By 2022, the installed power capacity in India is expected to reach 350 gigawatt (GW), from 243 GW in 2014, on the back of increasing industrialisation and economic development. The total market size of electrical machinery in India is anticipated to reach USD100 billion by 2022. The Electrical Machinery sector consists of generation, transmission and distribution machinery. The Transmission and Distribution market expanded at a compound annual growth rate (CAGR) of 6.7% over FY07-13. Boilers (16%), Cables (15%) and Transmission Lines and Conductors (12%) account for a large chunk of the revenue. The generation equipment market is expected to expand at a CAGR of 12.7% over FY12-22.

The Government of India has de-licensed the Electrical Machinery industry and has allowed 100% foreign direct investment (FDI) in the sector. EEPC India, under the aegis of Ministry of Commerce and Industry, Government of India, has identified the Electrical Machineries, Equipments and Components sector as one of the four focus sectors under ‘Brand India Engineering.’

‘Brand India Engineering’ is an initiative being implemented by EEPC India under the aegis of the Ministry of Commerce and Industry, Government of India, in close cooperation with the industry to enhance Indian engineering exports, by highlighting and showcasing Made in India products and their capabilities in the global market. The initiative involves a 360-degree approach in promoting the branding of Indian engineering products.

India’s Electrical Machinery and Equipment industry is highly diverse and manufactures a wide range of high- and low-technology products. The industry directly employs around half a million people and provides indirect employment to another one million people. India produces the full range of electric power generation and transmission machinery.

The Brand India Engineering campaign launched by the Ministry of Commerce and Industry, Government of India, aims at creating true brand value in international markets for Indian engineering products and services. It is expected to catapult India’s status in engineering capabilities by highlighting India’s competitiveness, credibility and service commitments in the engineering sector.

EEPC India is the premier trade and investment promotion organisation in India. It is sponsored by the Ministry of Commerce and Industry, Government of India, and caters to the Indian engineering sector. As an advisory body it actively contributes to the policies of Government of India and acts as an interface between the engineering industry and the Government. Set up in 1955, EEPC India now has a membership base of over 13,000 which includes PSUs, Corporates, SMEs, Chambers and Associations, State Trade Promotion Bodies, etc of which over 70% belong to MSMEs. The main objective is to promote trade, joint ventures, strategic partnerships and investments and acting as a catalyst in the promotion of trade, investment and strategic partnerships.

EEPC India has dedicated panel for Electrical Machinery and Equipments. Through this panel it extends benefits of various Government schemes such as MDA and MAI for trade promotion globally. Annually, EEPC participates in global trade shows and exhibitions and through this panel it acts as a dedicated interface for policy advocacy with the Government and Industry stakeholders.

The Indian Electrical Machinery and Equipment industry boasts of a diversified, mature and strong manufacturing base backed by a robust supply chain. With state-of-the-art technology in most subsectors at par with global standards, the major export markets for Indian electrical equipment are the USA, Germany, UAE, Saudi Arabia, France, UK, Nigeria, China, Kenya and Brazil. Given the need for electrical machinery and equipment and the current thrust of the Indian government, this sector has naturally lent itself as a priority for ‘Make in India.’ Some of the important facts of the sector are:

• Market growth in past 10 years – 11.6%
• Domestic Power Equipment industry growth in past 10 years – 11.9%
• Export growth in past 10 years – 18.6%
• Major Electrical Equipment industry growth in past 10 years – 8.3% and in past 5 years – 4%
• Estimated market value is expected to reach USD100 billion by 2022

Increased power demand has led to capacity augmentation. During FY07-16, India’s energy requirement grew at a CAGR of 5.5%, reaching 1114 billion units in FY16. The rising demand for energy has led to increasing capacity addition for power generation. During FY16 (April-November 2015), energy requirement in India stood at 749 billion units.

Capacity augmentation resulting in increasing demand for Electrical Machinery

• Increasing investments in capacity has resulted in rising demand for power generation and transmission equipment
• The increase in capacity during the 12th Five-Year Plan (2012–17) and up to January 2016 stood at 74535.72 MW by the end of 12th Five-Year Plan against target of 88,537 MW
• Total capacity addition in 2014-15 was 22,566.31 MW, exceeding the target of 17830.8 MW
• Up to November 2015, around 739.915 billion units of power were generated. In addition, around 1100 new census villages were connected through the grid
• In FY16, a target of producing 1098 billion units of power was set by the Government
• Installed capacity for power generation in India, as on 31 August 2016, was estimated to be 305,554.25 MW
• As a result of the Government’s initiatives to increase power generation and transmission, the Electrical Machinery sector is expected to witness new demand for electrical machinery of value around USD15.28 billion by 2020

The Electrical Machinery industry consists of four key product categories, based on their use as follows:

• The T&D equipment industry was worth USD15.1 billion in FY15
• The market expanded at a CAGR of 7.3% over FY07-15
• Cables (35.8%), Switchgear (15.9%), Boilers (14.6%) and Transformers (11.3%) account for a large chunk of the revenue
• In FY17(1), 5743 ckm of transmission lines have been commissioned, accounting for 24.6% of the annual target of commissioning 23,384 ckm of transmission lines
• Increase in the transmission capacity is estimated at 16,635 MVA in FY17(1), constituting 36.8% of the target of 45,188 set for 2016-17

