Monday, October 21, 2013: The Indian power sector is witnessing delays, poor financials and sluggish growth. The newly appointed director general of Indian Electrical and Electronic Manufacturers Association (IEEMA), Sunil Misra feel strongly about the slowdown. He spoke exclusively to Sanjay Jog about the challenges and way forward.
When asked about the key challenges for the electrical equipment (EE) industry and measures to handle them, Misra said, “The slowdown in the power sector has impacted domestic demand and the competition faced in the domestic market from imported electrical equipment are key challenges.”
Misra further added, “To stimulate demand for the domestic electrical equipment industry, the government should expeditiously address the challenges confronting the country’s power sector, including the problems in fuel linkages, land acquisition, environmental and other clearances, precarious financial health of utilities. The power sector needs urgent attention of the government. In this regard, the Project Management Group in the Cabinet Secretariat is taking proactive and positive steps.”
Misra also raised concerns over the burgeoning imports of electrical equipment in the country, which now stands at 38 per cent of the market for electrical equipment in India, leaving domestic capacity unused.
Misra feels that besides other interventions, it is recommended the Government of India raise the basic customs duty (BCD) on all electrical equipment to a uniform 10 per cent (currently, BCD on transmission & distribution equipment is 7.5 per cent and on generation equipment, including project imports, is five per cent).
Talking about the impact of the depreciating rupee on the import of critical raw material and inputs, Misra said, “The depreciating rupee has made critical imported raw material and inputs for electric equipment more costly but given the continued threat from imports of electrical equipment in the Indian market, domestic manufacturers are being forced to absorb this additional cost to remain competitive.”
Misra says that the Center has taken some measures by “imposing import duties at the rate of 5 per cent BCD, 12 per cent countervailing duty and four per cent special additional duty, along with cess as applicable, on import of equipment for ultra-mega power plants/mega power plants.”
However, he feels that whatever measures have been taken so far are not enough. “The government needs to provide greater encouragement to indigenous manufacturing by limiting participation in tenders for domestically funded projects to domestic manufacturers only; putting in place a requirement of setting up a manufacturing facility in India, within a specified time frame of the award of the tender, where foreign bidding is allowed; to provide for level playing field, that is, phased manufacturing process should be made mandatory in the country for supply of major equipment; stipulating a minimum percentage of the total procurement by any utility to be of made-in-India products; stipulating some amount of price preference for Indian products in procurement by utilities,” Business Standard reported.
This is expected to support Indian manufacturers, who want a level playing field. It will also offer required safeguards to the domestic industry that is facing non-market competition on account of cutthroat below-cost entry level prices offered by Chinese manufacturers.
