Electric equipment industry to witness double-digit growth with discom reforms: IEEMA

As the government goes forward with reforms for power distribution sector, the domestic electric and electronics manufacturers, such as Bajaj Electricals Limited, Bharat Heavy Electricals Ltd and Adani Power Limited, are expecting a turnaround in their fortunes as well.

Languishing under tepid demand and slow growth of the Indian power market for past five years, the industry witnessed negative growth in past two years.

“The demand that was envisaged back in 2004-05 is being realised now with the growth of the economy and the loopholes in the supply chain being fixed. Assuming a GDP growth rate of 7%, the equipment industry should grow by 15-20% soon,” said Babu Babel, president, Indian Electrical & Electronics Manufacturers’ Association (IEEMA).

 

IEEMA is the representative association in India with member organisations representing the whole value chain in power generation, transmission and distribution equipments.

During April to September period 2015, there was minimal growth for major divisions of equipment industry. Due to nil growth in demand, there was an overall decline in both import and export of electric equipments during same period. The current average growth rate for the equipment industry is around 8%.

“High efficiency and low maintenance materials are the need of time. As and when the discoms turnaround, there is a huge opportunity for the equipment makers,” said Babel.

The size of the Indian electric equipment industry is $23 billion, out of which $5.9 billion is exports. The Indian market comprises of close of 15% of imports, mostly from China.

According to IEEMA's database, during the last eight years, 2005-06 to 2013-14, India's import of electrical equipment has increased at a compound annual growth rate (CAGR) of 19.73% in rupee terms and was at Rs 58,354 crore in 2013-14. Of this, imports from China touched Rs 22,680 crore in 2013-14, growing at a CAGR of 34.57% in the last eight years.

IEEMA forecasts the business for sub-stations, transmission lines, conductors, insulators and transformers etc to grow. Owing to increase demand from state utilities, the growth of cables, transformers and switch gears has been in double digit.

“UP, especially eastern part, Bihar, Orissa, Telangana and North East – there is immediate and lot of business coming in for ‘engineering, procurement and construction’ companies,” said Sunil Mishra, director general, IEEMA.