“Electrical equipment sector envisages 3.5 million jobs by 2022” [June 2012]

June 20, 2012 4:47 am

In the electrical equipment sector, we envisage that by 2022, about 1.5 million persons will be directly employed and about 2 million will be indirectly employed- Ramesh Chandak, MD & CEO, KEC International
Infrastructure is one of the crucial drivers for achieving and sustaining high economic growth. The foremost challenge facing India’s rising aspiration levels to be a global economic powerhouse and improving the standards of living of its ordinary citizens is its huge infrastructure deficit. Nowhere else is this challenge more apparent than in the power sector today.
Power Sector needs urgent policy interventionsAn efficient power supply system is a key ingredient for economic growth and quality of life. According to Ramesh Chandak, MD & CEO, KEC International, “Assured availability of power at reasonable costs will not only act as a catalyst in the socio-economic development of the nation but also enhance the global competitiveness of the domestic industry leading to greater employment generation and higher levels of per capita income. Enhancing energy supply and access is, therefore, a key component of our national development strategy”.
Towards this end, the rapid development of a robust and healthy domestic electrical equipment industry in India, encompassing the complete value chain in power generation, transmission and distribution, is not only crucial for the economy but also of strategic importance to the nation.
The Electrical Equipment Industry Index (EEI) by IEEMA indicates that growth of the Indian electrical equipment manufacturing industry has decelerated to 6.6 per cent in 2011-12 as compared to 11.3 per cent and 13.7 per cent in 2009-10 and 2010-11 respectively. All three segments of the power sector – generation, transmission and distribution are facing several challenges which need to be addressed expeditiously. Sluggish growth in the power sector and the escalating imports of electrical equipment is significantly impacting the commercial viability of the domestic electrical equipment industry and will have severe long term consequences.
Growth in the capacitor, switchgear and transmission line sectors in 2011-12 turned negative, implying distinct slowdown in industrial capex activities and slowdown in off-take by users due to credit squeeze, high interest costs, etc. The cable industry is the only sector that showed a double digit growth of 25.7 per cent last fiscal.
Mr. Chandak observes “Absence of a level playing field for the domestic industry to compete with imported electrical equipment, especially from China, is a clear and present threat. Imports of electrical equipment have grown in the past five years at a CAGR of 28.28 per cent”.
“Urgent policy interventions are required by both the Central and the State Governments to keep a check on the deceleration in growth of the electrical equipment industry”, he adds.
Create enabling environment for innovations and greater R&D The domestic electrical equipment industry manufactures varied range of products including boilers, turbines, generators, transformers, cables, transmission towers and conductors, switchgear, insulators, capacitors, metres, etc. The industry is very heterogeneous, with a good mix of large private and public sector enterprises, multinational companies and small and medium companies, including major foreign players either directly or through technical collaborations with domestic manufacturers. The industry has a diversified, mature, established and strong manufacturing base, with robust supply chain, fully equipped to meet domestic demand and any capacity addition. Rugged performance design of domestically manufactured electrical equipment is equipped to meet the tough network demand and the tough operating conditions in India, including highly varying ambient temperatures and dust / pollution conditions.
The technology used in most cases is contemporary and latest state-of-the-art, but there is slow pace of absorption of new technology by domestic manufacturers of electrical equipment, and also user industries, and low investment in research & development (R&D). According to estimates, less than 1 per cent of the annual turnover of the industry is invested in R&D.
The prime customers / buyers of the electrical equipment industry are the utilities in generation, transmission and distribution of power. Presently, most of these utilities are either owned by the Central Government or different State Governments. Their buying practices do not encourage innovations and R&D.
Most of the State utilities:• Have non-uniform procurement policies and qualifying criteria for vendors for similar products• Outdated tendering procedures and contract awarding based on L1 bidder and negotiations• Lack of standardisation of product specifications, design parameters and ratings for T&D equipment across the country• They do not provide encouragement for field trials of innovative products / technologies.
Mr. Chandak comments,  “The main focus of the manufacturers of electrical equipment is on cutting costs and not on innovative technologies, on piecemeal short-term tactical measures rather than evolving any strategic action plan for their growth and development”.
He suggests, “An enabling environment for innovations and greater R&D needs to be created with the proactive involvement of all stakeholders, led and driven by the government and its agencies. Increase in productivity and automated processes, with best practices, in manufacturing need to be imbibed by the Indian industry”.

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