SWICON 15 – Global Platform for Indian Switchgear Industry
Q. Can you comment on the journey status of Switchgear industry over the last five years? How do you foresee the next five years? Do you feel AUTOMATION plays important role in metering Power, Electricity?
MV / HV Switchgear industry, post meltdown in 2009, did recover to a reasonable extent to reach Inr 3500 Cr, largely driven by investment in T&D sector. Demand from Industry is yet to kick in. Overall, the demand currently is flat, far from satisfactory as many players are facing capacity underutilization. Apart from demand, the Industry also recovered in terms of cash flows from a dismal situation to somewhat manageable now. Players did bring in innovation in products, as well as business models. Industry developed prototypes for 1200kV equipments which are under trial at PGCIL station at Bina.
Going forward, Industry has a positive outlook on demand. I expect the annual growth in demand to be in range of 5-7% going forward. I must commend MoP’s efforts in improving discom health through UDAY as also streamlining IPDS and DDUGY schemes through centralized procurement schemes. I am confident state Utilities is going to be benefited. We are quite hopeful that impending revival in Private generation, Industry along with further invest in T&D, increased budget allocation on Infrastructure, will buttress demand. Policy initiatives such as GST bill, land acquisition and ambitious national missions such as Solar, smart cities, IPDS, DDUGY stoke flames of hopes. In anticipation, industry is gearing up to the new order of demand revival through product innovation, competencies and capacities. In all , our sentiment is one of cautious optimism Switchgear always co-exists in the network with other Smart grid technologies . Automation or in other works “Smart grids” will hold the key to managing the new complex energy landscape. Most customers demand Smart grid technologies integrated with switchgear system and I am unable to think of any major switchgear player who does not combine energy automation technologies. Smart grid technologies will play a significant role from the nascent stages of network planning through grid operation and maintenance.
SUB QUESTION: Tell us in brief about SWICON 2015, upcoming grand conference on Switchgears!
SWICON 15 is a flagship event of both the switchgear divisions ; LV and LV / HV and IEEMA as a whole. Like earlier SWICONs, both the divisions are coming together to host this 2015 edition on 26th / 27th of Nov15 in Mumbai. Through this forum I invite all the readers to participate as delegate in this conference. SWICON is an international conference which successfully brings the best minds of Indian switchgear industry as also eminent think tanks from global markets. It provides a platform for all the stake holders in the sector; namely Manufacturers, Users (Industries & Utilities), Suppliers, testing institutions, central policy authorities, standards authorities, academicians to come together and share, through their paper presentations, their contributions and development in the area. Key highlights of SWICON15 is , we have given a special opportunity for the engineering student community from Indian colleges to present their ideas as also interact with industry players. We are convinced such exposure will bring bright minds of the academia closer to power sector thereby creating possibilities for a rewarding career in future
Q.What are the major challenges faced by the Switchgear Industry and your suggestions to combat them? What are the plans by Switchgear division of IEEMA to resolve these issues?
At the moment, Industry is rueful that level playing field is wanting, in the HV/EHV GIS segment upto 765kV. There are many recent GIS tenders of utilities which have been awarded to Manufacturers from China/Korea [C&K] who are able to quote prices substantially & unsustainably lower than domestic manufacturers. Gap is > 15-20%. Based on import data compiled from customs, imports, imports from C&K manufacturers have increased from Inr 10 Cr [2013] to Inr 250 Cr [2015] and > 500 Cr [2016, till date]. Capacities of manufacturers are underutilized at < 50% as per IEEMA’s submission to DHI. Their designs and life cycle support are yet to become proven in the Indian Context. Domestic manufacturers have, over the years, invested heavily in product development, skill development, plants & machineries, ancillaries with a view to giving quality products & life cycle services to customers, besides generating local employment. With this backdrop, placing orders on Chinese / Korean suppliers without local foot print, that too for locally funded projects is not seen as a pro-Industry stance. Let us not forget, we are talking about devices which are strategic in nature as they are core to our Power sector. Therefore in my view these award decisions should also have a basis of long term security of key infrastructure which may be at jeopardy arising out of any change in geo political situation.
