Poor financial health has limited the ability of most state-owned DISCOMs to undertake last-mile reforms which in turn has weakened demand for the MSMEs whose products find use in last-mile power distribution applications, informs Harish Agarwal, President of Indian Electrical & Electronics Manufacturers’ Association (IEEMA) – the apex association of the Indian electrical equipment manufacturing industry. Edited excerpts from his interview with Electrical India:
Power sector in India is expected to attract an investment of Rs 11,55,652 crore by 2022. How do you see the opportunity for electrical equipment business?
India is likely to attract a massive investment of Rs 11,55,652 crore in power generation sector in the five-year period between 2017 and 2022 in setting up projects across thermal, hydro, nuclear and renewables segment. So, it is great opportunity for the industry. The policy initiatives of Power Ministry like coal auction, renewable policies for generation, schemes like IPDs, DDUGJY etc, for T&D have helped the sector. Also, support from government through procurement policies, more capital in-flows domestically and increased competitiveness of Indian manufacturers vis-à-vis imports thereby reducing imports in some sectors. Moreover, the electrical equipment manufacturing technology is witnessing significant modernisation while new technology is also being adopted in the manufacturing processes. Technological advancements, like smart grids and policies on emission reduction will influence the future direction taken by the power sector and electrical equipment industry in various countries.
Which are the segments will drive the growth?
The demand in renewable has supported to overall demand and will open new demand for new products and solutions in all segments. The Government of India has wholeheartedly backed the renewable sector in India by announcing a target of 176 GW by 2022, of which 100 GW has been allotted to solar, 66 GW to wind and the remaining 10 GW to the development of other renewable energy sources like biomass, geothermal and small hydro power projects. The corporate too have shown interest to commit huge investments towards this goal. Besides this, enabling amendments have been proposed to the Electricity Act, including open access reforms and enhanced Renewable Purchase Obligations.
Have the government initiatives like ‘Make in India’ and ‘100 Smart City’ started delivering as far as electrical equipment industry is concerned?
“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 while creating additional employment. IEEMA being one of the proud partners of the ‘Make in India’ campaign has identified a four-point agenda, which includes, mandatory vendor development program by utilities, mandatory testing of all imported electrical equipment in Indian labs (non-tested at origin), standardising equipment across all utilities and national competitive specifications for bidding for any tenders against domestically funded projects.
The energy infrastructure is arguably the single most important feature in any city. If unavailable for a significant enough period of time, all other functions will eventually cease. IEEMA helps modernise power systems for the smart cities through self-healing designs, automation, remote monitoring and control, and where practical and economic establishment of micro grids. We have all required technologies and skill set.
How ‘Make in India’ is benefitting SMEs in electrical equipment segment?
Electrical equipment industry and the SMEs are going to be the game changer for tomorrow. For any industry to sustain and adopt new technology, they require finance and SMEs are no different. In this current scenario, there is a huge trust deficit between the banking segment and any industry. SMEs which account for around 85 per cent of the electrical equipment industry, are battling multiple headwinds today. Poor financial health has limited the ability of most state-owned power distribution companies (DISCOMs) to undertake last-mile reforms — for improvement of quality of supply voltage, distribution loads, the billing process and prevention of pilferage. This has weakened demand for the MSMEs whose products find use in last-mile power distribution applications.
Could you brief us on Indian electrical equipment industry’s preparedness on the ‘Power for All’ front?
IEEMA has been vigorously pursuing with the policy makers, so as to positively impact made in India products with state-of-the-art technology. Moreover, the electrical equipment manufacturing technology is witnessing significant modernisation while new technology is also being adopted in the manufacturing processes. Technological advancements, and policies on emission reduction will influence the future direction taken by the power sector and electrical equipment industry in various countries. We need to however keep an eye on utilising existing manufacturing capacities first before adding new.
Finally, what’s your outlook for Indian electrical equipment industry beyond 2019?
India is firmly set on a path of economic growth that is estimated to usher in prosperity like never before. This economic prosperity will need to be built on the back of significant transformations across several facilitating elements, the primary ones being infrastructure build-out, energy availability and sustainability. The government’s ‘Make in India’ program has placed India on the world map as a manufacturing hub and give global recognition to the Indian economy. India is expected to become the fifth largest manufacturing country in the world by the end of year 2020. The Government of India has set an ambitious target of increasing the contribution of manufacturing output to 25 per cent of Gross Domestic Product (GDP) by 2025, from 16 per cent currently. India’s manufacturing sector has the potential to touch US$ 1 trillion by 2025. There is potential for the sector to account for 25-30 per cent of the country’s GDP and create up to 90 million domestic jobs by 2025.
