The Indian power transmission and distribution (T&D) electrical equipment industry is seeing tough times. To achieve the envisaged annual gross domestic product growth rate of eight-nine per cent over two decades, India would have to increase its generation capacity to 800 Gw by 2032, and this would require matching upgradation and enhancement of the electricity T&D segment. In an interview with Sanjay Jog, Indian Electricals & Electronics Manufacturers’ Association (IEEMA) president, Ramesh Chandak, speaks about the challenges and the steps needed to help the industry. Edited excerpts:
What are the major concerns for the Indian T&D equipment industry?
About 90 per cent of the manufacturers in most sub-sectors of the domestic electrical equipment industry are micro, small and medium enterprises. Currently, it is estimated that the size of the domestic electrical equipment industry exceeds Rs 110,000 crore ($25 billion) and exports of electrical equipment stand at around Rs 18,000 crore ($4 billion). The industry provides direct employment to around 500,000 people and indirect employment to over 1000,000 people (5000,000 across the value chain).
The biggest challenge faced by the industry is lack of domestic availability of critical inputs and raw material and the looming skill gap and manpower crunch. There are several critical inputs used in the manufacture of electrical equipment that are not readily available domestically. Cold rolled grain-oriented (CRGO), a critical raw material for large generators/transformers, manufactured by 12 companies (no Indian manufacturer) in the world, is a prime example. The ambitious power development projects of the government require the setting up of a domestic CRGO manufacturing facility.
The electrical equipment industry is facing a major problem in securing skilled and employable manpower that is technically competent, equipped with skills and ready to be deployed. The problem requires concerted and collaborative action by three critical agencies — technical institutes, the industry and the government. The government needs to provide additional funds and facilities to modernise technical institutes, provide interest-free loans to technical institutes to upgrade their laboratories, involve the industry in the board of studies and incentivise the industry in providing internship to students and teachers.
Besides, there is a lack of standardisation of product specifications and design parameters, inadequate domestic testing and calibrating infrastructure. The government needs to take urgent steps for the upgradation of testing and calibrating infrastructure in the country, especially for high-voltage equipment.
How can the government provide relief to the industry?
The government needs to frame model procurement guidelines and practices for utilities. This is essential, since the prime customers/buyers of the electrical equipment industry are utilities in generation, transmission and distribution of power. Currently, most of these utilities are either owned by the central government or different state governments, and they do not have uniform procurement policies and qualifying criteria for vendors for similar products.
The government will have to limit participation in tenders for bidding for domestically-funded projects to domestic manufacturers only. As far as foreign bidding is concerned, it needs to put in place a local manufacturing clause to provide a level playing field. The government can stipulate a minimum percentage of the total procurement by any utility to be ‘made in India’ products. Further, there is a need for the quick implementation of the Goods and Services Tax. This would resolve most of the complicated tax issues, and the industry can focus its energy on productivity, research and development and business development. The domestic electrical equipment industry’s interests should be protected under different free trade agreements being signed. The absence of a level playing field for the domestic industry to compete with imported electrical equipment, especially from China, is a clear and present threat. This is significantly impacting the commercial viability of the industry and can have severe long-term consequences.
India’s share in global exports of electrical equipment is less than one per cent. Therefore, we need to incentivise exports of electrical equipment, as the electricity sector is a sunrise sector across the entire developing world.
