Electric power is the key to the economic advancement of any country. India is faced with gaps between demand and supply of electricity on one hand and the rising cost of power generation on the other. Power electronics, on the other hand, help in conservation of electricity and also enable improvement of its quality. India has witnessed a moderate growth in power electronics activities in the past two-and-a-half decades and has built a reasonable infrastructure towards manufacturing, application and skilled manpower requirement.
By Rutaksha Rawat
Saturday, September 19, 2009: Owing to India’s enormous population, the potential consumer demand is almost unlimited and consequently, can be expected to propel the industry further. In fact, liberalisation of the economy in 1991 has led to speedy growth and the country’s power electronics industry, in particular, is emerging as one of the most important ones.
Market thriving
According to a recent study conducted by Frost & Sullivan, the Indian UPS market is expected to witness a compound annual growth rate (CAGR) of 13.4 per cent till 2014, driven by a steady demand from the banking, financial services and insurance (BFSI), telecom, retail, information technology and information technology enabled services (IT/ITES), manufacturing, infrastructure and other sectors.
The drive for computerisation is an ongoing one. According to the Manufacturers’ Association for Information Technology (MAIT), India presently has 15 million computers and expects to possess 60 million more by 2010. Power supply being a sore point, the perpetual need for large numbers of UPS systems is inflating. Therefore, currently, the UPS segment is growing at the fastest pace as it is impelled by the soaring level of computerisation taking place in the country. An exponential rise in PC sales has, in turn, led to the increase in UPS sales. Furthermore, the upsurge experienced in the the government segment has been responsible for the speedy growth in UPS consumption over the past years and it will keep growing for the next five years. Educational institutes, particularly B Tech institutes, follow the norms of the All India Council for Technical Education (AICTE) and are required to have standard computer laboratories to meet these norms. This new system calls for expenditure on computers and server networks, along with UPS systems.
According to Arvind Gopal, CEO, 3EM Power Technologies, “3EM has been growing by 20 per cent every year.” The company feels that this growth is driven by the country’s robust economy. “The better the economy, the more purchasing power people acquire,” explains Gopal.
“The inverter market is thriving due to the shortage of power in the country, especially in rural areas. As for UPS, they are doing well due to the IT, telecom and hardware sectors,” says Anil Bhushan, director, Protronics Systems India Pvt Ltd.
Demand for UPS and inverters has been on the rise for the last decade and will continue to grow in the future too, as continuous power supplies are needed by all. “Medical equipment, computer numerical controlled (CNC) machines and many other machines are becoming microprocessor based, so the demand will continue to be there,” affirms Gopal. “The government sector is soon to be fully automated, so it will need more uninterrupted power supply, fueling demand for UPS,” remarks Raman Bhatia, managing director, Servotech Power Systems Pvt Ltd.
Demand rising
Over the years, the market has seen minor shifts in demand but overall, there is hardly any sector left which does not require these products. “Earlier, the demand was the most in the corporate sector. Now, it has shifted to the government, financial and banking sectors. Demand is also present in tier II and III cities. Earlier, people wanted 1000VA loads, one and two battery inverters, which could run only the most needed appliances during a power breakdown. Now, they want 5KVA ones which can run bigger and more luxurious appliances,” informs Sanjiv Thakur, chief technical officer, Servotech.
“There’s no deviation in demand as such. Products and applications change from sector to sector. So, one can’t say that one sector has more demand than another. Each sector has vast potential. Also, growth of sectors is inter-related and hence, dependent on each other,” contradicts Bhushan.
“Rural bank computerisation and the government’s rural development plan are also sectors, which are giving growth to this market,” says, Sujeet Kumar, MD, Ambient Computronics Pvt Ltd.
Some hurdles to cross
Despite its sturdy health, the power electronics market does have its own set of challenges. “Almost 80 per cent of the components we require for manufacturing are being imported. The fluctuation in dollar/rupee rates is impacting us negatively. Apart from a few brands, no one is making batteries, so we are forced to buy imported goods. If local components were being made, this wouldn’t happen,” comments Srikumar, director of marketing, Convergence Power System Pvt Ltd.
