While currently downbeat, the industry is positive of a manufacturing and technology backed revival soon.
The Indian pump industry is growing at an annual CAGR of ~10 per cent - which is higher than the international CAGR average of ~6 per cent - due to the surge in infrastructure development, growth in agriculture and other water intensive industries. It offers among the highest net value additions in the engineering industry - of over 20 per cent. Moreover, the domestic market for Indian pumps is growing at a healthy rate of 16-18 per cent per annum.
Of this, the agriculture and building services comprise 46 per cent of the market by value (Rs.3,910 crore). This segment of the Indian pump market is highly fragmented as well as competitive - with a large number of small and medium enterprises (SMEs) competing to increase their market share.
While, the industrial sector comprises the remaining 54 per cent of the market by value (Rs.4,590 crore). This segment of the India pump market consists of sectors like Water and Sewage Treatment, Power Generation, Oil and Gas, Metals and Mining and Others. Being technologically intensive, it is a relatively hard sector for small and medium enterprises (SMEs) to penetrate.
India has been manufacturing pumps for nearly 80 years now and has in its own growth, contributed immensely to the economic growth of the country. The enterprise in the Indian pump industry merits appreciation for the achievements of prompt and competent indigenisation and the industry has over the years built up great potentials to meet challenges.
It has also worked with good foresight and resilience to adapt to emerging trends, be it the compliance with the requirements of the quality systems as per the ISO 9000 series of standards or the exposure to the global competition, prompted by the liberalisation of the economy.
It is estimated that the production of pumps in the country is presently of the order of `1,200 crore, contributed by some one million pumps per year, produced by some 500 odd manufacturers of large, medium and small scales.
With the implementation of the norms introduced by BEE, significant amount of standardisation has been brought in place. This has eliminated sub-standard products having lower efficiencies. ISI standardisation has been in existence in our country from 1984 and has definitely helped the pumps and pumping system markets.
Feels Sayaji Shinde, Vice President - Power Sector, KBL, 'It is indeed a good step for Indian companies eyeing expansion in the global market. Besides, it has led to transparency in procurement practices and reduced time required for evaluation and awarding of the contract, which has certainly helped the Indian companies to stand a fair chance against the global players.'
However, adoption took some time states Bharat B Patel, President, India Pump Manufacturers Association (IPMA), adding, 'While today consumers recognise standardisation and ask for ISI products, the change didn't happen overnight. I feel, it is going to be the same for energy efficiency (star rating) in products and I am hopeful that the change will happen in the near future..'
Market Trends & Challenges
Rapid growth of the Indian chemical market has stimulated the demand for high quality industrial pumps. The growing demand for lower cost of operation and zero downtime pumps gives India a competitive advantage to offset the labour cost advantage offered by low-cost/low-quality manufacturers in some Asian countries. Observes Shinde, 'The Indian pumps industry has grown steadily and witnessed growth of 10 to 15 per cent, in the past two years,'
However, on the whole, high expectations and ground realities have been on a crossroads. This is because activities in core sectors that would propel the economy i.e. power, oil and gas, are still at low ebb. Barring some projects materialising in each of these segments; nothing dramatic has excited the capital goods industry at large. 'This has led to poor liquidity and capex expansion/implementing of new projects has been lacklustre in general in the industry,' feels Yagnesh Buch, DGM-Marketing, KSB Pumps Limited.
In the agriculture sector, poor/unseasonal monsoon has had a telling effect on its fortunes. Loss of crops leading to poor financial resources of farmers saw this market for pumps plummeting. In fact, most of the manufacturers addressing this segment reported a loss of 20-25 per cent business in the same period over the previous year. Adds Patel, 'The industry is in a bad shape at present. The demand for agriculture pumps has fallen by about 30 per cent this year. We expect some recovery in demand next year, if rainfall across the country is normal and happens in season. .'
In infrastructure and building services, the supply continues to be more than the demand, mainly due to resource crunch. However, the stage is being set for an economic growth and opportunities for growth are ample.
