The share of electric equipment in the country’s GDP is nothing to sneeze about. It constitutes about 2 percent of it. If the recent reports are to be believed, this number is about to see some really serious hikes in the coming years. The consumption of electronic goods is going to reach an all-time high and the revenue from this area is going to break all current records. Fortunately, India can more than meet this demand, as the growth rate of our electronic equipment production sector is growing at a very fast pass.
The most basic types of electronic equipment’s can be classified as follows:
- Generation electronic equipment’s
- Equipment meant for transmission.
- Distribution electronic equipment.
Things like motors, generations, transformers, induction motors, invertors, turbines, switch gears etc covered under this major head. Apart from its functionality, there are various other factors which distinguish one equipment from another. Thanks to a million such factors, the number of electronic variants available In the market today is humongous.
The electronic industry of our country did face a set back some time ago, but it Is the thing of past, as we have gradually recovered from that state. Various electronic equipment’s thus produced are used as production equipment’s themselves, or these are just fillers for the bigger picture. In any case, it is important to note that the potential for success in this sector is still huge. Of course, any person wanting to set up an electronics startup will need a sizeable capital. Power generation In a country, as well as its distribution among the general public makes all the difference when it comes to measuring the success of electronic equipment’s in any country. As we are sailing the boat with a very high population, the need for electronic goods is also very high.
The years between 2007 and 2012 had been wonderful and a true delight for the people who produced power equipment’s. As now, people are actually customizing their purchases, the electronic industry of India can go nowhere but uphill. Popular names such as the ABB, Havell’s India, Crompton Greaves, BHEL, BHEL Power Solutions, Kirloskar Electric, and Suzlon Energy are all a part of this segments. These are major players in this area.
Over the years, different governments have laid out different plans of action to save power and protect our limited fuels. The planned targets are usually not achieved, due to shortage of funds or poor strategies. If the peak seasons are taken advantage of, there is a very good chance that the electronic industry can actually double up in terms of revenue..
This field is going up by the second, and budding entrepreneurs will be fools not to jump on this wagon. Thanks to our constant dependence upon machines, electronics will always be in constant demand. Their sales will only increase and so will their production. A little innovation, some newer, more advanced ways of production and most importantly, finding a way to make sustainable electronic goods might just be the trick to succeeding in this industry.
The electrical energy sector in India has witnessed rapid progress over the years with increase in power generation capacity as well as expansion of transmission and distribution lines. The installed power generation capacity increased from 16,600 MW in 1974 to 223,000 MW in 2013. Thermal sources such as coal, lignite, gas and diesel accounted for about 68% of the total power generation in India in 2013. The per capita consumption of power in India has increased from 126 KWh in 1974 to 917 KWh in 2013 witnessing an annual growth of 5.2% during the period. Despite these developments, the country has been facing power shortages in some parts of the country.
The electrical equipment industry in India plays a key role in the Indian economy, providing direct employment to more than half a million persons and indirect employment to over a million. In the recent years, the electrical equipment sector has witnessed sluggish growth owing to the decline in domestic demand and increase in imported products.
Electrical equipment is broadly classified as generation equipment, transmission & distribution (T&D) equipment and other allied equipment. Electrical equipment market in India was valued at INR 1,300 billion in 2012-13. Transmission & distribution equipment accounted for about 53%.
Indian Electrical Machinery Industry Analysis
By 2022, the installed power capacity in India is expected to reach 350 gigawatts (GW) from 243 GW in 2014, on the back of increasing industrialisation and economic development. The total market size of electrical machinery in India is anticipated to reach US$ 100 billion by 2022 from US$ 24 billion in 2013.
The electrical machinery sector consists of generation, transmission and distribution machinery. The transmission and distribution market expanded at a compound annual growth rate (CAGR) of 6.7 per cent over FY07-13. Boilers (16 per cent), cables (15 per cent) and transmission lines and conductors (12 per cent) account for a large chunk of the revenue. The generation equipment market is expected to expand at a CAGR of 12.7 per cent over FY12–22.
The exports of electrical machinery rose to US$ 3.9 billion in FY14 from US$ 3.4 billion in FY12. Boilers & parts and electrical wires and cables were the primary drivers of the increase in exports
The Government of India has been de-licensed the electrical machinery industry and has allowed 100 per cent foreign direct investment (FDI) in the sector. It plans to set up the Electrical Equipment Skill Development Council (EESDC) which would focus on identifying critical manufacturing skills required for the electrical machinery industry.
