India is growing at a fast pace. That calls for a commensurate increase in its electricity supply. India can utilise this demand potential to develop a robust supply chain for power equipment. However, the government needs to chip in with right policy initiatives to help the industry grow in a holistic manner.
The size of the power equipment industry exceeds R1,10,000 crore ($24 billion). Exports account for R18,000 crore ($4 billion). The industry?s strengths include its mature and strong manufacturing base, with robust supply chain, fully equipped to meet domestic demand. Its products have a rugged performance design enabling these to meet the nation?s tough network demand.
The industry comprises a good mix of large public sector enterprises, multinational companies and small and medium companies. Major overseas players too have a presence here, either directly or through technical collaborations with domestic manufacturers. State-of-the-art technology has been developed in most sub-sectors on a par with global standards. The electrical equipment industry is also witnessing an emerging global reputation for being sourcing of base products and components and is slowly but surely establishing a global footprint by building Brand India.
Opportunities for future growth are also immense. There is a large and rapidly growing domestic demand. The industry has grown at a compounded annual growth rate (CAGR) of about 8% in the last ten years. To sustain the envisaged annual GDP growth rate of around 8-10% over the next 20 years, it has been estimated that India will require to increase its electricity generation capacity by around five times, that is from 170 GW presently to over 800 GW by 2032. This calls for a matching capacity increase of the transmission and distribution (T&D) segment. Electricity being a sunrise sector, there also exists a significant export potential for the domestic industry.
While it is a highly capital-intensive industry, it has huge employment generation potential, too. As per an estimate by the Indian Electrical and Electronics Manufacturers Association, the industry employs over 3 lakh and generates work for over 15 lakh.
The industry is very heterogeneous and manufactures a varied range of products across all sub-sectors, including boilers, turbines, generators, transformers, cables, transmission towers and conductors, switchgear, insulators, capacitors, meters. But the industry faces several challenges, including volatility in raw material prices. The industry’s growth is also hobbled by low investment in research and development, shortage of skilled technical manpower and inadequate domestic testing and calibrating facilities for electrical equipment. Besides, the industry is also facing problems like the lack of standardisation of product specifications, design parameters and ratings for T&D equipment across different state power utilities.
India must address its power deficit if it is to maintain its high economic growth rate. Assured availability of quality power at reasonable cost will not only act as a catalyst in the socio-economic development of the nation but also enhance the global competitiveness of the domestic industry, leading to greater employment generation and higher levels of per capita income.
The author is director, IEEMA