Heavy Electric Equipment Industry in India

An introduction to heavy electric equipment

The heavy electrical equipment industries is one of the major sectors for a stable economy and includes the equipment used for power generation, transmission, distribution, and its utilization. The principal goods include equipment like hydraulic, steam, gas and wind operated turbines, turbo generators, steam generators, switch gears and related accessories, power grid equipment like transformers, rectifiers, electric furnaces, etc. which are used by all sectors of economy. The industry, designs, develops, manufacture, assemble and implement the electrical systems like industrial conveyer belt systems, escalators, elevators, boilers, transformers, generators and other electrical machineries that feed the needs of energy and industrial sectors. However the industry excludes permanently installed machinery and engineering, classified under Engineering and Construction, and small generators classified in Electrical components and equipment.

Structure of Electrical machinery

Global view of Heavy Electric Industry

During the early times of 1950 to 1990, the export sector of heavy electrical equipment was monopolised by the US, Germany, UK, France, Japan, Switzerland, Italy, Sweden, and Canada and the largest importers of 1965 comprised of USA, Netherlands, Germany, Switzerland, UK, Spain, France, India, Japan, Mexico, Canada, Denmark, Italy, Brazil, Australia, Austria, Sweden, South Africa, Belgium, and Argentina according to the World Bank report. At these times the global industry were controlled by some large firms like General Electric, Westinghouse, Associated Electric Industries, English Electric, GEC, C. A. Parsons, A. Reyrolle & Co., Siemens-Schukertwerke, AEGd, Brown Boveri Co., CGE, Alsthom, CEM, Hitachi, Tokyo Shibaura Electric Co. (Toshiba), Mitsubishi Electric Corporation, Oerlikon, ASEAf, ACEC, Ercole Marelli, CGE, Ansaldo S. Giorgio, Tecnomasio Italiano, and Elin.

Decades passing after, several other nations, mainly from Asia, has shown a raise in their electric machinery export and consumption, and China is one of the largest player in the sector, especially in the total manufacturing sector. Following China, Indian industrial sector also shows tremendous growth over the last decade. As on 2016, Asia Pacific region boasted the largest in electrical equipment manufacturing market with about 57% of the total market share around globe. This can be attributed to a high demand for electrical equipment such as batteries, motors and generators from both individual customers and manufacturing companies. This is followed by Western Europe serving the second position with a largest market share of 19% and the position of third largest region occupied by North America accounting for 12% of the market share.

Heavy Electric Equipment Industry in India

Electrical machinery industry is one of the major capital goods industry in India and has the largest share in the total market size of capital goods in the country (US$ 25 billion). The heavy electric machinery industry took its birth in India, with the set-up of Heavy Electricals (India) Ltd. in 1956 at Bhopal, which started production in 1960, and the foundation of Bharat Heavy Electricals in 1964 and the merging of both organisation, forming Bharat Heavy Electricals Ltd. (BHEL). Under the two segments of the industry (power generation and T&D equipment sectors), the T&D (Transmission and Distribution) sector makeup its 85% and rest 15% is contributed by generation equipment sector.

Growth of the industry as on 2011-2012 FY

In the 2011-12 period, the industry raised over 24 billion US$, which contributed 8% to the manufacturing sector and 1.5% to the nation’s GDP, witnessing a growth of 4%. The power generation systems (BTG contributed) and major T&D equipment segment of transformers, energy meters, cables, switchgears, transmission lines, capacitors, etc., with an industrial size worth 6.5 and 13.4 billion US$ respectively showed the high output growth, within this sector. Other equipment such as industrial electronics, instrument transformers, stamping and lamination, surge arrestors, winding wires, insulators, insulating material, indicating instruments, etc., contributed to an industrial size worth US$ 5.2 billion. The heavy electric machinery industry, in India is forecasted to grow at a CAGR of 13.38% during the period of 2013-2018.

Vision 2022 for the Indian electrical equipment (IEE) industry

The mission 2012-2022 was developed with a concept of making India, a fruitful nation for the production of electrical equipment, reaching a goal of larger industrial size of US$ 100 billion by 2022. The main aim was the economic growth of the nation reaching a GDP growth rate of 8-9% and the goal was set to get achieved by boosting the electrical equipment industry, which is witnessing heavy investments and increasing demands. The mission also aimed at increasing the power generation capacity to 88.5 GW by 12th FYP (2012-17) and to 93 GW by 13th FYP (2017-22), which according to IBEF information, was expected to reach 350 GW.

Growth of the industry as on 2017-2018 FY

Over the 2017-18 period, total production of the industry reached US$ 27.3 billion and is estimated to reach US$ 100 billion by 2022, providing direct and indirect employment to 3.5 million people. The industry hit a growth rate of 12.8% from that of 2016-17 period, with an export point of US$ 6.5 billion, and the major export markets were US, UK, UAE, and Germany. Major export products include rotating machines (motors, AC generators, and generating sets) & parts, transmission line towers, switchgear and control gear, cables, conductors, transformers and parts, etc.

