India’s electrical equipment and industrial electronics sector’s annual production is currently around $25 billion, which represents 1.5 per cent of the national GDP, while its exports total $4.5 billion, according to IEEMA, the Indian Electrical and Electronics Manufacturers Association.
Ramesh Chandak, president of IEEMA and managing director of KEC International Limited, believes this sector is of strategic national interest. “If India wants sustained high economic growth, it needs to address its huge infrastructure deficit, especially its power demand and supply imbalance. Assured availability of quality power at reasonable cost will not only act as a catalyst in the socio-economic development of the nation but also enhance the global competitiveness of the domestic industry, leading to greater employment generation and higher levels of per capita income.
“An efficient power supply system is a key ingredient for economic growth and quality of life, and it crucially hinges on the rapid development of the domestic electrical equipment sector, encompassing the complete value chain in power generation, transmission and distribution.”
IEEMA reported that in the financial year 2010–2011, the electrical equipment industry grew by a healthy 14 per cent. This growth was fuelled by increasing demand in particular segments of the industry. For example, an increased focus on power quality and energy efficiency by utilities, Discoms and user industries, led to the demand for capacitors to surge by 35 per cent, while a buoyant demand from Power Grid Corporation of India, independent power producers and some utilities for high voltage and extra high voltage switchgear, including products like AIS and GIS, produced growth of 28 per cent.
The transformer industry also witnessed an overall growth of 15 per cent, with a rising domestic demand counteracting a decline in exports, mainly in the power transformer segment. Distribution transformers saw a renewed growth of 16 per cent, with growth in power transformers remaining steady (14 per cent).
Enhanced meter procurements by state utilities also translated into good business. The industry is now involved in development of specifications for smart meters under the guidance of the Ministry of Power and Sam Pitroda, chairman of the India Smart Grid Task Force. The energy meter sector saw a healthy growth of 15 per cent for both single and polyphase static energy meters domestically, coupled with good export demand.
The transmission lines sector achieved a moderate overall growth of 4 per cent due to stagnancy in demand for transmission conductors. In fact, the conductor segment saw revival in growth only in the last quarter of the financial year. Transmission line towers, however, grew by 7 per cent, driven by both domestic and export orders.
Thus there was some surprise when IEEMA released its latest growth results for the first half of this financial year (2011-2012), which showed a slowdown in growth to a moderate 9 per cent. The industry association determined that second quarter (Q2) growth had fallen to 4.14 per cent, down from 13.82 per cent in (Q1).
In the Transformer sector, power transformers maintained growth momentum with a rise of 14.8 per cent, well supported by exports. Their order book position also looks healthy with major order growth visible for above 200 MVA category, says IEEMA.
The Switchgear and Controlgear segment witnessed low growth (2.5 per cent), primarily due to stagnancy in the medium voltage segment. In contrast, the high and extra high voltage segment witnessed a surge in demand of about 20 per cent due to increased supply to power transmission projects.
The energy meter industry also bucked the trend and maintained its growth momentum by achieiving growth of 10.5 per cent, thanks to sustained off-take of mainly polyphase meters by utilities under the R-APDRP programme.
The Indian electrical equipment industry is clearly going through a challenging period. The adverse domestic economic situation due to high inflation, high interest costs and credit squeeze is having a significant impact on the growth of the industry. The situation is compounded by intense overseas competition, especially from China and South Korea, says IEEMA.
However, Jayantkumar Kulkarni, vice president of IEEMA, warned against paying too much attention to quarterly and half-yearly results, confirming he anticpated that the sector would achieve “double-digit growth by the end of this current finanacial year”. Historically, the second half of the year has performed better than the first six months.
IEEMA summed up its findings by saying that the approaching 12th Five-Year Plan (April 2012 to March 2017) provides huge opportunities for growth via an envisaged investment of $300 billion, coupled with exports growth. However, in the medium term, the industry is witnessing a decline in enquiries and order finalizations. It has reported a ‘wait and watch’ stand adopted by purchasers due to uncertainty in the economic, financial and political situation in the country.
Industry’s Mission Plan 2012-2022
In light of the challenges facing this industrial sector, the announcement of the ‘Indian Electrical Equipment Industry Mission Plan, 2012–2022’ in September could not be more timely.
The electrical equipment industry faces several challenges which require concerted action by all the stakeholders and policy interventions of the central and state governments. It is estimated that the size of the domestic market for T&D equipment will grow to $70–75 billion. Therefore, all stakeholders – government, manufacturers, policy makers, think tanks – need to proactively collaborate and take concerted and coordinated action so that the industry can further accelerate its growth process and contribute significantly to reducing the power demand-supply gap in the country.
With this objective in view, under the aegis of the government’s Department of Heavy Industry and with support from IEEMA, a mission plan for the electrical equipment industry is currently being drawn up, and expected to be launched before the start of the 12th Five-Year Plan period.
With the mission plan, the government’s responsibility is expected to facilitate infrastructure creation, promote the country’s capabilities, create a favourable and predictable business environment, attract investments and promote R&D. The industry’s responsibility will be towards issues such as designing and manufacturing quality products, improving productivity and maintaining costs.
The mission plan can certainly expect a warm welcome when it is published in around six months time.
ELECRAMA welcomes gridweek asia
IEEMA and Clasma Events have announced that the inaugural GridWeek Asia conference is taking place in conjunction with ELECRAMA 2012. It is a global extension of the annual GridWeek conference held in Washington, DC, USA, each year, and underscores the growing importance of India and Asia as evolving Smart Grid marketplaces. It will take place on 16-18 January, 2012 in Mumbai, India,
ELECRAMA is one of the world’s largest power focused trade shows, with an anticipated 125 000 visitors and more than 1000 exhibitors. GridWeek Asia will offer two full days of conference and plenary tracks, plus one day of interaction with ELECRAMA exhibitors and attendees, with the key objective of fostering interaction between Indian Smart Grid stakeholders and Smart Grid leaders and visionaries from around the world.
“GridWeek Asia will be the most influential international gathering of Smart Grid players in Asia,” said Anto Budiardjo, president and chief executive of Clasma Events, the organizer of GridWeek conferences. “Given the rapid growth of India and the opportunities they have to build a Smart Grid infrastructure from the ground-up, there’s no better time for a meeting of Smart Grid minds in India.”
India is experiencing rapid growth in GDP, with an expected growth rate of around 8 per cent this year, which is fueling the need for expedited infrastructure development. India’s total installed generation capacity is close to 175 000 MW, and the country requires an additional 100 000 MW of generation capacity in the next six years with a corresponding investment of well over $400 billion in the electricity sector. Building on the present base of 20 000 MW of grid-interactive renewable power, an additional 2500 MW is expected to be added annually going forward. The county’s National Solar Mission has set a target addition of 20 000 MW by the year 2022.
“It’s clear that a smarter electrical infrastructure is necessary in India, as we build out our T&D grid to support increased demand and our renewable energy goals,” said IEEMA. “We are thrilled that ELECRAMA will be host to the first GridWeek Asia and are confident that this gathering of the greatest minds in Smart Grid will be a tremendous learning opportunity for the Indian Smart Grid community.”
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