It is expected that the electrolytic and ceramic capacitors will capture major market share in India´s electrical capacitor market during 2014-19.
A capacitor is a key passive electrical component used to store energy in electrical and electronic equipment or devices. In India, the demand for electrical capacitors is expected to increase primarily due to rising demand for consumer durables, IT hardware coupled with use of electrical circuitry in diverse applications. Various types of capacitors that are available in the market include electrolytic, ceramic, film, solid double layer, carbon, dielectric and paper and plastic. Despite significant demand for capacitors, India lags behind in capacitor manufacturing due to lack of manufacturing base for the same. Although India majorly relies on imports of numerous electronics products, equipment and components from other countries, primarily China, Japan and Taiwan, the country´s Electronic System Design & Manufacturing (ESDM) market has witnessed a significant transformation over the past few years. In addition, the government´s support of allowing 100 per cent Foreign Direct Investment (FDI) in the electronics hardware manufacturing sector has provided an automatic route for increasing electronic component manufacturing, including electrical capacitors in the country.
The importance of use of power capacitors in the power industry is growing with increasing focus on energy efficiency in India. Power capacitors help to improve the overall power factor (PF) of the system and as such they form a very important part of energy efficient systems.
The new government is readily helping the sector through increased initiatives. Diverse focus on reactive power solutions with strict norms for harmonics through imposition of new reforms initiated by government will not only help in reducing T&D losses and realising generation capacity but will also boost demand of capacitors and power quality solutions.
Low Tension (LT) capacitors form a greater chunk of the market than High Tension (HT) capacitors because of the way overall growth is happening in industrial sectors in India. Utilities, infrastructure, green power (wind energy), and automotive and medical equipment increase scope of growth for this industry.
Mirroring challenges faced by the power sector, the capacitor industry has registered a fall in its revenue in FY13, when the cash flow position of manufacturers was under tremendous pressure. Interruptions in project execution and order finalisation due to precarious financial health of State distribution utilities, coupled with uncertainty and credit crunch, and high borrowing costs for private sector buyers have led to this grim situation. Says Saurabh Kumar, Manager, Product Head - Pan India, Power Capacitor Division, Havells India Ltd, ´The industry has witnessed negative growth across the capacitor market, registering 25.7 per cent in Q3 compared to 16.8 per cent and 37.3 per cent all in sequential quarter Q2 FY13. Exports growth of more than 40 per cent in terms of value has come to the rescue.´
Competition from China
At the moment, India is not all racing to learn Mandarin yet, but most, if not all, working-age adults in the Western world and many developing nations, know enough to keep an eye on news about and from China. For executives in all industry segments, China is the elephant in the room! It must be factored into any decisions about the future of their enterprise.
If any segment of the global economy can afford to ignore China´s gargantuan role, it´s not electrical. Over the last two decades, the industry has steadily and tightly yoked itself to the Asian nation. In the last five years alone, China has set numerous records in high-tech market share. It has become the world´s biggest consumer of semiconductor products and a wide range of power equipment including capacitors. By the way, it is just getting warmed up. As its middle class expands over the next decade- barring any geopolitical disruptions-China will overtake the Western world and become the leading market for electrical equipments and a range of other goods.
Role of capacitors
Motors work because of a linkage between the sinusoidal magnetic flux in the stator with the flux induced in the rotor. Synchronous machines use DC voltage to excite a fixed magnetic flux that locks in with the varying stator flux and applies a torque to the machine shaft. Induction motors have no exciter on their rotors; they have conducting bars arranged like a "squirrel cage" that circulate current induced by the stator flux that also establishes a flux for the rotor and a torque on the shaft. Induction machines by their nature have "lagging" power factors. All but the largest motors are induction machines. All the motors in home appliances, like washing machines, refrigerators, dishwashers, etc, are induction motors. Single-phase induction motors cannot start up by themselves; they need two stator fluxes with a phase angle between them (the angle between phases on a three-phase system is 120 degrees). The capacitor is tied in series with a second starter winding.