Role of Indian power sector in the growth of EE industry

The expansion of power sector is important for raising both generation capacity and demands of electrical machinery, manufacturing, and other industrial operations and hence proper power infrastructure is said to be the fuel of growing economy. As of 2013, India has the fifth largest generation capacity, and is the consumer of 3.4% global electricity generated, that put it sixth in position of world’s largest electricity consumers. As of 2014, India was at the 99th position among electricity accessibility, which with various initiatives by the government, has been raised to 26th position among world nations.

Segment wise analysis of Indian EE industry

The growth of power sector and electrification is assumed to increase the domestic demand for electrical equipment and based on the investment and capacity targets, the demand for BTG is assumed to reach the range of US$ 25-30 billion and that of T&D to reach US$ 70-75 billion by 2022.

Generation equipment sector

Generation equipment like boilers, turbines and generators (BTG) are being produced by full capacity, along with the augmentation of existing ones and setting up of new capacities by many companies. This BTG equipment sector has been awarded with investments from many foreign players to set up their production plants in India, due to the expanding demand. There is also a significant import of boilers, mainly from China and South Korea. Both native as well as foreign players has been focusing to manufacture products based on supercritical technology which reached 60% share in 2012-17 from 14% of 2007-12. The capacity in domestic BTG which was around 25 GW and 40 GW in 2012 and 2015 respectively, which has been raised and expected to be continued so, due to the entry of native companies into partnership with global players.

Transmission & Distribution (T&D) equipment sector

The T&D industry in India is diverse and manufactures a large range of goods ranging from energy meters to switch gears, transformers and transmission line towers. There are also a large number of SME level players in this sector. Therefore the total volume of production will be higher. The sector witnessed a considerable growth from an industry size worth US$ 4 billion during 10th FYP to US$ 13.4 billion during the 11th FYP. The T&D sector has significant capacity of production, operating broadly at 70% capacity utilization and will be sufficient to meet the growing domestic demand for these equipment. Today, India manufactures and exports a wide variety of T&D equipment and this scenario along with newer technologies being introduced by foreign players is thought to express excess manufacturing capacity of electrical equipment industry in India.

Key players in the Indian electrical equipment industry

Bharat Heavy Electricals Limited (BHEL)

Bharat Heavy Electricals Limited (BHEL), established in 1964, is one of the largest engineering and manufacturing companies in its sector, founded and owned by Government of India, headquartered at New Delhi. The company merged Heavy Electricals (India) Limited wit it in 1974 and was listed as public limited in 1991. Over periods, the company developed capabilities to produce various mechanical, electrical and electronic equipment. Today the company expands its functions for a wide range products and services in the sector of power, transmission, renewable, transportation, water, etc. As of the recent year, about 55% of the total power generation in India is possible by BHEL supplied equipment. The company also provides locomotive equipment for Indian Railways as well as defence equipment. BHEL serves for over 76 countries across six continents of the planet and has built power plants across 21 countries including New Zealand, Malaysia, UAE, Egypt, Oman, Bhutan, Iraq, etc. BHEL has a profit before tax turnover growth of 5.7% in 2017-18 FY.

Larsen & Toubro (L&T)

Larsen & Toubro is one of the largest and trusted private companies in India, founded in 1938 by two Danish refuge engineers. Headquartered in Mumbai, it is one of the largest MNCs in India, and have an industrial sphere in Engineering, Information Technology, Financial services, Construction and manufacturing. Now the company owns many subsidiaries, including L&T Technology Services, L&T Infotech, L&T Mutual Fund, L&T Infrastructure Finance Company, L&T Finance Holdings, and L&T MHPS. The company has a range of products from Power generation plants, Electrical & automation products, Heavy engineering, Hydraulics, Hydrocarbon engineering, Metallurgical and material handling, Ship building, Construction and mining machinery, rubber processing machinery, metallurgic and material handling, and IT & Digital Solutions.

Bharat Forge Limited (BFL)

Bharat Forge Limited (BFL), headquartered at Pune, Maharashtra is a subsidiary of Kalyani group. The company boasts the position of world’s largest forging company, and involved in automotive, locomotive, power, oil and gas, marine, mining and construction, and aerospace industries. BFL has its manufacturing presence overseas in Germany, France, Sweden, and USA. BFL Khedcity is the biggest Special Economic Zone in Pune. The company is developing its capabilities in electric vehicles, batteries, defence, aerospace, helicopter engine manufacturing, etc.

