Indian power sector is not only growing, but also undergoing a significant change that has redefined the industry outlook. The electrical and industrial electronics industry has witnessed a record double-digit growth of 12.8 per cent in 2017-18 after a period of seven years.
The industry started showing signs of revival from Quarter 3 when it witnessed a growth of 25% and later 14% in the fourth quarter. The astonishing growth of 12.8% is propelled by growth in segments like rotating machines by 12%, HT Motors 18%, cables 20% and Meters 28%. Growth is also seen in transmission mission line towers due to increase in demand in the domestic market. The Installed Generation Capacity as on 31st March 2018 is 3,44,002 MW. Almost all sectors are in green after 2 years of dull period; mainly due to domestic demand. The high growth in Q3 & Q4 is also due to stabilized GST.
This stupendous performance is attributed to Government’s schemes like DDUJGY, IPDS and Saubhagya where the country is racing to provide electricity to all households. The government unveiled Rs 16,320 crore Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya) in September 2017 to provide electricity connection to around 4 crore families in rural and urban areas, by December 2018.
IEEMA recently joined hands with government for this cause, IEEMA along with REC has created a North East Cell to give impetus to this growth by emphasizing on distribution in North East. This cell will facilitate to remove any bottleneck in implementation of projects in the North Eastern States of India.
We believe that this growth momentum will be sustained since major chunk of transmission and distribution projects are likely to be ordered in next fiscal. However, most of the orders would be through EPC route with more new players entering the business and sub-contracting the same to existing contractors. The sector seem to be reviving from long spell of negative growth.
The Government of India is also taking a number of steps and initiatives like 10-year tax exemption for solar energy projects, etc., in order to achieve India’s ambitious renewable energy targets of adding 175 GW of renewable energy, including addition of 100 GW of solar power, by the year 2022. The government has also sought to restart the stalled hydro power projects and increase the wind energy production target to 60 GW by 2022 from the current 20 GW.
With this, it is inevitable that need for electrical equipment shall increase substantially in coming years. How much of the demand would be available to Indian Industry depends upon various factors- some in control of the industry and some not in control of the industry like reforms in domestic (taxes, processes and procedures) and international policies.