Given the current economic situation, growth of the Indian low voltage (LV) and medium voltage (MV) switchgear markets is expected to slow down in 2009. However, by 2010, the market is expected to pick up, driven by demand from utilities, infrastructure along with industrial, residential and commercial user segments.
The growth is likely to stem from the recent initiatives of the government encouraging investments at the power distribution level to increase access to reliable power supply and reduce technical and commercial losses in the system through schemes such as Accelerated Power Development and Reforms Programme (APDRP) and Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY).
According to an analysis by the Frost & Sullivan, the market for Indian low voltage (LV) and medium voltage (MV) switchgear has witnessed a 15% growth in 2008, to register revenue worth $1,600 million.
In 2008, the Indian low and medium voltage switchgear market was estimated to be $1,600 million. Of this, the low voltage switchgear market accounts for $850 million and medium voltage switchgear market accounts for $750 million. The low and medium voltage switchgear market is estimated to reach $4173.2 million by 2015, growing at a CAGR of 14.2%.
Anup Barapatre, Senior Research Analyst?South Asia, Energy & Power Systems, Frost & Sullivan said, ?Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) is a scheme for rural electricity infrastructure and rural household electrification under which 90% capital subsidy is provided towards overall cost of the projects borne by the concerned state/state utility and 10% of the project cost contributed by states through own resources/loan from financial institutions.?
?The government is encouraging investments at the power distribution level to increase access to reliable power supply and reduce technical and commercial losses in the system. Schemes such as APDRP and RGGVY are likely to boost demand for the low and medium voltage switchgear market in India,?? the analyst adds. Burgeoning economic and industrial growth is set to drive demand for higher energy consumption. Key end-user sectors such as oil and gas, petrochemicals, steel and cement have been growing at a rate of more than 8% over the last two to three years, Barapatre informs.
All indicators point towards the power sector termed to be one of the key future drivers of India?s economic growth. The switchgear market has exhibited excellent growth primarily due to sustained demand from the vibrant residential, commercial construction, and infrastructure sectors. Demand from these sectors is likely to persist in the near future.
However, fierce price competition among the market participants impedes the overall revenue growth of the Indian LV and MV switchgear markets. Tier II and tier III suppliers target end users that prefer low-priced products, affecting the profit margins of established and organized tier I participants.
Multinational companies are restrained by the competitive pricing for imported products.
Market participants should adopt best practices to improve production efficiencies and achieve economies of scale.
Such an approach will help companies reduce manufacturing costs and maintain profit margins and will be critical to overcoming price challenges instigated by tier II and tier III suppliers, said the report.
