Indian electrical equipment industry's Q2 growth slows

Indian electrical equipment industry's Q2 growth slows

According to data compiled by the Indian Electrical and Electronics Manufacturers Association (IEEMA), the apex Indian industry association of manufacturers of electrical, industrial electronics and allied equipment, the industry has registered 9 percent growth in the first half of the current financial year.

Sequentially, second quarter growth in FY 2012 has decelerated to 4.14 percent from 13.82 percent clocked in the first quarter.

"The adverse domestic economic situation due to high inflation, high interest costs, credit squeeze is having a significant impact on the growth of the industry, apart from intense overseas competition," said Ramesh Chandak, president IEEMA and managing director, KEC International.

"All product sectors have shown decline in their growth momentum from first quarter of financial year 2012," he added.

According to the report, the current export-import trends based on select major ports trade data indicates alarming growth of almost 20 percent in imports especially from China, South Korea, Germany and other European Union.

IEEMA has based these growth figures on the production and sales data collected from its member organizations, which represent 95 percent of the entire sector.

Advocating for a level playing field, Chandak said that Heavy Industries Minister Praful Patel recently said that his ministry supports the recommendations of the Maira committee which has suggested 14 percent import duty on power generation equipment.

He added Chinese imports are relatively cheaper because equipment makers from China benefit from low interest rates and an undervalued currency, which in itself lends to cheaper exports.

"If this (14 percent import duty) is levied, it will create a level playing field for Indian manufacturers to compete with imports," said Chandak.

Sector wise the transmission line towers clocked a negative growth of 9.4 percent despite a moderate growth in export orders during the first half of the financial year 2012 while conductors witnessed a growth of 2.9 percent.

In the transformer sector, power transformers had a growth of 14.8 percent during the period under review, well supported by exports.

Switchgear and controlgear segment had a low growth of 2.5 percent. Imports of high voltage switchgear products like fuses, breakers, isolators, surge arresters, saw a jump of more than 50 percent in value terms during the period under review.