Almost all major players in the electrical and electronics industry are rising in unison on calls to improve government initiatives, investment and easing duties. It’s what they feel will unlock the potential in the local industry and help it assume gigantic proportions.
With Elecrama 2006 acting as a popular platform bringing together nearly 1,000 major players in the electrical and electronics industry, common issues and dilemmas were bound to be open to discussion.
Is Government Doing Enough?
The biggest issue that the electrical and electronics manufacturers and distributors are facing didn’t come as a surprise. Most of the respondents that Engineering Review spoke to pointed out the additional initiatives that the government of India need to take to improve infrastructure, increase awareness among consumers on energy conservation and industrial safety, giving laws more “bite” or even enforcing the laws that are passed, etc.
D. Jai Ramesh, Chairman, Vijai Electricals feels that not every state electricity board is concerned with transmission and distribution losses. “Energy saving is more economical than energy generation. That is why there is a need to adopt energy efficient transformers,” he says. According to Ramesh, transformers are the most important but energy consuming product in the distribution network, and contribute to almost 30 percent of the distribution and transmission losses. “It is a major bottleneck for the losses. Buy an energy efficient transformer. Do not see the initial investment into the transformer, look for the total life cycle cost of the transformer. Then you will realize the energy saving and the country will grow like anything. We will be energy efficient and all over India we can get 100 percent access to electricity,” he says.
According to Piyush Patel, Director of Amtech Electronics, Gandhi Nagar, Gujarat, if the government were to follow the lead taken by governments and electricity authorities in Japan, Hong Kong or Singapore who imposed strict laws governing energy efficiency, the huge potential in our own market for industrial motors would be adequately fulfilled. “There should be a focus on energy saving. So any pumps, fans or motors which are being used should have AC drives or variable speed drives on it so that the energy can be conserved. India has a big potential and the market is growing.”
Patel feels that after certain years, these kinds of laws will also be imposed in our country because you just stay away with it. “Saving energy is saving nation, so everybody should focus on it. That’s what I would expect. At present there is awareness in the industrial market. There is also a niche in the domestic market, in the household or the agricultural sector, which has not yet opened up. The market will be growing by 5-12 percent every year for the next 5-10 years,” says Patel.
Baldor Electric’s GM Sales, Bhanudas Chaudhari, says that awareness on energy saving was indeed present among large companies like Telco, Tata Motors, Cummins, Century Enka, most companies in the textile and cement segment, paper and pulp industries, and steel. “Electricity is not available is most of the important point and generation takes normally 8-10 to build the plant. One megawatt needs huge money. There is another possibility, if we can save on the electricity cost on the motors especially then that can help the nation to cope with the energy requirement in the future,” he says, agreeing with Patel’s argument that saving energy is saving nation.
But Chaudhari feels that the government needs to put in their bit to improve the situation too. Costs affect the decisions normally taken on the motors, which means customers often choose the EFF1 - the motors are the cheapest possible motors meeting the specifications.
“It is normally considered as the motor that should be fitted on the equipment. We are creating awareness through CII and other corporate organizations, but we still expect that the government should look into it. The government that should provide some subsidies or some type of advantages to the customer who want to buy these particular equipment and save electricity. That’s also going to help the nation. It’s a matter of concern, and if the government looks into, it will be more helpful,” he says.
The government needs to enforce basic safety standards, for instance, right from schools and colleges so that from the growth phase individuals understand fire safety. “Awareness could be only done through education. The awareness should start at the school level, school security, school prevention against fire. We are still maturing as a market,” he says.
The Other View
Rishi Khanna, Director Low Voltage Products of C&S though has a different view regarding expectations from the government on investments, etc. His contention is that with basic demand being strong, and the Indian market still being an unsaturated market, there is a huge room to grow, almost like the next China in the making. “I think the industry here should not think or worry about investments. Rather, we should think big, we should think about the next 20-30 years. This country is going to go somewhere, in a very big way and that step by step approach of “let’s invest a little and see what happens, invest little more and see what happens”, I don’t think is required anymore now. You can have confidence in our economy, at least in our company we have blind faith in the Indian economy and that’s why we are investing and developing production businesses with the conviction that basically if you have a good business philosophy, you have good attitude towards your customer, you have good products, there’s no way you can go wrong. That’s what most companies should think,” he maintains.
Ramesh who is also President of IEEMA agrees, “The electrical industry actually is coming of age. With the government’s program of electrifying all the villages by 2012 and as the economy is growing at the rate of 6-7 percent, electrical industry should grow at the rate of 12-15 percent.”
This, he feels, has already been felt in the scenario today. “For the next 10-12 years, we have to grow at those rates per annum. If you look to China, it has already added 400,000 megawatts and we are still at 125,000 megawatts. We have to catch up to those levels. The next 10-15 years is going to be the era of power industry,” he says.