Global Power & Electrical Equipment Industry
The demand for electricity worldwide is projected to grow at an annual rate of 2.4% for the period 2009–2035, driven by economic and population growth. Over 80% of the growth between 2009 and 2035 is expected to be in non-OECD countries.
New Capacity and Investment in Power Infrastructure
- The world’s installed power generation capacity is projected to rise from 4,957 GW in 2009 to about 9100 GW in 2035. The total gross capacity addition is expected to
amount to 4,100 GW over the period, with 48% of this addition planned for installation by 2020.
- The cumulative investment during 2009–2035 is expected to amount to US$ 16.9 trillion, with US$ 9.8 trillion needed in generation and US$ 7.1 trillion in T&D.
- The share of coal in total electricity generation is expected to decrease from 41% in 2009 to 33% in 2035. Non-hydro renewable energy sources – biomass, wind, solar, geothermal, wave and tidal energy – are expected to continue gaining share of the market, accounting for almost 15% of generation in 2035, up from 2% in 2009. The share of nuclear power (14% in 2009) is not expected to increase by 2035W.
Global Electrical Equipment Industry
- The global EE industry consists of the following two segments:
a. The global heavy electrical equipment market, including boilers, turbines, generators, wind turbines, solar power systems, etc.,
b. The global T&D equipment market, including electric power cables, transformers, electrical switchgear, transmission line towers, conductors, control equipment, meters, etc.
- The global EE market is expected to increase from a cumulative size of more than US$ 3 trillion (2008-15) to US$ 6.8 trillion (2016-30). This translates into around 2% CAGR over the long term.
- Asia-Pacific and Europe together account for more than 70% of the global market, with the Asia-Pacific region’s share being 45%. This region is expected to see the strongest demand in future due to the region’s strong expected economic growth rates.
- In spite of less-than-impressive growth rates in recent years in the electrical equipment market, there is substantial scope for expansion in certain areas, such as the emerging markets in the Asia-Pacific and Africa region. Robust economic growth in emerging countries such as China and India, combined with rapid urbanization and strong growth in investment in these countries, is expected to boost the demand for electrical equipment in these countries in the future.
- In developed countries, and also in several developing countries, rising ecological concerns and investment in alternative sources of power generation should benefit equipment segments such as wind turbines, solar power systems, etc.
Global Trade in Electrical Equipment
- Global trade in EE products accounts for 3% of the overall trade. While global trade has grown at 18% since 2010, trade in EE has grown by 9% over the same period; thus despite an increase in EE trade, its share in the global trade has not increased.
- Global trade in EE reached US$ 540 billion in 2011, with China being the leading exporter with over 16% share. India accounts for less than 1% of the total share of exports.
- The US and China are the largest import markets in the world for EE. India imports more than 2% of total EE trade of the world. India has a trade deficit in EE trade, with imports higher than exports, consistently for the last many years.
- Switchgears and rotating machines together cover around 34% of the trade market. China is the leading exporter in rotating machines as well as transformers with more than 16% share, while India has less than 2% share in global trade of these products. The US is the largest importer of rotating machines as well as transformers.
- China dominates trade in most of these product segments. Segments such as rotating machines, transformers are dominated by China with a double digit share in global trade. Countries like Japan, the US and Germany dominate trade in a few segments like lamps, cables, switchgears, insulators, capacitors, etc.
Indian Electrical Equipment Industry
India’s electrical equipment industry is highly diverse and manufactures a wide range of high and low technology products. The industry directly employs around half million persons and provides indirect employment to another one million people. The industry can be broadly classified into two sectors – generation equipment and T&D equipment. For 2011-12, the industry size is estimated at ` 1.20 lakh crore (US$ 25 billion), of which generation equipment segment consisting of BTG contributed ` 31,000 crore (US$ 6.5 billion) while the major T&D equipment segment of transformers, cables, transmission lines, switchgears, capacitors, energy meters, etc., provided the larger share of ` 64,235 crore (US$ 13.4 billion). Other electrical equipment, including instrument transformers, surge arrestors, stamping and lamination, insulators, insulating material, industrial electronics, indicating instruments, winding wires, etc., contributed to `25,000 crore (US$ 5.2 billion).
Indian Electrical Equipment Industry Mission Plan 2012-2022
To make India the country of choice for production of electrical equipment and reach an output of US$ 100 billion by balancing exports and imports
- The generation equipment segment is targeted to reach a size of ` 125,000 crore (US$ 25 billion) and the T&D equipment segment is targeted to reach a size of ` 375,000 crore (US$ 75 billion) by 2022. The electrical equipment industry, comprising these two segments, is targeted to reach a size of ` 500,000 crore (US$ 100 billion) by 2022.
