The Institute for Energy Economics and Financial Analysis (IEEFA) forecasts India’s gross domestic product (GDP) to double over the next 10 years, growing at 7 per cent annually. Electricity demand is forecast to nearly double over this period. This has generated the need for the development of quality electrical infrastructure supporting its growth for several years to come. It augurs well for the development of wires and cables industry in India. Being one of the key segments of power sector, wires and cables sector is experiencing an escalating demand owing to the growth in power generation infrastructure.
The wires and cables market in India comprises nearly 40 per cent of the electrical industry and is growing at a CAGR of 15 per cent as a result of growth in the power and infrastructure segments. The segment has been witnessing unprecedented growth owing to the boost provided by the recent policy and regulatory initiatives as well as Government schemes like Ujjwal Discom Assurance Yojana (UDAY), the Deendayal Upadhyay Gram Jyoti Yojana (DDUGJY), the Integrated Power Development Scheme (IPDS) and the Pradhan Mantri Sahaj Bijli Har Ghar Yojana Saubhagya. Further, Indian Railways’ Railway Mission 41K has generated the potential for Indian wires and cables industry through electrification of 38,000 km route. Under DDUGJY, the government has envisaged the electrification of all villages.
Growth Drivers
The Transmission and Distribution sector continues to remain in focus, especially, with the outlay of Rs. 2.6 lakh crore announced by the Government for the five-year period ending FY2022. There is also a sharper focus on high voltage transmission lines along with the Government’s aims to provide 24×7 power, which is opening up opportunities in the sector. DISCOMS which have joined the UDAY scheme are expected to improve their T&D infrastructure through renewed investments. The government’s target of generation of 100 GW of solar energy by 2022 and measures such as excise duty exemption for ferro-silicon magnesium used for manufacturing components for wind-operated electric power generators have augmented the demand for electrical wires and cables.
According to Randeep Narang, President – International (T&D, Solar) and Cables, KEC International, the Government’s focus on Power for All, rural electrification, improving infrastructure, robust spurt in the number of electrified households, improved life-styles and new opportunities are propelling the demand of domestic cables and wires and electrical items. RPG Cables has grown over the last six years and now is amongst the key suppliers of high-quality power and telecom cables, not only in India but also in markets such as UK, Australia and Africa.
Arvind Agarwal, AVP, Havells informs further, that the government’s ‘Smart City’ project is expected to propel large-scale growth in infrastructure, telecom, power generation, T&D, engineering and automotive sectors which augurs well for the wire and cable industry, as growth of the industry has direct linkage with growth and developments happening in other sectors. According to reports, the wires and cables industry in India is expected to double in size in the next five years.
Cable manufacturers, both power and telecom, have been shoring up their capacities in anticipation of the demand growth. “KEC has built significant capabilities over the last few quarters by consolidating its Silvassa manufacturing unit with the state-of-the-art Vadodara plant. “We have also commenced manufacturing catenary & contact conductors and signaling cables for Railways,” informs Narang.
Apart from right of way (RoW), space constraints in the cities generates the scope for underground cables as a solution. Brugg Cables wants utilities to learn about future trends and to have the latest technology.
“On the one hand, we see a lot of new power generation due to the new climate politics. This results in substantial adaption of the transmission network. A general trend is to replace overhead lines with underground cables, which is more environmentally friendly. A big trend as well are the upcoming projects for HVDC connections. In the renewable segment we see huge on and offshore wind parks coming up,” informs Samuel Ansorge, CEO, Brugg Cables.
Technology
Global investors are envisaging India as the potential market for high voltage (HV) and extra high voltage (EHV) cables. They leverage their investments in the Indian cable market through technical collaboration with Indian cable manufacturers for production of EHV cables up to 400 kV. Due to lack of congenial policies and technology for investments in local manufacturing, the country still depends on imports cables of 66 kV and 33 kV. So, Indian Electrical and Electronics Manufacturers’ Association (IEEMA) suggests that the domestic manufacturers must explore the possibility of manufacturing these items to meet likely demand. There is a burning need for standardisation of specifications across this segment, which would lead to improved efficiencies in this segment and also reliability and replaceability of products. With increasing focus on renewables, the industry is now looking forward to supply cables for solar and wind power applications in addition to oil and gas, railways and other specialized segments. As per IEEMA, Indian power cable manufacturers have attained maturity in terms of technology for HV cable up to 220 kV and have been found competitive in the global scenario, despite having higher local costs, as well as local taxes and duties being paid on their products.
In the near future, there appears to be no viable alternative for cables for bulk power transmission. But trends such as Smart Grids or Distributed Generation has a potential to change the demand for cables, although they are yet to be fully established in terms of long term commercial viability.
For KEC, bulk of its business comes from LT and HT cables, which are technically mature and fully standardised. “EHV cables, particularly, the 220 kV and higher segment, is seeing development in terms of improving long term reliability and making them more compact. This know-how is limited to very few companies like ours, which have been supplying EHV cables for over 20 years. Another area that we see development in is E-beam cables, which are being favored in sectors such as solar, railways and shipping, where cables are required with cross linked polymeric insulation with lower insulation thickness for high temperature applications,” informs Narang of KEC International.
Ansorge opines that the electrical power business is undergoing substantial changes and generally accelerating. The early adaption of latest technologies is, therefore, a must. These are new cable and cable accessories technologies like HVDC, 800 kV cable systems etc and the need for digitisation, which will enhance efficiency of the network. Not only will technologies be an important aspect, but also market-oriented services.
Conclusion
The Government’s impetus on infrastructure sectors such as power, railways, roads and petrochemicals will in turn spur demand for more power, and hence more power cables. Growing market potential, increased adaption of new technologies by the utilities, growing importance of services that may be linked to digital technologies have generated further scope for the growth of wires and cables industry in India.
The government’s efforts of introduction of Goods and Service Tax (GST) has brought unorganised players in the sector under the tax net by narrowing the price difference between organised and unorganised market.
Moving forward, Narang of KEC International expects a pick-up in manufacturing activity and capacity expansion in segments like steel, cement, pharma etc. additionally, in line with the supreme court directive to reduce emissions as per BS-VI norms, petrochemical companies are expected to invest in plant modernisation and expansion, thus increasing the demand for cables.
Brugg Cables considers India as a highly attractive market and has established a sustainable market presence which they will keep and expand in the future.
As cable networks become wider, the demand for improved efficiency and reliability will drive future trends in India. The improved financial health of the discoms will fund and drive latest technology know how advancements, giving better services to the consumers.