Taxation Woes
Another issue, which has been rearing itself every year just before the annual Budgets, is the rates of taxation and uniformity in taxation across the country. The general opinion is that compared to 10-25 years ago, when many players in the electrical and electronics industry started their businesses, government policies have improved considerably, but there is still room to improve.
Ramesh says, “We have been representing our requirements to the finance ministry just before the budget. This year also we have gone there. Most of our requests have been heeded to also. Last year we wanted to reverse the import duty on raw materials, which was being charged at higher rate than finished goods. They accorded the request. This year also we have quite a few requests and it’s going to happen.”
But DAV’s Naveen Kumar Deswal says that whatever decisions the government makes, it should make according to the requirements of the prevailing market conditions. “If you see the purchase itself has gone up so much that even the smallest of manufacturers has a Rs 1 crore turnover, which brings him into Excise slab but he doesn’t have the capability of doing even Excise accountancy. I am talking of small traders, businessmen, who are basically my vendors,” he says.
To illustrate his point, Deswal says, “The government needs to increase its Excise limit accordingly. Some years back if somebody was making ten panels, he was making a turnover of Rs 50 lakh; now with the same 10 panels, he is making a turnover of Rs 1.25 crore. So even if he hasn’t really grown, he has come into the bracket of excise for which his overheads is going to increase. He has to keep one more guy to do all the paperwork, he has to pay the excise. The government should move faster according to whatever is happening in the market.”
Sumitron’s MD, S. K. Jain opines that the import duty structure still consists of so many components, and there is no transparency. “It’s very complicated. We need to make these import duties more clear and transparent. For instance, the finance minister says import duty peak rate is 15 percent but that is not true. The import duty actually comes out to be 35 percent,” he says. He also suggests that the working days in the Customs and Excise departments should be increased to six per week instead of the current five since importers are made to wait for 2-3 days longer at times.
Timely approvals is also a problem with Vishye’s Director Marketing & Sales, Paul Dax, who terms getting approvals from quality assurance institutes a serious difficulty. “If we want to get approval from Indian institutes it takes a long time. We want to get faster approval for our technology. Sometimes we send them references; we prove that our quality is good but getting approval takes a very long time. Maybe you need to speed up this process. This will not only result in a positive thing for us but it will also result in a positive thing for India because new technology will come faster,” he says.
With Elecrama 2006 acting as a popular platform bringing together nearly 1,000 major players in the electrical and electronics industry, common issues and dilemmas were bound to be open to discussion.
Is Government Doing Enough?
The biggest issue that the electrical and electronics manufacturers and distributors are facing didn’t come as a surprise. Most of the respondents that Engineering Review spoke to pointed out the additional initiatives that the government of India need to take to improve infrastructure, increase awareness among consumers on energy conservation and industrial safety, giving laws more “bite” or even enforcing the laws that are passed, etc.
D. Jai Ramesh, Chairman, Vijai Electricals feels that not every state electricity board is concerned with transmission and distribution losses. “Energy saving is more economical than energy generation. That is why there is a need to adopt energy efficient transformers,” he says. According to Ramesh, transformers are the most important but energy consuming product in the distribution network, and contribute to almost 30 percent of the distribution and transmission losses. “It is a major bottleneck for the losses. Buy an energy efficient transformer. Do not see the initial investment into the transformer, look for the total life cycle cost of the transformer. Then you will realize the energy saving and the country will grow like anything. We will be energy efficient and all over India we can get 100 percent access to electricity,” he says.
According to Piyush Patel, Director of Amtech Electronics, Gandhi Nagar, Gujarat, if the government were to follow the lead taken by governments and electricity authorities in Japan, Hong Kong or Singapore who imposed strict laws governing energy efficiency, the huge potential in our own market for industrial motors would be adequately fulfilled. “There should be a focus on energy saving. So any pumps, fans or motors which are being used should have AC drives or variable speed drives on it so that the energy can be conserved. India has a big potential and the market is growing.”
Patel feels that after certain years, these kinds of laws will also be imposed in our country because you just stay away with it. “Saving energy is saving nation, so everybody should focus on it. That’s what I would expect. At present there is awareness in the industrial market. There is also a niche in the domestic market, in the household or the agricultural sector, which has not yet opened up. The market will be growing by 5-12 percent every year for the next 5-10 years,” says Patel.
