• Root cause is financially weak electricity distribution sector in the country
  • Political will, need of the hour to break the vicious cycle
  • Reduction in losses, timely payment to Discoms can help bringing in reforms
  • Implementation of smart devices is the solution for long-term stability of distribution sector

The farmer, businessman and also the common man, will continue to face cost, quality and availability issues of electricity in the country. This vicious cycle is difficult to break unless a strong political will pushes reforms in the distribution sector, according to the Indian Electrical and Electronics Manufacturers’ Association (IEEMA).

“The inefficiencies in the power sector will continue to impact the common man and housewives due to challenges of cost, quality and availability of electricity. Unless the power network is upgraded significantly and made technically efficient, the financial position of power distribution companies cannot improve,” said Sunil Misra, Director General of IEEMA.

According to the industry body with more than 800 members, a strong political will is the need of the hour to change the vicious cycle to a virtuous cycle, wherein the State Electricity Distribution Utilities (commonly known as discoms) becomes financially viable.

“Once the discoms become financially strong, they can invest in upgrading technology and implement smart devices. This would not only improve quality and availability of electricity but also reduce cost to some extent,” explains Misra.

In addition, the bad health of discoms negatively impacts the growth of electrical equipment industry in the country.

The growth in the production of the Indian electrical equipment industry has fallen to 0.9% in the third quarter (Q3) of the current fiscal (October-December 2013-14), after a growth of 9.8% in the second quarter (Q2), according to production data released by IEEMA.

“The enormous delays in project execution and non-adherence to payment schedules, the cash flow position of electrical equipment manufacturers will remain grim and availability of bank credit to them will remain a huge challenge,” said Misra.

After a weak growth of 2.2% in the first quarter (Q1) of the current fiscal, mainly on account of growth in exports, Q2 had witnessed a growth of 9.8% in the production of the electrical equipment industry due to a welcome rise in domestic demand. But, with the 0.9% fall in Q3 on account of procurement delays and rising imports, the cumulative growth in the first nine months (April-December) has come down to 4.0% from 6.0% in the first half of 2013-14.

The Indian Electrical and Electronics Manufacturers’ Association (IEEMA) has based these growth figures, after rigorous analysis, on the production data (in volume / quantity terms) collected from its member organisations, which represent 95% of the over INR 1.30 lakh crore Indian electrical equipment industry.

Details on 9 Months Production

In the first nine months of the current fiscal, the cable industry has shown a growth in production of 9.6%, with high growth in power cables (up to 33 kV) due to exports. Capacitor industry has grown by 44.6% on account of high growth in LT-self healing capacitors mainly due to exports; with high growth in HT capacitors also but due to domestic orders with a decline in exports. The energy meter industry has witnessed a growth of 15%, with a 16% growth in single phase multifunctional meters on account of rise in domestic orders. The transformer industry has also shown a growth of 8.1%, with growth in exports of distribution transformers and growth in domestic orders in +440 kV rating range. The transmission towers industry has seen a growth of 19.0% due to growth in domestic orders.

On the other hand, the rotating machines industry has witnessed a negative growth of 5.2%, with decline in production of HT motors and AC generators by 22% and 8% respectively. Instrument transformers have seen a negative growth of 2.0%, insulators a negative growth of 12.0%, surge arresters a negative growth of 28.7%, and conductors a negative growth of 20.4%. The switchgear industry has seen a negative growth of 1.4%, with negative 1.7% growth in LV and negative growth of 0.9% in HV switchgear.

Growth Indices for Electrical Equipment Industry
Cumulative Growth Compared to same period of previous year
Product Weightage April – Dec 2013-14 (% Growth)
Rotating Machines 10.1 -5.2
Switchgear 15.9 -1.4
Cables 25.0 9.6
Transformers 17.0 8.1
Capacitors 0.7 44.6
Energy Meters 4.4 15.0
Transmission Lines 27.1 0.1
Overall IEEMA Electrical Equipment Growth Index 100 4.03