“Right now, we are making rugged products for the Indian terrain and doing fairly well for ourselves, at an estimated demand of Rs 50,000 million and 400,000500,000 units of inverters per year, but the time has come to step up the game,” says Bhatia.
Others, like 3EM opine that Indian enterprises spend too little on R&D, due to which they are not moving forward in technology. “Companies are only investing 3-4 per cent of their annual revenue on R&D. This quantum needs to go up if the industry wants to make a real impact on the world market,” says Gopal.
Another disturbing fact that has become an encumbrance is the lack of standardisation in power generation products. There are no regulated parameters on the basis of which products are manufactured. This leads to varying prices and confusion in the market. If products were made standardised, it would lead to mass production and a subsequent drop in product prices would occur.
“This is not an organised market. People are trying to make cheaper products to grab as many customers as they can. That’s why there’s no standardisation. The industry needs to understand that in order to grow, we need to conform to a uniform pattern. Otherwise, we will forever be doomed to mediocracy,” comments Sarika, corporate sales director, Servotech.
Competition from the grey market is another hurdle the Indian power electronics industry has to overcome. “Imported goods are cheaper as those that import them don’t pay taxes or VAT and we, who adhere to all legal regulations suffer as a consequence,” adds Bhushan.
Govt help needed
Some are of the opinion that the government is not doing all it can to succour the industry. “Taxation and excise duties can be relaxed and VAT can be moderated. There was nothing for the industry in this year’s budget. The central sales tax was supposed to be made 1 per cent from April 2009 onwards but it wasn’t so much as mentioned in the budget,” complains Srikumar.
The government can also help the industry by proffering incentives for export like China does. China manufactures all of its components indigenously (whereas ours are imported, hence, more expensive), so it can afford to make cheaper products. It is virtually impossible for the Indian industry to compete with China due to their low priced products. “If the government encourages us, we can also make cheaper products and compete with the world market. “Qualitywise, we have an upper hand over China. It’s only the cost factor that’s holding us back,” laments Bhushan.
The government needs to embolden the industry by making the environment more conducive for manufacturing. Currently, poor infrastructure, bad roads, lack of ports, high taxes, less productive labour hinder forward movement. “The labour laws here are very unfriendly, due to which, Indian labour productivity is much lesser than in China. The laws here are very pro-labour and anti-employer, which makes the former complacent and under-productive,” Bhushan adds.
“The government can help by reducing the excise duty to 4.12 per cent and applying a flat VAT of 4 per cent on all kinds of power electronic equipment like UPS, inverters, stabilisers, power factor correctors, battery chargers, etc for all the states,” says Kumar.
Exciting future
That the Indian power electronics industry is not at par with those of the world market is a fact of reality. Nevertheless, we are not doing badly and have plenty of exciting changes to look forward to. The winds of change are blowing in the power electronics domain. Renewable energy is the buzz word on everyone’s lips. “The market is veering towards renewable power energy—solar and wind energy in particular. The entire market is going to be revolutionised once this niche market pervades all sectors. If this happens, there will be a growth of at least 100-200 per cent in business. It will open up a whole new chapter in the history of Indian power electronics,” predicts Thakur.
“The government is investing heavily in renewable energy. Almost 80 per cent subsidies are being granted to those investing in the solar domain. Servotech, too, has ventured into this arena and is manufacturing inverters, which can be used with solar panels and servo stabilisers, which will reduce energy consumption,” comments Sarika. “I envisage stabile growth in this industry for the next 20 years at least. Reliable and quality products can spur this growth even further,” says Gopal.
The most crucial aspects that need to be worked upon, according to industry members, are constant technological upgradation. People are no longer content with just power backup. They want numerous things in one product, so the answer to success is perpetual upgradation and innovation,” concludes Bhatia.
Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine
