Dongfang initiates talks for Indian unit

Dongfang Electric Company (DEC), China’s largest power equipment manufacturer, has initiated talks with four Indian companies to set up a local production unit as the government is planning to make it mandatory for foreign equipment suppliers to have domestic manufacturing presence, said a top DEC executive said.

However, the names of the companies involved were not disclosed.

Dongfang Electric will compete in the domestic manufacturing sector that is dominated by government-run Bharat Heavy Electrical (BHEL), which, off late, has received a lot of criticism for delayed delivery of power equipment. DEC’s entry will also increase the war for skilled workers.

“The mandatory domestic manufacturing policy of your government has only led us to speed up our plans,” said Wen Ya, Dongfang’s chief representative in India. The company is talking with four potential domestic partners and a decision would be taken shortly, he added.

To maintain GDP growth of 8-10 per cent, India needs to increase its power generation capacity by more than six times to 800 GW by 2032, as against the current level of 132 gw, according to Citigroup Investment Research. Thus, BHEL and private companies like Larsen & Toubro are investing their resources to cater to this growing capital intensive sector.

Ya said it would take a minimum of three to four years after setting-up the production unit to start selling locally-made finished products. The Chinese company would look at making a wide range of capacities, including more than 500 mw.

The company already has orders in excess of 15,000 mw in the last three years. In addition, it has also supplied to West Bengal Power Development Corporation’s projects in Sagardighi (600 mw) and Durgapur (300 mw).

The Chinese company, which has set up a target of adding 3,000 mw, has been working on several projects here.

Recently, union minister of state for power Jairam Ramesh stated that the equipment supplied by Chinese manufacturers have failed resulting to lower than optimal power generation, thus justifying the need for a technical audit of Chinese-made machinery by the Central Electricity Authority (CEA).