Baldor Electric’s GM Sales, Bhanudas Chaudhari, says that awareness on energy saving was indeed present among large companies like Telco, Tata Motors, Cummins, Century Enka, most companies in the textile and cement segment, paper and pulp industries, and steel. “Electricity is not available is most of the important point and generation takes normally 8-10 to build the plant. One megawatt needs huge money. There is another possibility, if we can save on the electricity cost on the motors especially then that can help the nation to cope with the energy requirement in the future,” he says, agreeing with Patel’s argument that saving energy is saving nation.
But Chaudhari feels that the government needs to put in their bit to improve the situation too. Costs affect the decisions normally taken on the motors, which means customers often choose the EFF1 - the motors are the cheapest possible motors meeting the specifications.
“It is normally considered as the motor that should be fitted on the equipment. We are creating awareness through CII and other corporate organizations, but we still expect that the government should look into it. The government that should provide some subsidies or some type of advantages to the customer who want to buy these particular equipment and save electricity. That’s also going to help the nation. It’s a matter of concern, and if the government looks into, it will be more helpful,” he says.
The government needs to enforce basic safety standards, for instance, right from schools and colleges so that from the growth phase individuals understand fire safety. “Awareness could be only done through education. The awareness should start at the school level, school security, school prevention against fire. We are still maturing as a market,” he says.
The Other View
Rishi Khanna, Director Low Voltage Products of C&S though has a different view regarding expectations from the government on investments, etc. His contention is that with basic demand being strong, and the Indian market still being an unsaturated market, there is a huge room to grow, almost like the next China in the making. “I think the industry here should not think or worry about investments. Rather, we should think big, we should think about the next 20-30 years. This country is going to go somewhere, in a very big way and that step by step approach of “let’s invest a little and see what happens, invest little more and see what happens”, I don’t think is required anymore now. You can have confidence in our economy, at least in our company we have blind faith in the Indian economy and that’s why we are investing and developing production businesses with the conviction that basically if you have a good business philosophy, you have good attitude towards your customer, you have good products, there’s no way you can go wrong. That’s what most companies should think,” he maintains.
Ramesh who is also President of IEEMA agrees, “The electrical industry actually is coming of age. With the government’s program of electrifying all the villages by 2012 and as the economy is growing at the rate of 6-7 percent, electrical industry should grow at the rate of 12-15 percent.”
This, he feels, has already been felt in the scenario today. “For the next 10-12 years, we have to grow at those rates per annum. If you look to China, it has already added 400,000 megawatts and we are still at 125,000 megawatts. We have to catch up to those levels. The next 10-15 years is going to be the era of power industry,” he says.
Taxation Woes
Another issue, which has been rearing itself every year just before the annual Budgets, is the rates of taxation and uniformity in taxation across the country. The general opinion is that compared to 10-25 years ago, when many players in the electrical and electronics industry started their businesses, government policies have improved considerably, but there is still room to improve.
Ramesh says, “We have been representing our requirements to the finance ministry just before the budget. This year also we have gone there. Most of our requests have been heeded to also. Last year we wanted to reverse the import duty on raw materials, which was being charged at higher rate than finished goods. They accorded the request. This year also we have quite a few requests and it’s going to happen.”
But DAV’s Naveen Kumar Deswal says that whatever decisions the government makes, it should make according to the requirements of the prevailing market conditions. “If you see the purchase itself has gone up so much that even the smallest of manufacturers has a Rs 1 crore turnover, which brings him into Excise slab but he doesn’t have the capability of doing even Excise accountancy. I am talking of small traders, businessmen, who are basically my vendors,” he says.
To illustrate his point, Deswal says, “The government needs to increase its Excise limit accordingly. Some years back if somebody was making ten panels, he was making a turnover of Rs 50 lakh; now with the same 10 panels, he is making a turnover of Rs 1.25 crore. So even if he hasn’t really grown, he has come into the bracket of excise for which his overheads is going to increase. He has to keep one more guy to do all the paperwork, he has to pay the excise. The government should move faster according to whatever is happening in the market.”
Sumitron’s MD, S. K. Jain opines that the import duty structure still consists of so many components, and there is no transparency. “It’s very complicated. We need to make these import duties more clear and transparent. For instance, the finance minister says import duty peak rate is 15 percent but that is not true. The import duty actually comes out to be 35 percent,” he says. He also suggests that the working days in the Customs and Excise departments should be increased to six per week instead of the current five since importers are made to wait for 2-3 days longer at times.
Timely approvals is also a problem with Vishye’s Director Marketing & Sales, Paul Dax, who terms getting approvals from quality assurance institutes a serious difficulty. “If we want to get approval from Indian institutes it takes a long time. We want to get faster approval for our technology. Sometimes we send them references; we prove that our quality is good but getting approval takes a very long time. Maybe you need to speed up this process. This will not only result in a positive thing for us but it will also result in a positive thing for India because new technology will come faster,” he says.
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