IEEMA demands the Prime Minister to safeguard Indian manufacturing against imports

The Indian Electrical & Electronics Manufacturers’ Association (IEEMA), an apex body of the country’s $25 billion electrical equipment industry, has appealed to the Prime Minister to intervene and safeguard the interests of Indian manufacturers against the constant onslaught of imported equipment in the power sector, especially from China.

In a detailed representation, IEEMA President Mr. J G Kulkarni has requested that the government should introduce a uniform basic customs duty of 10 percent on all electrical equipment from 7.5 percent in case of transmission and distribution equipment and 5 percent on generation equipment.

“The above measures will support Indian manufacturers, who are not seeking protection but a level playing field, and provide necessary safeguards to the domestic industry that is facing non-market competition on account of cut throat below-cost entry level prices offered by Chinese manufacturers,” said Mr. J.G Kulkarni, President, IEEMA.

“The recent initiative of setting a timeline for the manufacturing sector is a welcome move and we hope that the committee headed by the honourable Prime Minister would also look into boosting the morale of the electrical and electronics manufacturing industry,” said Mr Kulkarni.

The industry has been long suffering due to inexpensive imports and is at a constant disadvantage vis-à-vis imports due to sales tax / VAT, entry tax / octroi; higher financing cost; lack of quality infrastructure; dependence on foreign sources for critical raw material and components, etc.

For the first time in 10 years, the T&D equipment sector has seen a negative growth of 7.8% in 2012-13. The industry has experienced hardly any growth in capital expenditure manufacturers are working at less than 70% of their production capacity.

During the last seven years, 2005-06 to 2012-13, India’s imports of electrical equipment have increased at a compound annual growth rate (CAGR) of 24.67% in rupee terms and were at Rs 64,674 crore in 2012-13.

China’s share in Indian imports of electrical equipment has dramatically increased in the last few years and now it stands at 44.92% (2012-13) of the total from 15.26% in 2005-06. Imports from China have grown at a CAGR of 45.46% in the last seven years and were INR 29,054 crore in 2012-13.

"Imports of electrical equipment in the country have assumed very threatening proportions and have now captured close to 40% of the market for electrical equipment in India. However, with imports becoming costlier in a volatile currency environment and likely to hurt power projects, government should take necessary steps to encourage domestic equipment manufacturers and boost local demand for power equipment." said Mr. Kulkarni.

IEEMA has also requested the government to frame model procurement guidelines for utilities, besides ushering in standardisation of product specifications and design parameters.

As per IEEMA’s data, the proposed measures will provide a major fillip to the Rs 1.20 lakh crore Indian electrical equipment industry that provides direct and indirect employment to over 1.5 million.

In the event of the domestic built-up capacity standing under-utilised across several products, IEEMA wants the government to stipulate a minimum percentage of the total procurement by any utility to be of ‘Made in India’ products. The government should also stipulate some amount of price preference for Indian products in procurement by utilities.

The apex association wants the government to initiate time-bound action in the form of limiting participation in tenders for bidding for domestically funded projects to domestic manufacturers only.