India's cumulative share in the global market for electrical equipment is around $ 480 billion, which is less than 2 per cent. Given our tremendous export potential, there is the scope of increasing India's share to 5 per cent by 2025, says...Anil Saboo, President, Indian Electrical and Electronics Manufacturers' Association (IEEMA) with optimism.
Excerpts of the interview...
Why is it crucial for India to become aatmanirbhar or self-reliant in the area of power sector equipment?
Electricity is the most important factor in the growth of any country. When we talk about the power sector, COVID-19 has again highlighted electricity's role as the lifeline of the economy. Especially at a time when the entire population was largely restricted to homes, the sector played an important role in the smooth functioning of households and healthcare facilities. Another point is the fact that the world is now your market. And India's cumulative share in the global market for electrical equipment is around $ 480 billion, which is less than 2 per cent. Given our tremendous export potential, there is a scope of increasing India's share to 5 per cent by 2025. We also import Rs 710 billion worth of electrical equipment and around Rs 1.17 trillion of electronics. So, the issue is not just about becoming aatmanirbhar but also becoming a net exporter as well.
Ever since Prime Minister Narendra Modi gave the clarion call for making the nation self-sufficient in May, do you find the industry making a conscious attempt to reduce import dependency?
Earlier, IEEMA was constantly pursuing power and other ministries on putting an embargo on a large number of items that were being imported. But this is the first time that a prime minister has given a call for aatmanirbharta with support from all the ministries. There could not have been a better time to highlight this aspect. India's future lies in becoming self-dependent than relying on others. The industry is also very keen as we have more than 50 per cent manufacturing capacity lying idle in electricals.
Electricals is one of the most robust industry segments in India with a compounded turnover of $ 50 billion. So, we are really capable and all we needed was support from the government. Now that it is there, we will make it happen!
To what extent did the lockdown act as a catalyst for fast-tracking solutions for the power sector?
That is exactly what has happened! The world finally realised that it is being dominated by China, leading to so much dependency that they were being blackmailed. As a result, they are now trying to focus on other countries like India, which are already quite ahead in sectors like IT. This has resulted in even our companies getting export orders.
Does the country offer the right kind of ecosystem for the development of this segment?
We have had open house discussions with Union Minister of Power, Raj Kumar Singh, Union Minister of Commerce & Industry, Piyush Goyal and Union Minister of Heavy Industry, Prakash Javadekar. I find that all ministries are well synergised and have tried to address some of our concerns. Whether we have the right ecosystem, I would say that is not so right now. But the Central Government is working to correct things. Like, in one of the sessions they asked us about our main problems. We apprised them of the issues with land acquisition, infrastructure, development of industrial parks, logistics, etc. We also told them that our government departments and electricity boards must adhere to the terms of the contract.
We have been facing difficulties with the enforcement of contracts, be it about receiving timely payments or resolution of legal matters. These are some of the constraints that are under consideration by the government. These issues have to be resolved to improve the ease of doing business in our sector.
What more can the government do to facilitate a conducive environment for the industry?
In the last few months, we must have held over 20 meetings with the Ministry of Power and the Central Electricity Authority (CEA) to identify the items that are being imported. And to our collective surprise, a large number of public sector enterprises like NTPC, POWERGRID and NHPC were among their largest importers. The Ministry of Power and CEA are actively working to create hubs for the domestic production of such items that are not manufactured in the country. You will be surprised to learn that we identified around 274 such items. The list includes equipment for which capacity is available in India but is imported due to cost competitiveness or other reasons. There are 95 such items, with 46 for generation and 49 for transmission. Similarly, there are 242 items for which capacity does not exist in India. Now, this is the first time in several years that there is a clear-cut demarcation to identify products and the categories under which they are being imported. Senior management of all public sector enterprises was also involved in the exercise. We have suggested to the Central Government that we can work as partners to explore the right technologies that are available across the world. We can approach those companies together to ask them to provide the technology by setting up their manufacturing facility in India in collaboration with an Indian partner. Once the government is involved, it will become easier for us to get those people to come to India for manufacturing.
How well-prepared are the Indian T&D equipment makers for attractive growth opportunities emerging in the sector?
It is quite easy to blame others. But part of the blame also lies with us manufacturers. Therefore, we need to introspect on areas where we are lacking. Frankly, we are not investing enough in innovation and research & development. This is very much required. We need to develop new technologies to become self-sufficient. The other important area is standardisation. What is happening is that if a product is being purchased in India, each electricity board has different specifications. We have, therefore, created a cell that is now working with the Bureau of Indian Standards (BIS) on common specifications. We have to upgrade those specifications to global standards as well. This will ensure that the equipment gets exported the world over. Secondly, we have created an innovation and research & development cell for interacting with the Department of Science and Technology as well as the Ministry of Power for developing products. Thirdly, we have asked the Central Government to provide some incentives for research & development. Like, if you are spending Rs 100 on research & development, you can get a deduction of Rs 200 in income tax. Big industries have that culture but that has to percolate down to micro, small and medium enterprises (MSMEs) as well.
You had mentioned the need for increasing India's share in the global electricals market from the current 2 per cent to 5 per cent. What makes you so confident of the Indian electrical industry's ability to outperform?
Let me give you one example. You will be surprised to know that our transmission line sector is meeting almost 50 per cent of the world's requirements. Companies like KEC, Kalpataru and Sterlite are currently active in 60 countries on transmission line projects. They are also deploying the latest technologies like robotics. From 60 they can easily go up to 180 countries. That is the potential in that sector. But we need to upskill our manpower. And as I said earlier, the other areas that need focus are technology and research & development. If we can combine those two things along with the internet of things (IoT), digitalisation and Industry 4.0, the target is very much achievable. Now, that we also have government support, I don't see any obstacle there. Capital is not a problem as enough people are willing to invest in India.
- MANISH PANT