The Indian electrical equipment
industry sustained a lower
growth in the second quarter of
FY12, according to statistics furnished
by apex body Indian Electrical
& Electronics Manufacturers'
Association (IEEMA). The industry
posted a growth of 4.1 per cent in Q2
(July to September), as against 13.8
per cent seen in the first quarter. With
the result, the growth in the first half
fell to 9 per cent.
Although the XII Plan period is
expected to see investment of $300
billion and an appreciation in exports,
the medium term outlook is quaint.
IEEMA is of the opinion that the
industry is facing a decline in enquires
and order finalizations with
purchasing bodies adopting a "wait
and watch" approach. Uncertainty in
the economic, financial and political
situation has made even core sector
industries like cement and steel adopt
a cautious stand.
In the midst of falling domestic
production of electrical equipment,
preliminary data on foreign trade is
suggestive of a 20 per cent growth in
imports, especially from China, South
Korea, Germany and other European
Union member countries. In this
backdrop, IEEMA has welcomed the
imposition of 14 per cent import duty
on main plant equipment for power
plants. This move is ostensibly to
countervail the rising cheap imports
from China. (See Box.)
Ramesh Chandak, President,
IEEMA, observed: "The adverse
domestic economic situation due to
high inflation, high interest costs,
credit squeeze et al is 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 Q1 of FY12."
MICRO REVIEW
In the transmission lines sector,
transmission line towers have clocked
a negative growth of 9.4 per cent
despite a moderate growth in export
orders. This indicates delays in
completion of orders due to various
difficulties faced by the industry.
INDUSTRY SIZE |
|
`crore |
% growth |
2007-08 |
45,370 |
16.6 |
2008-09 |
46,935 |
3.4 |
2009-10 |
51,730 |
10.2 |
2010-11 |
58,315 |
12.7 |
Power transformers have
maintained growth momentum,
growing by 14.8 per cent in H1 of
FY12, well supported by exports.
Order book position of power
transformers also looks healthy with
major order growth visible for
200MVA-plus category. However,
production of distribution
transformers segment has slipped to -
2.8 per cent in H1 of FY12 with
almost three times rise in imports;
mainly sourced from Hungary,
Germany and Croatia.
Switchgear and control gear
segment has witnessed a low growth
of 2.5 per cent in H1 of FY12. There
has been a good growth only in
miniature circuit breakers and
air circuit breakers, the IEEMA
study observed.
PERFORMANCE IN FY12 |
Segment |
Q1 |
H1 |
|
(Apr-Jun) |
(Apr-Sep) |
Rotating Machines |
9.3 |
5.7 |
Switchgear |
2.7 |
2.5 |
Cables |
59.5 |
29.0 |
Conductors |
-4.1 |
2.9 |
Transformers |
5.6 |
14.8 |
Capacitor (LT) |
20.4 |
27.0 |
Energy Meters |
17.3 |
10.5 |
Transmission Lines |
-9.1 |
-9.4 |
Overall |
13.8 |
9.0 |
Although, a huge growth of 96 per
cent in control cables, due to sustained
demand from IPPs and infrastructure
sectors, helped overall cable sector to
grow by 29 per cent, demand for
power cables has been stagnant in
physical terms despite a moderate 8
per cent growth in the HV cable
segment. Industry believes that the
tonnage usage of major raw materials
like copper, aluminum, etc. in overall
cable sector has been declining and has
affected top line of the sector.
The energy meter industry
maintained its growth momentum
by registering growth of 10.5 per cent
in H1 FY12; thanks to sustained
offtake of mainly poly phase 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.
In FY11, the size of the Indian
electrical equipment industry was
estimated at
58,315 crore, having
grown by 12.7 per cent from
51,730
crore in FY10.
IEEMA welcomes duty |
-Ramesh D. Chandak, President, IEEMA"Heavy Industries
Minister Praful
Patel recently said
that his ministry
supports the
recommendations
of the Maira
committee which
has suggested 14 per cent 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 per cent 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." |