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T&D equipment segment is operating at 70% capacity

Indian Electrical & Electronics Manufacturers’ Association (IEEMA) represents companies across the whole value chain in power generation, transmission and distribution equipment. In this exclusive interview IPF, Sunil Misra, Director General, IEEMA, analyses the performance of the industry and its growth prospects.

What is the status of power equipment industry in India?

The electrical and industrial electronics industry has witnessed a 4.25% growth in the year 2016-17 over the previous year. The industry exported Rs 38,580 crore ($ 6 billion) worth of electrical equipment in 2015-16 (Rs 35,276 crore April to February in 2016-17 - $ 5.25 billion). Exports are helping the industry to grow especially in power transformer & high voltage switchgear products, energy meters and cables. Policy changes and various initiatives undertaken by the industry and government are eventually showing signs of revival for the sector.

The major drivers in this growth are low voltage switchgear which has registered a healthy growth of 22% due to revival in demand from realty, infrastructure & other manufacturing industries. Distribution transformer (especially up to 25 KVA – REC range) & energy meters demand is declined by 12% & 10% respectively because of poor off-take from utilities due to delay in finalisation of orders under the government schemes like DDUGVYJ and IPDS.

The growth in power transformer & high voltage switchgear can be seen due to domestic orders arising from new substation additions especially for above 220 KV. There is a marginal growth in LT motors. However, there is a declining trend for HT motors due to imports & core sector industry capex not taking off. The conductors demand has also declined by 5% due to delay in order finalisations.

What are major challenges before the Indian power equipment industry?

The challenges faced by the electrical and related electronics industry are:

>> Under utilisation of installed capacity
>> Continued delay in payments on one hand and high cost of finance on the other. As the main customers, discoms, have high losses, banks perceive greater risk in funding electrical industry
>> Absence of level playing field in some cases and certain countries dumping
>> Overall industrial slow down and uncertainty about when will the turnaround really reach a satisfactory level
>> Global economic slowdown impacting exports

Government is aiming for ‘Power for All’ in India. Is this creating demand for power equipment?

There has been an overall growth in most segments of the electrical equipment industry - in boilers, turbines, generators, transformers, switchgears, and wires and cables - due to the high demand from central and state power utilities. India’s EE industry is expected to grow steadily and witness growth opportunities as a result of the government‘s focus on capacity augmentation across generation, transmission and distribution. India’s electrical equipment industry has witnessed significant growth in the last few years. There is significant capacity in India’s T&D equipment segment, which is operating broadly at 70% capacity utilisation. The domestic T&D segment is geared to cater to the expected growth in the demand for T&D equipment.

What is the growth outlook for this industry?

The Indian power sector has an investment potential of Rs 15 trillion ($ 222.36 billion) in the next 4-5 years, thereby providing immense opportunities in power generation, distribution, transmission, and equipment, according to Union Minister Piyush Goyal. The government’s immediate goal is to generate two trillion units (kilowatt hours) of energy by 2019. This means doubling the current production capacity to provide 24x7 electricity for residential, industrial, commercial and agriculture use.

The Government of India is taking a number of steps and initiatives like 10-year tax exemption for solar energy projects, etc, in order to achieve India’s ambitious renewable energy targets of adding 175 GW of renewable energy, including addition of 100 GW of solar power, by the year 2022.


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