Triveni Engineering Industries

Triveni Engineering Industry Private Limited, is one of the largest sugar manufacturers in India, and leader in engineering business that include gearboxes, high speed gears and water treatment solutions. The company owns six co-generation plants with a combined capacity of ~103 GW. Triveni Turbines, GE triveni Turbines Limited, set up in 2010 at Bengaluru, is a joint venture between GE oil and gas and Triveni Turbines that manufactures steam turbines having capacity for producing 30.1 to 100 MW industrial power generation. The business network of Triveni group extends the entire planet on USA, Canada, Mexico, Guatemala, Nicaragua, Cuba, Australia, Russia, Venezuela, Colombia, Ecuador, Peru, Chile, Argentina, Brazil, South Africa, Zimbabwe, Mozambique, Zambia, DRC, Gabon, Nigeria, Ghana, Morocco, Guinea, Swede, Denmark, Ireland, Iceland, Finland, Spain, France, Italy, Austria, Germany, Ukraine and other European nations, UK, Iran, Iraq, Syria, Oman, Yemen, Kazakhstan, Uzbekistan, China, Taiwan, Singapore, Malaysia, Srilanka, Papua New guinea, Bangladesh, Myanmar, Laos, Thailand, Vietnam and other Asian nations.

Foreign trade of Indian electrical equipment

During the 11th FYP, the total exports in the electrical equipment industry worth US$ 4.6 billion, while imports override this reaching US$ 15.7 billion. The major export market during this period were US, Germany, UK, Nigeria and Singapore. While coming to the import part, China has the major share as an importer, contributing 45% of the total imported products, while USA, Germany, Japan, South Korea, and Italy are other major import contributors of electrical equipment.

Today, Indian EE industry has become more diversified, matured, and there is a strong manufacturing base. Indian industries have a robust supply chain and stable performance of the products makes a Brand India signature all along the Globe. The major export markets of Indian electric equipment include USA, Canada, Nigeria, Saudi Arabia, Singapore, UAE, China, France, Italy, UK, Kenya, Brazil, Germany, Mexico, and Japan. In 2017-18 FY, the Indian electrical equipment industry has shown an astonishing 2 digit growth of 12.8%. The IEEMA (Indian Electrical and Electronics Manufacturer’s Association), this growth was backed by the improvement in growth during the 3rd and 4th quarter of 2017-18, while which, the industry shown a growth of 25% and 14% respectively in Q3 and Q4. This growth of 12.8% is driven by growth in individual segments such as rotating machines (12%), HT Motors (18%), cables (20%) and Meters (28%).

Investment opportunity in India

The domestic demand for electrical equipment are getting increased by developments such as raised electrification, raising entrepreneurship, growth of SMEs and large scale industries, optimising Government policies, International ties, quality products and creation of trusted brand values etc. in the last decade. With the Make in India scheme, Skill India initiatives added with cheap labours and negotiated Government policies for manufacturing and export, the 12.8% growth of Indian electric equipment sector is thought to jump heights and the sectors will be reviving. This makes the Indian manufacturing sector a worth platform to invest on and so does the electrical equipment industry.

Major foreign investors in Indian electrical equipment sector

Mitsubishi Heavy Industries - MHI (Japan)

Mitsubishi Heavy Industries Limited is a Tokyo based multinational company that functions in engineering, electrical and electronic equipment manufacturing. The company operates in the energy sector, manufacturing boilers, combined cycles, turbines, fuel cells, industrial machineries such as compressors, electronic sector, manufacturing air conditioners, refrigerators, aerospace sector, manufacturing aerospace components, aircrafts, rockets and space crafts, etc. defence sector, manufacturing missiles, torpedoes, warships, and armoured fighting vehicles, transportation sector, manufacturing electric buses, diesel engines, railway vehicles, ship building, etc.

Mitsubishi started is business in India during 1920s, and the Mitsubishi electric entered into the Indian business by providing quality products. Mitsubishi was the first Indian brand to sell 5 star rated products. Mitsubishi started Indian business by supplying electric locomotive equipment for Indian Railway in 1960s, slowly by which the company have three manufacturing units in India, currently. Understanding the importance of tier 2 cities and semi-urban areas, the company performs a constant market research to raise from among the strugglers in this sector. Today the company eyes Indian market, to sell air conditioning products, factory automation products, process automation and renewal energy segment, semiconductor products for the Indian Railways, renewal sector and medical devices, etc. As of 2014 FY, the company have a sales turnover of INR 9.3 billion, which was expected to raise to INR 22-23 billion by 2021.

As a part of the Make in India programme, Mitsubishi Electric India, had set up a factory for transportation systems business in Bidadi, near Bengaluru in 2015 and another, a technical centre for CNC business in India at Peenya, Bengaluru in 2016.