The capacitor shifts the phase angle in that winding enough to provide the torque to get the motor rolling, and is often opened after started. So this capacitor is not used for power factor correction. Thus the domestic appliance motors do contribute to fall in power factor. But since the households are charged on the basis of KWHr (and not KVAHr), improvement of power factor by installation shunt capacitors will not help in saving of electricity bills. At the most some single phase capacitor can be installed at the main circuit to improve voltage regulation.
Almost all the electricity authorities have now made it compulsory to install LT power capacitors in the case of all industrial loads. This implies that for every induction motor, LT power capacitor is a must. Due to massive rural electrification and use of electric pumps in irrigation and industrial purposes the motor load is increasing day by day and so is the demand for power capacitors.
Says Abraham Varughese, General Manager- Power Quality Marketing, Schneider Electric India, ´The capacitor industry depends on three factors for growth: Accelerated Power Development and Reforms Programme (APDRP) projects which have high demand for capacitors, core industry growth and the replacement market.´ He further adds: ´The growth also depends on the initiatives by the government as the government projects meant for infrastructure development need more number of capacitors and bigger voltage capacitors.´
India has capability to make sophisticated capacitors. The Department of Heavy Industry has decided to develop a 10-year Mission Plan (2012-22) for the Indian electrical equipment industry. The Mission Plan will have recommended interventions aimed at enhancing the technical strengths of the industry. Its objective is to develop a strategic plan of action, with full participation of the stakeholders, to remove obstacles in the growth path of the industry. Given this scenario, many capacitor manufacturers will come forward to invest in growth of specialised capacitors to decrease dependence on import of certain types of capacitors.
Competition is on the rise as capacitor manufacturers cut prices to retain market share. Although the market is growing, so are the challenges. Companies that want to survive in the marketplace must begin to employ new competitive strategies to stay ahead.
An efficient power supply system is a key requirement for a nation´s economic growth and good quality life of its citizens. Assured availability of quality power at a reasonable cost will not only act as a catalyst in the socioeconomic development of the country, but also enhance the global competitiveness of the industrial sector. It will also lead to enhanced employment generation and per capita income levels. Rapid development of a robust and healthy domestic electrical equipment industry, supporting the complete value chain in power generation, transmission and distribution, is not only crucial for the economy, but is also of strategic importance for India.
The capacitor industry has a diversified, mature, and established manufacturing base, which has the potential to meet the current as well as future domestic and export demands based on the power sector´s growth projections. However, increasing challenges from the supply and demand side and international competition has started to impact the health of this important industry. The current scenario has necessitated that the government develop a well-defined, robust plan to support the long-term growth of this industry.
What needs to be done?
To increase the overall demand, industry must take multi-tasking initiatives which includes -
Upgradation in standards that encourage improvement in power quality, processes and maintenance practices.
Educating consumers on benefits for improving power quality (reactive power compensation, harmonic filtering, transient suppression etc.).
Strong representation and follow good practices to improvise standards to enhance product quality and reliability.
Guidance for improving energy-efficiency and energy-savings, particularly the enforcement of regulations to penalise utilities responsible for poor quality of power in the network and incentivise better performing utilities.
Framing standards for addressing issues related to poor quality power.
Capacitor market to grow at CAGR of 3.6 per cent According to a recently published report by TechSci Research ´India Electrical Capacitor Market Forecast & Opportunities, 2019ö, the country´s electrical capacitor market is projected to grow at a CAGR of around 3.6 per cent during 2014-19. India has grown multi-fold in terms of electrical and electronic product manufacturing, and the revenue growth in these industries is the key driver for electrical capacitors market in the country, especially in the southern and northern regions. Domestic companies engaged in manufacturing capacitors in India include Deki Electronics Pvt. Ltd., Desai Electronics Pvt. Ltd. and Filcon Electronics Pvt. Ltd. These players have a strong pan-India distribution network and also export their products to other countries. However, these players are facing intense competition from low-cost imports from countries like China.