The Indian electrical equipment
industry, comprising of
multinationals, large, medium &
small players, is robust and capable of
producing, supplying and exporting a
varied range of electrical equipment
including switchgear and control gear
items needed for expanding industrial
and power sector in India. This
industry sector in fact manufactures
the entire voltage range from 240V to
800kV. Besides, 1,200kV equipment is
also under development. The
technology level is contemporary.
The present size of the switchgear
market (not including RMU, GIS &
domestic switches which amounts to
about Rs.3,000 crore) is estimated at
about Rs.9,000 crore and the industry
grew by 21 per cent in volume terms in
FY11. Overall exports decreased by 15
per cent, whereas imports increased
mainly for MV/HV switchgear by more
than 50 per cent. Weightage of
switchgear industry based on IEEMA
electrical industry Index is 15.2 per
cent. The population of IEEMA
members from switchgear industry is
around 140.
CHALLENGES &
OPPORTUNITIES
Currently, the MV & HV segments are
suffering from overcapacity due to lack
of orders. Inadequate demand could be
attributed to insufficient planning by
the users and delay in finalizing
tenders resulting in bunching of orders
which also creates supply-delivery
problems. Also L1 (Lowest Quoted
Price) procurement system in utilities,
which entails procuring products at
lowest price, creates a hurdle for
bringing in good quality material into
the system. Further, the insistence by
utilities on repeated type testing of
products, despite there being no
change in design, poses additional
delays and adds to unnecessary cost.
This is further impacted by inadequate
type-testing laboratories.
The switchgear and control gear
sector has slid into red with -1 per cent
growth during the first three quarters
of FY12. Except for MCBs, ELCBs and
ACBs all other products showed a
negative growth ranging from 3 per
cent to 10 per cent.
On quarter-on-quarter basis the
industry declined sharply to -6.6 per
cent in Q3FY12 from a constant growth
of 2.5 per cent registered in both Q1
and Q2FY12. MV switchgears have
reported a decline of more than 10 per
cent whereas HV and EHV switchgear
continue to be in demand.
Imports of high voltage switchgear
products also saw a jump of more than
50 per cent in value terms.
MARKET OPPORTUNITY
FOR LV/MV SWITCHGEAR
Utilities Segment: HV and EHV
demand mainly comes from the
utilities. The Government is focusing
on increasing the penetration of power
supply in villages and schemes like
APDRP and RGGVY are providing an
excellent opportunity for the LV and
MV switchgear market with about 10
per cent villages yet to be electrified.
Industrial Segment: India's
industrial sector accounts for about 30
to 35 per cent of GDP, with most of the
industrial divisions reporting growth
in output in the fiscal. Investment in
new infrastructural setup is set to
increase the market for intelligent
switchgears, RMUs, MCCBs, ACBs
and C&Rs. Another indicator of
sustainable growth is the increasing
gross assets of organisations
Commercial and Infrastructure:
Infrastructure sector is one of the most
important thrust sectors in the Eleventh
Five Year Plan of the GoI with an
estimated investment of $475 billion
over five years which has actually slipped; the demand figures were based on
an average growth of 7.6 percent of GDP
consequently, benefit for the RMUs, ISGs
ACBs and MCCBs market for switching,
control and general protection
applications did not materialise fully.
Residential Segment: In the residential
construction sector which has actually
slipped, the demand for MCBs, ELCBs
and MCCBs has clocked a growth about
12 per cent. However the revised NEC
(National Electrical Code) has created
some optimism for the segment.
Power Plant Modernization and
Refurbishment: As in other parts of the
world, numerous power plants in India are
nearing the end of their service plan, thus
requiring overhauling and modernization.
This includes replacement of existing
transformers, which are on average over
30 years old and the replacement of LV,
MV and HV switchgear. Power plant
modernization and refurbishment is
expected to additionally support growth
of the switchgear market.
Alternative Energy Sources: The
Electricity Act 2003 also stipulates
buying about 6 per cent of the total supply
power from renewable sources on a
mandatory basis, the concerned CERCs
fix applicable tariffs. The India
Government continues to financially
incentivize investment in renewable
energy sources such as wind, solarthermal
and hydroelectric power.