In short, in respect of any equipment of strategic significance, where domestic technologies & capacities are available, sourcing shall be done locally through competitive bidding process. We are open to competition, yet the players have to put in place the local mandatory fundamentals without which the life cycle support to our Utilities may be impaired. We have made representation to central policy bodies such as CEA, Department of Heavy Industries [DHI], GoI, through IEEMA, for introducing “Local Procurement Clause”, introduce conditions that such manufacturers must set up local foot print to qualify for bidding as also safeguard duty for a defined period. Recently Govt demonstrated rescue support to steel sector by introducing 20% safeguard duty which raises hopes for our sector as well. We received DHI endorsement to our submission which is encouraging. It is upto the industry now to further take the matter forward as per laid down procedures to a logical conclusion. We also plan to visit utilities directly to appeal to the authorities for supporting domestic sourcing only at 400kV. Terms & Conditions in tenders of certain state utilities covering cash flows, risks, warranties clauses are not neutrally poised. Some of the clauses do not represent an equitable risk sharing between contracting parties and are clearly detriment to the Industry. We intend highlighting the same to concerned utilities to seek their review and favorable ruling eventually.
Q. Do you think the Government ( Central & State) is doing enough for stimulating the demand?
At the outset, I, as an Industry player, must complement government for its commitment to providing an enabling environment for growth. Our Macro fundamentals are strong to the envy of many other countries. Coal Government is pushing forward with many pro growth missions. I discussed some of them before. They will positively impact demand
Yet it is my view more debottlenecking on the ground level is still needed. As a country we are still struggling to introduce GST bill, land reforms that are central to infrastructure development. Many infra companies are highly leveraged. Due to delays, viability of some projects in Infra and power is being now challenged. With their stretched balance sheets revival of private investments in the Infrastructure space is going to be a challenge my view. Discoms, which presents a big bottleneck who represent a major demand source for MV products, should be banking on UDAY to improve their finances. In balance, I will say, Govt has done a good job so far
Q. What do you feel the industry should be doing to help increase the demand and help the customer? What are your expectation from ELECRAMA 2016 for the Industry? How ELECRAMA 2016 will benefit to Industry?
As such at a basic level , demand for switching device cannot be created by industry per se. Yet Industry can facilitate movement of clients higher in the technology value chain thereby creating demand. There is room for industry to engage more with customers in sensitizing them to the advantages of technology solutions, like GIS, thereby moving from Capex based purchase decisions to total cost of ownership based decisions. The engagement will also serve to better understand customers challenges , which we generally assume, we know Elecrama16 will immensely benefit industry. This is marquee trade event of IEEMA that attracts global players to show case their products and solutions. It is also a big opportunity for main equipment manufacturers to tap into vendor bases as well.
Q. What were the achievements and challenges during your tenure as the chairman of IEEMA , Switchgear division so far? What is the way ahead for the division?
Our division [MV HV] is 2 years old which I served as Vice Chairman for last 2 years. I have taken over the chair in Sep15. In the previous tenure, we took a while to bring manufacturers together to the forum, discuss , define & priorities our challenges. We engaged with senior executives of Tata Power, GETCO in the divisional meetings to hear their feedback to industry and future expectations. We engaged with CEA for the activation of GIS committee. We have been regularly providing inputs to central policy cells of IEEMA , through whom Industry requirements are channeled to policy makers such as pre budget memorandum. Thanks to the IEEMA public policy cell, some measures, such as relating to simplified ED, BoE procedures, have been introduced in finance bill of Fiscal 16
Going forward , we need to carry forward the momentum built so far. We need to connect with the state utilities to submit our concerns points on T&C, with policy makers to find a solution for unbridled imports from China and Korea, engaging with local test lab for infrastructure upgrade, supporting MoP initiative of facilitating state procurement of quality equipments for IPDS, DDUGY schemes. Most important aspect is to stay connected through divisional meetings and continuously assess the environment and identify concern topics.
