- Growth in production a result of increase in exports, growth in domestic orders still negative
- Negative growth continues for rotating machines, switchgear, transformers
- Transmission line towers, cables, meters and capacitors show positive growth
- Domestic manufacturers continue to be severely hit by delays in project execution
India’s INR 1.30 lakh crores electrical equipment industry has, after four consecutive quarters of negative growth, shown a 2% growth in the first quarter of the current fiscal (April-June, 2013-14), according to production data released today by the Indian Electrical and Electronics Manufacturers’ Association (IEEMA).
The miniscule growth of 2% is attributed largely to increase in exports of electrical equipment from India in the first quarter of the current fiscal (Q1 FY’14), despite the growth in domestic orders continuing to be negative as compared to the corresponding period of 2012-13 (Q1 FY’13). The sluggish growth in the country’s power sector and delays in project execution, and the precarious financial situation of the State power distribution companies continues to severely hit the domestic electrical equipment manufacturers.
The industry has been staying somewhat afloat on account of ongoing transmission and sub-station projects, power generating stations especially of renewable energy like wind, and R-APDRP projects. Despite this, the top and bottomlines of most manufacturers are under pressure and showing continued declining trends.
Over and above this, electrical equipment industry continues to face very severe credit availability, enormous delays and non-adherence of payment terms by customers, mainly power utilities, resulting in unmanageable cash flow problems across the sector.
Further, the depreciating rupee has made critical imported raw material and inputs for electric equipment more costly, but given the continued threat from imports of electrical equipment in the Indian market, domestic manufacturers are being forced to absorb this additional cost to remain competitive.
While the rotating machines and transformers sectors have seen a negative growth in production of 4.5% in Q1, the switchgear sector has witnessed a negative growth of 6.7% in its production. Capacitors and energy meters have seen a robust growth of 20.8% and 14.6% in Q1 FY’14, followed by 8.6% and 4.9% growth by the transmission lines and cables sectors respectively.
Although, overall imports have shown some decline during Q1 FY’14 as compared to Q1 FY’13, imports of power transformers, insulators (mainly through power project imports route) and AC motors and generators have continued to increase and are capturing a larger and larger share of the domestic market for these products even as domestic demand remains depressed.
Exports growth is visible in developed countries like USA, Germany, UK, Australia and Canada, apart from UAE, Saudi Arab, Nigeria and Kenya. This clearly shows the increasing greater acceptability of ‘Made in India’ products with desired quality and competitive cost in both developed and developing countries.
|Growth Indices for Electrical Equipment Industry|
|Cumulative Growth Compared to same period of previous year|
|Product||Weightage||April – June 2013-14 (% Growth)|
|Overall IEEMA Electrical Equipment Growth Index||100||2.03|