The renewable energy market has
grown from about 2,400 mw to 18,655
mw and this growth is likely to sustain at
current/higher levels for the next 4-5
years. The MCCB and MCB markets are
expected to benefit considerably from
alternative energy expansion.
NEW INDUSTRY TRENDS
The switchgear industry continues to
innovate and upgrade its products to meet
the evolving/future needs of its customers.
In recent years, the following
products/trends have been noticed.
LOW VOLTAGE
Increased acceptance of electronic
releases in circuit breakers;Embedded
Intelligence and communication enabled;
Improved materials for cost saving,
environmental reasons and ROHS;
Movement from motor starters to
submersible pump controllers; Soft
Starters; Increased use of modular device
in building electricals;Vacuum contactors
for higher ratings; More use of magnetic
actuators; Field for Life-Maintenance
free (IEC- M2 duty -10000
Operations);Shift from Electromagnetic
to Numerical relays; Shift from
Electrical sensors- CT/PT to electronic
sensors; Ring Main Units; Intelligent
switchgear;VCBs with higher ratings.
HV- EHV
Compact GIS; Compact AIS; Compact
switchgear; Controlled switching; Solid
State switchgear; Intelligent switchgear;
VCBs with higher ratings (50kA-4000A);
800-1200KV circuit breakers under
development; Substitute for SF6 gas;
Harmonisation of protocol IEC : 61850;
Package substation; Polymer of HV
equipment;Smart Grid.
WEAKNESSES
The switchgear industry is largely
dependent on the financially weak
electricity boards for its sales. Moreover,
the L1 procurement system in utilities,
which means procuring products at lowest
prices, creates a hurdle for bringing good
quality material in the system. Some other
weaknesses in the industry are:
- L1 procurement system in utilities i.e
procuring products at lowest price
creates a hurdle for bringing good
quality material in the system.
- Uncertainty and slow pace of reforms
and policy paralysis
- Increasing Competition from
unorganized sector and low cost and
bad quality imports
- Macroeconomic challenges which
constrain public & private funding
- Low investments in R&D & innovation
- Integration/Assimilation of new
technologies into development of new
products in the sector needs
improvement
THREATS
Major threats facing the switchgear
industry can be summarized as follows:
- Underutilization of installed capacity
- Lack of HV switchgear testing capacity
in the country
- Increasing competition from
unorganized sector in low end/low tech
items/imports in LV segment and
project imports.
- One sided contracts by the user
industries/price variation contracts not
accepted by many users
- Improper procurement planning/
bunching of orders
- Entry of unproven contractors/ subcontractors
with minimal technical
knowledge.
- Lack of standard specification and
design parameters clubbed with
increasing trend of customization is
adversely impacting the delivery
schedule as well as taking away benefits
of economies of scale.
- The new clause of consequential
damages which in short means an
organisation supplying equipment is
not only responsible for the supply but
also for the damages arising out of the
equipment.
OPPORTUNITIES
The biggest opportunity for the
switchgear industry comes from the
upcoming power generation capacity.
Power generation capacity is expected to
be augmented by around 1,50,000 mw
under the XI and XII Five Year Plan
periods. More than 60,000 mw is
currently under construction.
Centrally-sponsored nationwide
schemes like R-APDRP (Restructured
Accelerated Power Development &
Reforms Programme) and RGGVY (Rajiv
Gandhi Grameen Vidyutikaran Yojana)
are providing an excellent opportunity for
the LV and MV under the "Electricity for
All" initiative.
Expansion of key industry sector
(cement steel petrochemicals, telecom &
others) and expansion of other
infrastructure segments like telecom,
railways, airports, ports, roads, hospitals,
are also key opportunities for the
switchgear industry.
Other opportunity areas could include
replacement & retrofitting programmes,
and 800 HVDC, 1,200kV AC
transmission line development.
Moreover, after publishing of the
revised NEC by BIS, the nation-wide
awareness program to promote revised
NEC 2011 should enhance the use of
safety and protection devices like MCB,
RCB etc.
(The author is Chairman, Switchgear
& Controlgear Division, IEEMA)