Due to a sharp fall in orders from the Gujarat Urja Vikas Nigam Ltd (GUVNL), a power equipment makers industry had lost business over the last few years. So that the protection policies in other states executed by power distribution companies (DISCOMs) to protect their local manufacturers added to the woes of the industry in Gujarat.
Power equipment manufacturers from Gujarat have now begun looking abroad for greener pastures. Several small and medium enterprises (SMEs) have either teamed up with power equipment makers in other countries or are scouting for good companies to forge joint endeavour.
"The Gujarat government isn’t giving local companies much of an edge over firms from other states. And our business in other states has gone down due to their local reservation policies. To survive and thrive, we have to now shift focus to the foreign markets," said Samir Kumar Thakkar, managing director, Akshar Energy Structures Ltd, which makes transmission line towers and sub-station structures.
"We will manufacture the products here, and then they will be assembled in Kenya," Thakkar said.
Industry players said that the firms looking for JVs abroad have their eyes intent on Africa as only 20% of the continent is covered by power supply, and the demand for power equipment is going to grow. UAE is another lucrative market for establishing JVs.
"Africa has huge potential for the power equipment industry, and their policies are also friendly. Apart from exporting products, the power equipment makers from Gujarat are also setting up joint ventures with the local firms there. The JVs aim to get better business for the power equipment makers in Gujarat that are currently facing a crisis," said Amit Patel, secretary, Gujarat Electrical Equipment Manufacturers Association (GEEMA).
Patel further said that his firm, Danke Electricals, is already in talks with some firms in Africa for establishing a joint venture. "The manufacturing business for us is no more lucrative in India. Gradually, we may shift our entire operations from Gujarat to Africa, where government policies will benefit us," Patel said.
Vadodara is measured a hub for electrical equipment manufacturing, and just four years ago it commanded 30% of the market in power equipment in the country. But the industry is now struggling to survive and has required that Gujarat DISCOMs should increase reservation of business from the current 50% to 75% for local power equipment manufacturers.
The Covid-induced pandemic has added hit the industry hard as the government reduced electrical equipment orders by at least 50% last year. It’s a huge loss for the industry that earns most of its revenues from DISCOMs.
"The demand for power equipment is going down in Gujarat, as electrification has already been done in 90% of the state. In other states, we can’t compete as they give preference or majority reservation to their local firms. In Gujarat, local firms have only 50% reservation, so we are losing business from all sides," said Amol Damle, director, Airbreak Switchgear Products Pvt Ltd.
"Setting up joint ventures with local firms in African countries like Congo, Kenya, Tanzania, Uganda, and others is a lucrative business proposition for Indian SMEs. But they have to be cautious as the Chinese power equipment makers have already forayed into Africa and are dominating the markets there. Our firms will have to fight it out with them to capture their market share," stated by Nimish Phadke, director of Comfort InstaPower Ltd.