• Heavy Industries Ministry backs 14% import duty proposed by Maira committee on imports of electrical equipment that are hurting Indian manufacturers
  • IEEMA welcomes import duty proposal – feels it will create level playing field for Indian manufacturers

New Delhi, 11th November 2011:Indian Electrical Equipment Industry has registered a moderate 9% growth in the first half (H1) of the current financial year, 2011-2012, according to data compiled by the Indian Electrical and Electronics Manufacturers’ Association (IEEMA), the apex Indian industry association of manufacturers of electrical, industrial electronics and allied equipment.

Sequentially, second quarter (Q2) FY’12 growth has decelerated to 4.14% from 13.82% clocked in the first quarter (Q1) of FY’12.

On the contrary, current export-import trends based on select major ports trade data indicates alarming growth of almost 20% in imports; especially from China, South Korea, Germanyand other EU countries.

The growth represents an absolute increase in output over similar period of last financial year and may differ from the growth in value terms according to IEEMA. IEEMA has based these growth figures, after rigorous analysis, on the production and sales data (in volume / quantity terms) collected from its member organizations, which represent 95% of the entire sector.

Mr. Ramesh Chandak, President IEEMA and Managing Director, KEC International said: “The adverse domestic economic situation due to high inflation, high interest costs, credit squeeze et alis having a significant impact on the growth of the industry; apart from intense overseas competition. All product sectors have shown decline in their growth momentum from first quarter (Q1) of FY’12.”

He added: “Heavy Industries Minister Praful Patel recently said that his Ministry supports the recommendations of the Maira committee which has suggested 14% import duty on power generation equipment to strike a balance between protecting local manufacturers and the need to import equipment to boost power production. We all know that Chinese imports are relatively cheaper because equipment makers from China benefit from low interest rates and an undervalued currency, which in itself lends to cheaper exports. If this (14% import duty) is levied, it will create a level playing field for Indian manufacturers to compete with imports. India now has adequate domestic capacity to fulfill the anticipated annual demand for power generation capacity augmentation, which was not the case earlier.”

Product Sector Review

In the Transmission Lines sector, Transmission Line Towers have clocked a negative growth of 9.4% despite a moderate growth in export orders. This indicates delays in completion of orders due to various difficulties faced by the industry. Conductors have seen revival and witnessed a growth of 2.9% in H1 FY’12 despite a negative growth of 4.1% witnessed in Q1 FY’12. The growth in ACSR Conductors indicates momentum in the power distribution segment.

In the Transformer sector, Power Transformers have maintained growth momentum by having a growth of 14.8% in H1 FY’12, well supported by exports. Order book position of Power Transformers also looks healthy with major order growth visible for ‘above 200 MVA’ category. However, growth of Distribution Transformers segment has slipped to (-) 2.8% in H1 FY’12 with almost three times rise in imports; mainly sourced from Hungary, Germany and Croatia.

Switchgear and Controlgear segment has witnessed a low growth of 2.5% in H1 FY’12. There has been a good growth only in Miniature Circuit Breakers (MCBs) and Air Circuit Breakers (ACBs) in the low voltage segment. While, there is stagnancy in growth in the medium voltage segment, high and extra high voltage segment has witnessed a surge in demand of about 20% due to increased supply to power transmission projects. Imports of high voltage Switchgear products like fuses, breakers, isolators, surge arresters, etc. have seen a jump of more than 50% in value terms during H1 FY’12.

Although, a huge growth of 96% in Control Cables, due to sustained demand from IPPs and infrastructure sectors, have helped overall Cable sector to grow by 29%; demand for Power Cables has been stagnant in terms of KM despitea moderate 8% growth in the HV Cable segment. Industry believes that the tonnage usage of major raw materials like Copper, Aluminium, etc. in overall Cable sector has been declining and has affected top line of the sector.

Growth momentum of 27% continues for LT Capacitors segment due to increased focus on power quality and energy efficiency by utilities, discoms and some user industries. However, HT Capacitors demand has decelerated to (-) 13% in H1 FY’12 due to delays in order finalizations by major PSUs and State utilities.

Energy Meter industry bucked the trend and maintained its growth momentum by registering growth of 10.5% in H1 FY’12; thanks to sustained off-take of mainly polyphase meters by utilities under R-APDRP programme. The thrust of metering at every feeder and distribution transformer level for monitoring of power consumption is visible.

Rotating Machines sector represents final consumption and usage of power. Overall growth of 5.7% is attributed due to high growth of 23% in HT Motors and moderate growth of 12% in LT Motors; both indicating continuous momentum in power and core sector industries. However, AC Generators continue to show declining trend of more than 20% mainly for ‘above 15 KVA range’.

The 11thPlan period is on the verge of completion and the 12thPlan (April 2012 to March 2017) throws huge opportunities for growth with envisaged investment of USD 300 billion, coupled with exports growth. However, in the medium term; industry is witnessing a decline in enquiries and order finalizations. It has reported a ‘wait and watch’ stand adopted by purchasing bodies including core sectors like cement, steel, etc. due to uncertainty in economic, financial and political situationin the country.

Growth Indices for Electrical Equipment Industry

(Cumulative Growth Compared to Same Period of Previous Year)

Product Weightage H1 FY 2011-12 (% Growth)
Low Tension Motors 5.6 12.0
High Tension Motors 2.0 23.1
Alternators 1.9 -21.5
Fractional Horse Power Motors 1.3 -6.8
Rotating Machines 10.8 5.7
Power Contactors 1.9 -6.8
Low Tension Circuit Breakers 3.7 -2.3
Miniature Circuit Breakers 3.0 21.4
Switch Fuse/Fuse Switch Units 0.6 3.8
High Tension Circuit Breakers 6.0 0.3
Switchgears 15.2 2.5
Power Cables: PVC 16.8 -0.7
Control & Special Purpose Cables 7.6 96.2
Cables 24.4 29.0
Power Transformers 10.6 14.8
Distribution Transformers 14.7 -2.8
Transformers 25.3 4.5
High Tension Capacitors 0.3 -13.4
Low Tension Capacitors 0.5 27.4
Capacitor Industry 0.8 13.8
Energy Meters 3.1 10.5
Energy Meters 3.1 10.5
Transmission Line Towers 12.8 -9.4
Conductors 7.6 2.9
Transmission Lines 20.4 -3.7
Overall IEEMA Growth Index 100.0 9.0