GE says it’s willing to invest in India if there is opportunity. Banmali Agrawala, president and chief executive officer of GE South Asia, tells Sanjay Jog that the government’s Make in India initiative has increased the company’s confidence in doing business here. Edited excerpts:
How is GE pursuing its plans under the Make In India campaign?
GE has supported the Make in India campaign since its inception. Our multi-modal manufacturing facility in Pune is an example of our confidence in India’s capabilities. We believe the Make in India initiative has played a significant role in moving the locomotive deals forward for Indian Railways, which had been pending for many years.
With the addition of Alstom’s power business to the GE portfolio, our India footprint has increased to 21 manufacturing facilities, thereby boosting our localisation efforts. The larger point is that we want to be in India and we’re willing to invest, if there is an opportunity. India has always been a high-potential market for us. Make in India has helped smoothen the road for companies like us and increase our confidence in doing business in India.
What steps have been taken by GE for local manufacturing in the country?
GE’s corporate strategy ensures that more production takes place closer to customers. After the multi-modal manufacturing facility in Pune, our next big project is the setting up of a state-of-the-art locomotive factory in Marhaura in Bihar, which is one of the most prestigious projects for GE Transportation globally and the largest for GE in India. From an innovation perspective, it helps bring the latest technology to Indian Railways. The locomotive designing is being undertaken by our Technology Centre in Bengaluru, thereby leveraging local innovation. For us, manufacturing and innovation have to go together in order for us to stay ahead of the curve. That’s the basis for our transformation to a digital industrial company.
GE plans to nearly double its sourcing of components and manufactured products from India to $4 billion by 2020. How is it progressing?
We are on track to achieve the sourcing target. Today, GE’s scale of sourcing and manufacturing from India is close to $2.3 bn annually, of which components accounted for approximately $1.4 billion. The company has already developed a base of nearly 5,000 suppliers, including 250-odd vendors of high strategic importance, which account for 80 per cent of the sourcing. Around 50 per cent of the products sourced in India are being used for GE’s global supply chain. We are currently building a nationwide supplier ecosystem for the diesel locomotive project for manufacturing and servicing capabilities. As a result, the benefits will be far reaching for India’s railway sector.
What is your take on the India’s power sector?
There is a growing realisation within the country and governments that electricity needs to be priced fairly if the ‘Power for All’ target has to be met. Gradually but surely, India’s power sector is turning a corner in terms of reliability, pricing, efficiency and sustainability. Approximately 13 per cent of the new power generation orders in the world are going to India. It is fairly diversified with more efficient coal-fired plants as well as adding significant renewable energy capacities. Going forward, what is important is leveraging the industrial internet using digital solutions that are based on data and analytics so as to improve efficiency of power assets.
Will Ujwal Discom Assurance Yojana (UDAY) be a game changer for the distribution sector?
The UDAY scheme certainly has a better chance of succeeding than previous financial restructuring plans. The results have begun to show. We’re optimistic there will be a turnaround in the sector since we do see very positive steps taken by state governments to curtail transmission and distribution losses. In addition, it’s crucial to have the political will to ensure user tariffs reflect the cost for generation and distribution of electricity.
Will the government succeed to meet its deadline for launch of GST from April 2016?
GST is a significant tax reform for any country of this size. India’s transition from a fragmented to a single market is going to simplify things for investors. The target for rollout is indeed steep, but we’re optimistic the government should be able to meet the deadline.
What opportunities and challenges do you see going ahead?
As economic growth gains momentum, the faster and bolder we are in addressing infrastructure shortcomings, the more positive is the impact on the economy.