- Indian exports in EE currently account for 0.8% of the global EE trade. EE imports into India are significant, with a total EE import of US$ 15.7 billion in 2011-12. Global trade in EE is expected to increase at around 2 %, similar to the equipment demand, which would make global EE trade reach US$ 575 billion in 2022.
- Import of EE into India has been significant in the last few years. With increasing domestic industry competitiveness and levelling of the playing field, the rate of growth of imports is likely to reduce to 7-8% in the long term. India needs to target a 4% share in global EE trade by 2022 to balance its exports and imports, which is estimated to reach US$ 23 billion in 2022.
- The Indian EE industry is projected to provide direct employment to 1.5 million people and indirect employment to 2 million in by 2022.
Exports to Emerging Markets
Top export destinations of Indian electrical equipment currently include Western countries (the US, the UK, Germany and the Netherlands), Gulf countries (UAE, Oman, etc.) and Singapore, Brazil, etc.
- Africa, a continent with 54 countries that are rich in natural resources but have several least developed nations, is the fastest growing region in the world. Africa is an emerging market and has continued to witness high growth rate in recent times. Indian electrical equipment manufacturers and EPC contractors can benefit by pushing exports to the African continent.China has a significant presence in these countries. The UK and Europe have been the biggest trading partners of these countries since the time these countries attained independence. India has very little presence in these countries presently
IEEMA commissioned a study of the African market for electrical equipment in 2010 and identified 10 high-opportunity countries – Algeria, Angola, Egypt, Ghana, Kenya, Morocco, Nigeria, Senegal, South Africa and Tunisia. As per this study, all of these countries have inadequate basic infrastructure such as roads, railways, power, connected transmission lines, substations and power distribution systems. Presently, Indian exports of electrical equipment to Africa are less than US$ 500 million.
In Algeria, Egypt, Ghana, Kenya, Morocco, Nigeria, etc., ambitious plans for addition of generation capacity are being taken up, which will generate tremendous scope for exports of BTG and T&D equipment.
As per EXIM Bank’s Study on South African Development Community (SADC), 2012, total trade of SADC countries has increased from US$95.8 billion in 2001 to US$339.1 billion in 2010. India’s total trade with SADC countries increased from US$2.4 billion in 2001-02 to US$20.4 billion in 2010-11. This study also indicates that there is great scope of export of electrical equipment to these countries.
- The Latin American countries also offer a significant potential for export of Indian electrical equipment. India’s total exports to these countries have increased from US$ 5.4 billion in 2007 to US$ 11.7 billion in 2011. However, Indian exports of electrical equipment to Latin America presently are less than US$ 0.5 billion and there is ample scope to increase export of electrical equipment.According to an EXIM Bank study on the LAC Region, 2011, US$200 billion is going to be spent by Brazil for Soccer World Cup 2014 and the Olympics 2016. Similarly, Colombia is expected to invest US$ 28 billion in the exploration and refinery and related production sector.
- The Central Asian countries are amongst the fastest growing economies in the world. The Central Asian economies are still in the process of economic and political transformation. These countries have made a significant progress in market reforms and business environment has improved considerably. This region is rich in oil and gas and holds strategic importance for India. Exports of Indian electrical equipment to Central Asia are presently very negligible and only one or two companies are active in these countries. There is good potential for exports of Indian electrical equipment and investment in the generation and transmission sectors in these countries.India is looking at Central Asia from the point of view of its annual global trade with Europe, CIS, Afghanistan and Pakistan, which by 2015 is expected to grow to US$ 500 to 600 billion. This region is of special interest to India because of its vast natural and energy resources and its proximity to India, though India’s private sector has been reluctant to go to this region so far. India is looking closely at Central Asia and the Government of India has announced “Connect Central Asia“ Policy in June 2012. In the absence of direct surface transport route, India is trying to improve connectivity in the North-South corridor and also other routes that can make use of Chabahar port in Iran and Zaranj-Delaram road in Afghanistan.
- Similarly, neighbouring countries like Bangladesh, Afghanistan, Pakistan, Sri Lanka as well, have good scope for exports. Iraq, which is at the stage of reconstruction, also has good scope for exports as well.
- Full report available at Indian Electrical Equipment Industry Mission Plan 2012-2022 Indian Electrical Equipment Industry Mission Plan 2012-2022 II [source]