Despite the slow global economic growth affecting the T&M market adversely, the industry is still hoping the market will turn around this year
By Richa Chakravarty
Monday, May 13, 2013: The test and measurement (T&M) market in India has registered only a modest growth in the FY 2012-13. An analysis of the Indian T&M market by Electronics Bazaar revealed that while most of the major T&M vendors have reported sluggish growth (all companies declined to share their growth percentage for 2012-13), a few witnessed no growth at all. While industry giants believe this to be a temporary phase, T&M companies are keeping a close watch on the economic developments in Europe, USA and China, which have affected the Indian T&M market.
Factors leading to flat growth
Slow global economy: A weakening global economy has adversely affected the Indian T&M market, which registered a growth of 8-10 per cent in 2012-13 as compared to 10-15 per cent in 2011-12, according to the industry leaders.
The electronics and electrical industries depend to a large extent on a few sectors like power, automotive, oil and gas, which saw a dip in their growth due to the sluggish global economy. This, in turn, has taken a toll on the T&M industry as well. “All the major power projects in India are on hold; there are no funds with the power transmission and distribution companies.
The mining industry has also been devastated. The automotive sector is also witnessing slow growth. Not only this, large engineering, procurement and contract (EPC) companies have also kept projects on hold. As a result, the T&M industry witnessed a flat year in 2012-13,” informs Tushar Bhavsar, head, IHV sales and strategy, The Motwane Manufacturing Pvt Ltd. The company has registered no growth at all, while it grew by 30 per cent in 2011-12. In fact, companies that primarily cater to the above-mentioned sectors have witnessed no growth or negative growth in 2012-13.
Liquidity crunch:The liquidity crunch in the market is another factor that affected the sales of T&M devices in India. While companies claim that there is no shortage of orders for testing equipment, due to the lack of funds with the buying companies, many orders have not materialised. “We were sceptical of taking orders with delayed payments as that might run my company into losses. I would prefer to lose a customer than make a loss for the company,” adds Tushar.
Fewer orders from the telecom sector: The procurements from the telecom equipment manufacturers declined last year. The cancellation of 122 telecom licences by the Supreme Court and the subsequent fall in the subscriber figures was the key reason behind the fall in orders from the telecom industry.
| “Though the industry witnessed a flattish growth in FY 2012-13, all major test equipment vendors are hopeful of positive trends in 2013-14. Experts predict the industry will grow at 15-20 per cent this FY”. |
Fewer orders from the telecom sector: The procurements from the telecom equipment manufacturers declined last year. The cancellation of 122 telecom licences by the Supreme Court and the subsequent fall in the subscriber figures was the key reason behind the fall in orders from the telecom industry.
Sectors that contributed to growth
Aerospace and defence: The overall increase in the R&D investments, especially in segments like aerospace and defence, was a respite for the T&M industry. “With new missiles and satellites being launched and tested, the demand for testing equipment has risen in this domain. The defence forces are also putting in a lot of resources into surveillance as per their requirements and, hence, a lot of T&M devices are being procured. Procurement for other government projects also contributed to the growth of the T&M sector,” informs an industry expert.
Education sector and laboratories: They also contributed to the growth of the T&M industry last year, thanks to the government’s plans to improve the quality of education in colleges and universities. Demand for T&M devices also came from the electronics, electrical, microwave, RF communication, digital communication, physics and mechanical labs.
Semiconductor testing. On the semiconductor testing front, particularly in the wireless chipset segment, a lot of design testing and validation happened in India last year. “We saw growth in the semiconductor segment in India. Companies like Qualcomm, Intel and Broadcom required a lot of prototype testing for their designs, leading to procurements of T&M devices,” says the industry expert.
Besides these, the electronics manufacturing and LED sectors also added to the limited growth witnessed by the T&M industry. “We received some orders from the manufacturing units. For example, HAL’s manufacturing units gave us good business in segments like avionics,” says Sumit Sharma.
Cities that contributed to the growth
Around 60-65 per cent of the demand for T&M devices came from the southern cities like Bengaluru, Hyderabad, Mysore and Puduchery. While in the western region, Pune and Baroda made significant contributions, Chandigarh, Mohali and Delhi contributed to the growth from the northern region and Kolkata from the east.
Devices that were in demand last year
Equipment like digital multimeters, power supplies and oscilloscopes were the basic instruments that were in demand last year, as always. “Combined with technological upgradation in terms of features, accuracy, range and performance, and with new versions of the USB series of devices being introduced, LTE testers for the telecom industry saw rising demand. PCB testers, automatic test equipment (ATE), power quality analysers and calibrators were also in demand last year,” informs Prabhanjana Rao, regional sales manager, India SE Asia and ANZ, Lecroy Teledyne.
“Instruments like capacitance measuring devices, and those for personal discharge measurement, insulation diagnostics and harmonics, as well as function generators, signal and network analysers, spectrum analysers, etc, were also in demand last year,” adds Praveen Kumar Gupta, director, Avante Global Services Pvt Ltd.
Expectations for 2013-14
Though the industry witnessed a flattish growth in FY 2012-13, all major test equipment vendors are hopeful of positive trends in 2013-14. Experts predict the industry will grow at 15-20 per cent this FY. They are banking on government-led developments like the National Policy for Electronics and the National Manufacturing Policy to be a shot in the arm for the electronics and test equipment market in the years to come.
Another positive development is that India is set to increase its power generation capacity around 15,000MW every year, over the next five to seven years. New power generation plants and supporting evacuation infrastructure will positively influence the prospects of the T&M equipment industry.
There are at least ten new projects under the central government, including strategic defence projects, governance projects of various states and the Centre, etc, which is expected to see the light of the day this FY, and large-scale procurement of T&M equipment will also take place.
“With the elections round the corner, the industry is hopeful that the government will release more funds for the development of infrastructure for the power sector. Around Rs 3000 billion is awaiting government sanction—for restructuring of the transmission and distribution companies. The release of these funds will accelerate the growth of the T&M sector significantly,” says Tushar.
Electronics manufacturing clusters will also open up new avenues and opportunities for the T&M sector to cash in on. Apart from this, the measurement market in the electronics and the bio-analytical space will experience robust growth in India. For general-purpose test equipment companies and semiconductor test manufacturers, the proliferation of mobile devices, including smartphones and other mobile devices, will continue to be the key growth driver into the foreseeable future.
With the fast growth in communications infrastructure, there is an increasing need for higher speeds of data transfer. The demand for high bandwidth will also provide a lot of growth opportunities for T&M vendors to develop and upgrade test instruments.
The industry is also hopeful of seeing the wireless boom and digital convergence on mobiles happening this FY. This will give opportunities to the T&M players who offer a wide range of testers for the R&D, manufacturing and installation/deployment segments.
According to the industry leaders, the reach of the T&M players and the cost of the equipment will play major roles in determining the growth of the industry. T&M players who provide quality and fast service to customers and have extensive coverage will do well in the market, predict industry experts.
Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine
