Growth rate of the Indian electrical equipment industry has decelerated to 6.6% in 2011-12 as compared to 11.3% and 13.7% in 2009-10 and 2010-11 respectively according to data compiled by the Indian Electrical and Electronics Manufacturers' Association (IEEMA), the apex Indian industry association of manufacturers of electrical, industrial electronics and allied equipment. IEEMA has based these growth figures, after rigorous analysis, on the production and sales data (in volume/quantity terms) collected from its member organisations, which represent 95% of the entire sector.

Sluggish growth in the power sector and the escalating imports of electrical equipment is significantly impacting the commercial viability of the domestic electrical equipment industry and will have severe long term consequences. All three segments of the power sector - generation, transmission and distribution are facing several challenges, which need to be addressed expeditiously.

Growth in the capacitor, switchgear and transmission line sectors in 2011-12 turned negative, implying distinct slowdown in industrial capex activities and slowdown in off-take by users due to credit squeeze, high interest costs, etc. The cable industry is the only sector that has shown a double digit growth of 25.7% in the year.

Absence of a level playing field for the domestic industry to compete with imported electrical equipment, especially from China, is a clear and present threat. Imports of electrical equipment have grown in the past five years at a CAGR of 28.28%. Current export-import trends based on 27 major ports trade data indicates that imports continue to rise for 765 kV transformers & reactors (mostly through power project imports), insulators, LV switchgear and HV cables. Total Imports of 765 kV transformers & reactors in 2011-12 were Rs 1,229 crore; in the last quarter (Q4) 2011-12, imports sharply increased by 125% (Rs 687 crore) over the combined total of the first three quarters (Rs 542 crore).

According to IEEMA, urgent policy interventions are required by both the Central and the State Governments to check the deceleration in growth of the electrical equipment industry.

Mr Ramesh Chandak, President IEEMA said, "In India the focus is largely on increasing the power generation capacity. There has been a continuous under-investment in the T&D sector. This lopsided investment pattern needs to be corrected; this will resolve some of the power problems and will also provide balanced growth."