Imports of electrical equipment assumed threatening proportions

Imports of electrical equipment assumed threatening proportions
Is ‘Made in China’ the most threatening phrase for the Indian electrical equipment industry?
Based on the projections of the government for capacity enhancement in power generation, transmission and distribution in the 10th, 11th and 12th Plans, the domestic electrical equipment manufacturing industry has made huge investments in doubling and, in some cases, even tripling its production capacity.
However, this built-up capacity currently stands underused across several products due to sluggish domestic demand on account of the slowdown in the power sector and a surge in imports of electrical equipment in recent years. This is significantly impacting the commercial viability of the domestic electrical equipment industry and impacting both the top line and bottom line of the manufacturers. This can have severe long-term consequences.
In the last couple of years, there has been hardly any growth in capital expenditure in the T&D equipment sector. T&D equipment manufacturers are working at only 70 per cent of their production capacity.
In the last few years, the domestic manufacturing capacity of generation equipment has being ramped up and currently stands at 25,000 MW per annum against a requirement of about 16,000-17,000 per annum. With six-seven joint ventures coming up in India, the capacity will increase to 40,000 MW per annum by 2014-15. The additional power generation capacity target for the 12th Plan has also been scaled down to about 88,537 MW. As a result, even the generation equipment sector will soon be sitting on huge surplus capacity.
India’s inability to meet targets for generation capacity addition is adversely impacting the downstream transmission and distribution sectors.
Absence of a level-playing fieldAbsence of a level-playing field for the domestic industry to compete with imported electrical equipment — especially from China — is a clear, present threat.
During the last 5 years, India’s imports of electrical equipment imports have increased at a CAGR of 30.30 per cent and were at $15.7 billion in 2011-12. Import duties on most products are quite low and are being further lowered under the various free trade agreements (FTAs) signed by India.China’s share in Indian imports of electrical equipment has dramatically increased in the last few years, and now it stands at 44.5 per cent (2011-12) of the total from 15.3 per cent in 2005-06. Imports from China have grown at a CAGR of 57.5 per cent in the last 6 years and were Rs.33,432 crore in 2011-12.
Imports of electrical equipment in the country have assumed very threatening proportions and now captured 43 per cent of the market for electrical equipment in India (Rs.173,092 crore in 2011-12), whereas there is significant underused of installed domestic capacity.
 

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