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Trend | June 2013

Equipment industry reports a negative growth

The electrical equipment industry registers a negative growth of over 8 per cent, for the first time in 10 years, mainly due to falling demand and higher imports, says IEEMA.

Domestic electrical equipment players are severely hit by delays in project execution and higher imports. In addition to this the Indian manufacturers are facing unprecedented credit squeeze and repayments, according to Indian Electrical and Electronics Manufacturers' Association (IEEMA). In a latest report released by the association, it stated that transformer makers have registered a negative growth of 26 per cent in sales, while other equipment segments such as switchgears, transformers, power cables and capacitor has recorded 3-26 per cent drop in sales on year on year basis.

IEEMA, which is the apex association of manufacturers of electrical, industrial electronics and allied equipment, said the industry had clocked a growth of 6.6 per cent in FY2011-12 and was facing massive project execution delays, mostly by the state-run transmission and distribution companies and an unprecedented credit squeeze due to economic slowdown.

The worst hit were the transformers which registered a negative growth of 26 per cent in FY 2012-13 compared to a growth of 25 per cent in FY 2011-12 and capacitators makers, where the negative growth widened to a massive 24 per cent. All, except the transmission sector, decelerated in the last fiscal year.

'An efficient power supply system is a key ingredient for economic growth and quality of life. The electrical equipment manufacturing industry requires the focused attention of the government to protect our interests by providing us a level playing field that would equip the industry to fight imports,' said J G Kulkarni, President ' IEEMA.

Slackening demand in the power sector, continuous rise in imports of electrical equipment, especially China and South Korea and an absence of a level playing field is threatening the existence of the Indian players. The imports of electrical equipment has grown to more than 20 per cent in the last fiscal, thus eating into the domestic manufacturer's pie.

The import-export data from 27 ports across the country indicate a sorry state of affairs given the significant rise in imports of 765 kV transformers (Power) and reactors, insulators, LV switchgears and HV cables. However, exports of electrical equipment, led by demand in Africa and some other countries, have also risen significantly; especially of AC generators, switchgears, transmission towers and energy meters.

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