‘Make in India’ is perhaps one of the most important programmes being pursued by the government of India.

A t the Annual Convention and 68th AGM of Indian Electrical and Electronics Manufacturers’ Association (IEEMA) held in Mumbai on September 25, 2015, Vishnu Agarwal, the outgoing President of Indian Electrical & Electronics Manufacturers’ Association (IEEMA), did some plain speaking, giving expression to the many issues facing the industry. The theme of the annual convention this year was ‘emPOWERing – Make in India’. Shri Anant Geete, Minister for Heavy Industries and Public Enterprises, who inaugurated the convention, was among the dignitaries present on the dais, and a large number of CEOs and MDs present in the audience. “The government had promised to release orders for electrical equipment manufactured in India to the tune of Rs 100,000 crore by various PSUs and a year later the manufacturers are still waiting for the orders. In the meanwhile many SMEs have had invested in adding capacity, facing a double blow,” said Agarwal.

IEEMA is the apex industry association of 800 plus manufacturers of electrical, industrial electronics and allied equipment in India. The association member companies have contributed to more than 90% of power equipment installed in India. Over 80% of the IEEMA members are SMEs, companies that do not have the resources of large domestic corporates and MNCs to withstand the swings of the market in the absence of government support and reluctance of banks to lend them the requisite finance thanks to stringent lending norms. But Agarwal made it clear that the electrical industry in India is not asking for any subsidies or concessions from the government. All it wants is a level playing field vis-à-vis the cheap imports of equipment, especially in the power and irrigation sectors, where according to IEEMA estimates there is a huge price differential of up to 17% in favour of imported products and equipment – an unfair advantage over the domestic manufacturers.

But the industry is optimistic about the government’s emphasis on ‘Make in India’ and related programs. Within the power sector the ambitious schemes of ‘Deen Dayal Upadhyaya Grameen Kaushalya Yojana’ and ‘Integrated Power Development Scheme’ coupled with emphasis on renewables, the emerging business opportunities seem to be very promising. IEEMA also feels the government has been treading in the right direction by making efforts towards ‘Ease of Doing Business’,” said Agarwal. Mr Babu Babel, the President Elect, IEEMA expressed the view that, “There has been an overall increase in power generation by 8.4 per cent since last year. The government had done well to untangle supply side issues by augmenting coal supply as well as taken efforts to boost transmission and distribution. ‘Make in India’ is perhaps one of the most important programmes being pursued by the government of India. The central theme is about transforming India into a manufacturing hub with world class technology on the pattern of China, Japan, South Korea, etc. IEEMA being one of the proud partners of the ‘Make in India’ campaign has been vigorously pursuing with the policy makers to promote made in India products with state-of-the-art technology.”

Mr Sunil Misra, Director General, IEEMA said, “The electrical and industrial electronics industry has witnessed a 14.81% growth in Q1 of FY 2015-16. The growth in exports is helping the industry to grow especially in distribution transformers, cables, transmission line towers, energy meters, capacitors, etc. Policy changes and various initiatives undertaken by the industry and government are eventually showing signs of revival for the sector.” He further added, “The Government has also set a target of generating 60,000 MW in wind power capacity. Currently, renewable energy accounts for only 31,692 MW of India’s power generation capacity of 267,637 MW. But still the power sector is facing predicament and this is due to the losses faced by the discoms. The combined debt of power distribution companies (discoms) stands at over Rs 3 lakh crore. Faced with acute financial stress, many of these are unable to buy power. The power generation companies are scheduling their production in accordance with the demand of electricity which has come down as discoms are unable to buy due to fund crunch.”

Electrical Equipment

The Indian electrical equipment industry size in 2012-13 was in excess of USD 24 billion, with exports of USD 5 billion. The electrical equipment industry comprises of two segments – generation equipment (boilers, turbines, generators) and transmission and distribution (T&D) and allied equipment like transformers, cables, transmission lines, switchgears, capacitors, energy meters, instrument transformers, surge arrestors, stamping and lamination, insulators, insulating material, industrial electronics, indicating instruments, winding wires, etc. The generation equipment sector is 28% and T&D equipment sector 72% of the industry.

In the last decade (2005-2014), imports of electrical equipment in India increased 19.73% to Rs 58,354 crore, with China cornering a lion’s share thanks to its cost advantages, even as there are apprehensions about quality. Thanks to cheaper imports, the local transmission and distribution equipment manufacturing sector is operating at less than 70% of its capacity. According to a research report, the Indian power transformer market is set to grow at a CAGR of 14 per cent between 2013 and 2018. The country has all along been net exporter of transformers, and even the various international players with manufacturing facilities in the country are looking forward to making Indian their manufacturing base for supplying to other countries. And despite the fact that Cold Rolled Grain Oriented (CRGO) laminated silicon steel, one of the major raw materials for transformers has to be imported in the absence of local manufacturing, the domestic players have managed to gain a strong foothold the exports not just to developing countries but also to advanced markets on the basis of its quality and pricing. According to industry estimates, around 15 per cent of India’s production of power transformers are exported. Now with successful domestic manufacturing of 1,200kV transformers of global standards, the future is indeed very promising.

The industry electrical equipment at a glance:

> Estimated production for 2014-15: Rs 1,28,000 crores, exports: US$ 5.3 billion
> 9.9% of manufacturing sector is terms of value and 1.4% of India’s GDP
> Direct employment to 5 lakh persons, indirect to 10 lakh, and over 50 lakh across the entire value chain
> Diversified, matured and strong manufacturing base, with robust supply chain
> Rugged performance design of equipment to meet tough network demand
> Presence of major foreign players, either directly or through technical collaborations with Indian manufacturers
> State-of-art technology in most sub-sectors at par with global standards
> Major export markets: United States of America, United Arab Emirates, Germany, United Kingdom, Nigeria, Saudi Arabia, Australia, Brazil, Canada and France, and
> Major export products: switchgear and controlgear, transformers and parts, industrial electronics, cables, transmission line towers, conductors, rotating machines (motors, AC generators, generating sets) and components.

The Department of Heavy Industry (DHI), Government of India, with support from IEEMA, has launched a holistic Mission Plan for the rapid development of the domestic electrical equipment industry, encompassing the complete value chain in power generation, transmission and distribution. The Mission Plan lays down a clear roadmap for enhancing the competitiveness of the domestic electrical equipment industry, the Vision 2022, which envisages making India the country of choice for the production of electrical equipment and reaching an output of US$100 billion by balancing exports and imports.