Indian transformer industry proficiently graduated in manufacturing”The transformer industry in India is well versed and matured enough into reliable supplier of all types of transformers and can meet country’s demand and exports market for sub-transmission system,” shared Anil Aggarwal, President, Indian Transformer Manufacturers AssociationThe transformer industry has been growing strength by strength, every day. If CRGO — transformer core material — is produced in India, it will be a great help in reducing the cost of transformers as CRGO costs about 40 per cent of the total value of the unit. Anil Aggarwal, Chairman and Managing Director, PME Power Solutions and President, Indian Transformer Manufacturers Association tells what move would check the import of transformers and increase competitiveness in domestic industry.As per the 12th Five-Year Plan, Rs. 13 lakh crore is likely to be invested in the power sector. How will transformer sector benefit from it?Your figure of Rs.13 lakh crore investment during the 12th Plan appears to be excessive. The installed capacity of generation up to the year 2012-13 is 228,000 MW in the country which is slated to be enhanced to 315,000 MW by 2017. This means addition of 87,000 MW would require completion of about 22,000MW projects each year to meet the target. Such a tall claim is impossible, viewing Ministry of Power’s past record and that too with number of impediments and self-created bureaucratic hurdles in respect of land acquisition for projects, environmental clearance as well as ever shortage of fuel of coal, gas etc. Other problems are theft of electricity, free power to farmers, excessive A&TC losses to the extent of average 35 per cent, inability of utilities and discoms to pay to the generators etc.In case the Ministry of Power accomplishes 88,000MW in next 4 years, it would cost roughly Rs. 4 lakh crore and the same amount would be required to develop transmission and distribution system to absorb the intended generation capacity addition.Such scenario would naturally result for development of 8 lakh MVA of transformation capacity for disbursal of power from far flung generating stations to the users calling for matching 765KV/400KV/200KV trunk transmission system and 132KV/66KV/33KV sub-transmission and further 11KV/0.415KV distribution network in the country.This huge reticulation may peg transformer market to the tune of roughly Rs. 10,000 crore to 12,000 crore and will grow further to meet the power demand of the country.Indian transformers industry registered a de-growth of 26 per cent in FY 12-13 compared to a growth of 25 per cent in FY 11-12. Could you highlight the reasons behind?There is no denial about 26 per cent negative growth of transformer industry during financial year 2012-13 as compared to 25 per cent growth in financial year 2011-2012.It is a cause of worry for Indian industry. The basic reason is the free flow of import of equipment which is affecting adversely the commercial viability of domestic equipment (industry), entailing long-term consequences. In fact, there is no level-playing field to compete with cheap imported equipment, especially from China and Korea. The Government of India seriously has to look at these vexing issues lest it should result into social problems of unemployment and other consequences.What’s the best way to come out of this sorry state?Industry as whole has made hue and cry, and the matter has already been debated at the highest level in the Ministry of Power. As a result, a panel has been set up for collecting the data on the efficacy of imported equipment used in different plants. It is known that the Chinese equipment being cheap might be meeting broad parameters of specifications but do not come up to expectations while in service. The mindset and concept of accepting L1 has to be done away with. At times, the quotes do not meet the cost of raw materials, leave aside profit margin. Suitable laws or invocation of antidumping act may be necessary to mitigate the ill effects.Increase in import is alarming as far as electrical equipment industry is concerned. Is the lack of competitiveness within the domestic manufacturing sector eating into its pie?There is perennial shortage of power in the country. Despite best efforts, the government has not been able to bridge the gap between demand and supply. The Ministry of Power is switching over to EHV/UHV system by adopting super critical 800/600 MW generating units in a bid to augment the power availability to meet declared goal of the Government of India for providing power to all at reasonable cost by 2017. As a result, power developers have placed order for about 40,000 MW equipment on Chinese suppliers, causing alarm in domestic industry. Of late, there is local presence of major foreign players either directly or through joint venture due to introduction of high technological equipment. Such a proposition when fully realised would prove competitive at domestic and global level.What actions should be taken to enhance competitiveness within the domestic transformers manufacturing sector?The transformer industry is usually divided into distribution transformers, power transformers and other type of special transformers for welding, traction and furnace etc. The transformer industry in India is well versed and matured enough into reliable supplier of all types of transformers and can meet country’s demand and exports market for sub-transmission system.The industry has proficiently graduated in manufacturing transformer up to 400-KV class for the last two decades but for 765-KV class very few like BHEL, ABB, Crompton Greaves, EMCO, Alsthom, Prime Electric Ltd. and Siemens are enhancing their establishment with new technologies to cater to the requirement of handling bulk load for interstate disbursal of power. Such a move will check the import of transformers and increase competitiveness in domestic industry.Is there any ray of hope in export when it comes to transformers industry?Our transformer industry is well matured and already exporting transformers to various countries. The export is mostly restricted to developing and under-developed countries such as Middle East and Africa.The transformer core material called CRGO is not manufactured in India and our industry is totally dependent on import. If this material is produced in India, it will be a great help in reducing the cost of transformers as CRGO cost is 40 per cent of the total value of the unit. Besides, India can earn lots of foreign exchange.What kind of government help does the power and distribution transformer sector seek?Whatever panel has already been made by the Government of India to analyse the shortcomings, it should co-opt experts on technical and economic fields who can suggest various changes in policies and measures of reforms to the advantage of our industry.As CRGO material is not available in the country, the Government of India should force SAIL, TATA, JSW, MITTAL Group, etc. to set up plant in India as our demand is about 300,000 MT per year which shall increase in the coming years. Such a proposition shall reduce the cost of transformers and help in becoming competitive at global level. Besides, excellent testing facilities should be created in the country as at present 220/400/765-KV class transformers are sent abroad for type testing which costs a lot in foreign exchange and delays in execution of big power generation and transmission projects. Further, it would be necessary that excise duty should be reduced from 8 per cent to 3 per cent. Another most important aspect is that the policy of L1 should be changed to lowest capitalised cost.