like the Gujarat’s Jyoti Gram Yojana, where specially designed transformers were used to create a parallel network for providing 24X7 reliable availability of electricity for the rural Gujarat. This expansion is going to create additional demand for special DTs with different type of technology and innovation.
There has been noticeable development in the field of FACTS like phase shifting transformers and controlled shunt reactors. The environmental conditions are pushing us to take lead in use of green transformers having very low losses, using environmentally friendly materials like ester fluids. How is the industry reacting on these initiatives? The industry is reacting positively as the transformer growth in all the three categories has been positive by about 4 to 5 per cent in 2013-14 as compared to 2012-13. The gap between the demand and supply is expected to narrow down in next few years with more number of projects coming on stream.
What necessary steps should be taken to enhance the competitiveness of domestic electrical equipment industry? 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 have become need of the hour. Our country experienced controlled economy till 1990 and then liberated 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 should therefore seriously think as to how we can 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 calls for enhancing competitiveness. A major precondition for competitiveness enhancement is the availability of skilled labour. The constant changing conditions of international markets force the stiff conditions that the nation has to face. Therefore innovation is the 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.