The other major challenges include the unorganised sector and the competitive landscape. Buch feels that till such time power is not metered and charged to the farmers/or the power is metered and free power is only offered to the extent of the load sanctioned; unorganised players will still be a strong deterrent to the progress of our industry.
Today, the organised sector corners only 30 to 35 per cent of market share of these segments. Additionally, the pumps market in India is characterised by the presence of several international vendors, large regional vendors, and small and mid-sized regional vendors. The market appears to be highly competitive.
An estimated 70 per cent of India's $15 trillion GDP projected for 2030 will have to be supported by urban infrastructure and its associated sectors - and will require massive doses of investment in urban infrastructure.
Besides, GoI is actively encouraging technology development and transfer to enable the small scale sector (i.e. small pump manufacturers) to enter high-tech areas such as aerospace and defence. Additionally, Indian companies are increasingly looking for international partnerships via technology collaborations to enter foreign markets.
Many small scale pump manufacturers have created price sensitive offerings as viable alternatives to costly pumps manufactured by large pump manufacturers. The Indian chemical market- growing at a rapid pace - is fuelling the demand for industrial pumps. Government regulations and energy crisis are motivating water pump manufacturers to develop energy efficient products.
GoI has also introduced several policies to promote agricultural growth in the country. These policies range from subsidised electricity to exemptions on use of solar water pumps. The announcement of such policies has inspired farmers to install independent irrigation facilities to ensure consistent availability of water. Consequently, this is pushing the demand for water pumps in India.
Prominence of renewable energy is certainly expected to increase further in the near future. This also includes solar energy. Obviously, the solar pumps market is bound to have a major impact on the segment.
In fact, the market has witnessed a continuous growth trend and is expected to provide the required boost to the segment in a big way in years to come,' feels Shinde.
Technology adaptation has been high in India. Indigenous supplies by MNCs and local players in India cater to 90 per cent of the pumps and valves requirement of Indian customers. As India is evolving fast, newer technologies are bound to find way into the country.
'We have contemporary technologies and products and remote monitoring of pumping systems is one such example. We expect more and more evolutions to take place - more efficient; integrated and automated solutions to be used in the Indian industry,' shares Buch.
Electronics and computerisation have crept across the Indian pump industry, substantially. There are examples of noteworthy developments of computerised pump-selection softwares, marketing activities and also fully computerised pump test beds.
Shinde too feels that the segment has witnessed several developments, and points some of them out, 'Apart from the advent of high efficiency pumps and motors (IE2/IE3 motors), the other prominent developments in the segment include the introduction of brushless DC motors for solar pumping system and development of conditioning monitoring and remote monitoring devices on the pumping systems. Interestingly, in some states (such as Jharkhand), this is now being specified in the tender specification.'
Manufacturing technology too has seen a jump. Here, it is noteworthy that the submersible pumps for small-bore tube wells, like 100 mm familiarised the Indian pump industry with the mass-production technologies, adopting also moulded impel1ers in engineering plastics like the modified PPO. Efforts had also been made to make the impellers and diffusers for submersible pumps employing pressed sheet metal fabrication.
Development of winding wires with polyester based poly-propylene insulation can be credited to be a wholly indigenous endeavour. This has improved the reliability of the submersible motor, also economising the design of the motor, by virtue of the reduced insulation thickness.
Currently, the US and Germany are the revenue contributors to the market. Factors such as the rising demand for oil and the increased investments in water and waste water treatment activities will have a huge impact on pump exports in India, which will drive the demand for the market during the predicted period.
The pumps market in India will witness the emergence of intelligent pump systems and micro disc pump technology in the next few years. Intelligent pump systems can control and regulate the flow or pressure of the fluid, can adjust to process changes, and also have a fault tolerant design, which will induce several manufacturers to adopt these pumps as they reduce the total cost of ownership without compromising performance parameters.
Also, the micro disc pump technology will help manufacturers develop small-size and energy-efficient disc pumps that can be used in medical applications such as wound therapy and blood pressure measurement.
- JOCELYN FERNANDES
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