• The Generation Equipment market is expected to expand at a CAGR of 24.6% over FY15-22

• Boilers are the major segment, accounting for 66.71% of the total industry in FY15
• Turbines accounted for 17.32%, whereas generators made up the remaining 15.97%

• As per the latest data available during FY15-22, the size of the Transformers industry is expected to expand at a CAGR of 30.7% to USD11.1 billion
• The domestic Transformer industry has the capability to manufacture the whole range of power and distribution transformers, including transformers used for HVDC transmission up to 500 KV

• During FY15-22, the size of switch and control gears industry is expected to expand at a CAGR of 19.2% to USD8.2 billion
• The switch gear industry in India manufactures the entire voltage range from 240 KV to 800 KV
• In May 2016, transmission of 1200 KV was started through National Test station at Bina (Madhya Pradesh)
• Significant advances have been made in control gears due to major developments in the field of technology

• Exports of Electrical Machinery and Equipments rose to USD5.7 billion in FY15 from USD5 billion in FY11 with a CAGR of 2.6%
• The Electrical Equipment industry’s production for FY15-16 is estimated at USD19.55 billion
• Indian manufacturers with capacity and advanced technology in industry export a wide array of equipment, including transformers and cables
• Boilers and turbines, electrical cables and conductors, transmission lines, and energy meters were the primary drivers of the increase in exports
• The domestic electrical industry is expected to witness excess manufacturing capacities across generation, transmission and distribution segments. Indian manufacturers with capacity and advanced technology in industry export a wide array of equipment, including transformers and cables

• Upgrading technology – Industry players are upgrading their transmission capacities to the next higher voltage system of 765 kilovolts (kV) and are gearing up to supply transformers and related equipment of this class
• Increasing R&D expenditure – Indian manufacturers are becoming more competitive with respect to their product designs, manufacturing and testing facilities. Investments in research and development (R&D) in the Electrical Machinery industry are among the largest in India’s corporate sector
• Diversifying product portfolio – Increasing competition in the industry and changing consumer demands have led to new versions of products being launched in the market. Players are entering into strategic alliances and tie-ups with technology suppliers to upgrade capabilities
• Adoption of supercritical technology – The Government of India is encouraging the adoption of supercritical technology for thermal power plants due to its efficiency and reduced emissions. During the 12th Five-Year-Plan, 60% of the total additional power is expected to be generated using supercritical technology

• New technologies – High-voltage technology is being developed in the Electrical Equipment industry, for economical power transmission. Firms are diversifying into the nuclear reactor business, as the government wants to increase its nuclear power base
• Capacity addition – India plans to increase investment in infrastructure (including electricity), as it lags behind other countries. With more capacity addition in the power sector, demand for electrical machinery would rise, prompting the companies to increase their production capacity
• Promotion of R&D – The Government is helping companies enhance the level of research to match the best in the world. The Government has relieved customs duties on some equipment. Companies, too, are enhancing their R&D departments to take advantage of the situation
• Skill upgradation and incentives – Skill upgradation is necessary as firms need to have the desired talent pool. The Government plans to set up the Electrical Equipment Skill Development Council (EESDC), which would focus on identifying critical manufacturing skills required for the electrical machinery industry. It is enhancing export incentives by removing export barriers

• De-licensing – The Electrical Machinery industry has been de-licensed; 100% FDI is allowed in the sector. This has facilitated the entry of global majors into the electrical machinery industry in India
• Tariffs and customs duties – The Government has removed tariff protection on capital goods. It has also lowered customs duties on a range of equipments. Relatively lower customs duties; 5.0% for power generation equipment and 7.5% for T&D
• Initiatives to increase power generation – Planned capacity addition of 115 GW in the 12th Five-Year-Plan. The government is targeting to provide 24/7 power by 2022. Through the Accelerated Power Development Reform Programme, the government plans to provide reliable, affordable and high-quality power to all
• FDI policy – 100% FDI has been allowed under the automatic route in the Electrical Machinery sector
• SEZ – The Government has approved 15 SEZs for the engineering sector across the country; electrical machinery is a part of the sector. As of 10 May 2016, 13 exporting SEZs are operational. The Delhi-Mumbai Industrial Corridor being developed across seven states could boost the engineering sector

• Vision statement – To make India the country of choice for the production of electrical equipment and reach an output of USD100 billion by balancing exports and imports
• Focus on industry competitiveness – To focus on technology and R&D and bring it on a par with the global benchmark, the Government has lowered customs duties on a range of equipment
• Identify skills to support industry’s requirement – The Government plans to set up the Electrical Equipment Skill Development Council (EESDC) which would focus on identifying critical manufacturing skills required for the Electrical Machinery industry
• Develop and strengthen support infrastructure – The Government plans to establish Electrical Equipment industry clusters. It plans to take steps to enhance product-testing infrastructure in the country
• Increase share in export market – The Government plans to provide credit support to economically less-developed export markets. It aims to create a dedicated fund for EXIM bank to support exporters in the electrical machinery industry

• Cumulative FDI inflow in India, during April 2000 to March 2016, stood at USD4.3 billion
• Electrical Machinery accounted for around 1.5% of the total FDI inflow in India as in March 2016