Hitachi (Japan)

Hitachi is a Tokyo based MNC, that manufactures power plants, elevators and escalators, telecommunication equipment, electronic equipment, defence manufacturing, automotive components, construction equipment, IT, etc. One of the popular ventures it created in India is one of its former division, TELK (Transformers and Electricals Kerala Limited) well known for its quality transformers that had great demand in Indian power system. Hitachi Communication Technologies America, Hitachi Consulting, etc.

Hitachi India started its business in 1930s and have a wide range of products in the IT, Telecommunication, Industrial machinery, Infrastructure, transportation and urban development. As of 2013 India accounts only for 1% of total global sales of the company, which is thought to raise by 3% in following years. Power equipment manufacturing plants has been set up in India as a joint venture with BGR Energy Systems. The company operates through 24 companies that employs over 7,508 people in India, which was thought to raise by 13,000 in the following years.

Toshiba (Japan)

Toshiba is a Tokyo headquartered MNC, with a variety of products ranging from IT and communication equipment, Power systems, Industrial and social infrastructure systems, electronic components and materials, consumer electronics, etc. The subsidiary power systems company manufactures combined-cycle gas power plants, nuclear power plants, hydro-electric power plants, and associated components, while the Social infrastructure systems company comprises Transmission & Distribution Systems Division, Railway & Automotive Systems Division, Motor & Drive Systems Division, Automation Products & Facility Solution Division, Defence & Electronic Systems Division, and Environmental Systems Division.

In the Indian business sector, Toshiba has more than 50 years of history. While coming to the heavy electric industry, Toshiba, in India has many subsidiaries the major being Toshiba India Pvt. Ltd. set up at Gurgaon, TPSC (India) Pvt. Ltd. at Hyderabad, Toshiba JSW Power Systems Pvt. Ltd. at Chennai, Toshiba Johnson Elevators India Pvt. Ltd. at Mumbai, and Toshiba Transmission and Distribution Systems (India) Pvt. Ltd. at Telengana. Toshiba Plant Systems & Services Corporation (TPSC), is an Engineering, Procurement and Construction Company that extends its services in building thermal power plants, hydroelectric power plants, gas insulated switchyards, industrial plants, etc. The company has a wide service sphere both within India as well as overseas. Toshiba JSW Power Systems Pvt. Ltd. is a joint venture between Toshiba Corporation and JSW Group, India for manufacturing super-critical Steam turbines and Generators for Thermal Power Plants in India. Later, the joint venture was merged with Toshiba Thermal & Hydro Power Systems Company, a division of Toshiba India Private Limited. The ownership is 75% for Toshiba and 25% for JSW steels and JSW energy. Toshiba Johnson Elevators India Pvt. Ltd. is a joint venture between Toshiba Elevators Private Limited boasting the experience of installing the world’s fastest elevators, and Johnson Lifts Pvt. Ltd. in 2012, and the products include elevators, escalators, moving walks, etc.

In 2017, Suzuki Motor Corporation, Toshiba Corporation, Denso Corporation established a joint venture for manufacturing lithium ion batteries in India, with an investment of 20 billion Japanese Yen. 50% share will be owned by Suzuki, 40% by Toshiba and 10% by Denso.

Schneider Electric (France)

Schneider Electric is a French MNC, operating in the area of energy management and automation for industries and homes. The company began its operations in 1836, operating as a steel industry, which eventually grown to acquire many electrical equipment manufacturers, emerging to Schneider Electric in 1999. Today the company have a wide range of products including those required for building automation and control, residential and small business, Medium Voltage Distribution and Grid Automation, Industrial Automation and Control, Solar and Energy Storage, etc.

Globally, the company has over 250 factories and India is one of the largest industrial countries of the company. Schneider Electric India Private Limited is founded in 1995, headquartered at Gurgaon, Delhi. As of 2016, Schneider Electric have over 28 factories and 20,000 employees with 1,500 people in R&D, along 50 cities of the country.

Legrand (France)

Legrand is a France based global player of electrical equipment and cabinet manufacturer founded in 1904. The product range include switches, electrical connectors, and other circuit components, circuit breakers, electrical cabinets, electrical conduits, and other cable management products.

Headquartered in Mumbai, Legrand India operates across the nation through 5 companies, 1 R&D centre, 14 manufacturing units, 13 training centres, and 54 offices. In 2010, the electrical installation giant, acquired the switchgear business of Noida based company, Indo Asian Fusegear for INR 600 Cr. In 2012, the giant proceeded another great acquisition of Numeric UPS of India for INR 873 Cr. In 2017 Legrand launched its INNOVAL studio, which is a design studio that shows another renewed investment by the company in India.

Alstom (France)

Alstom is a French MNC, primarily operating on rail transport, signalling, and locomotives. In India Alstom has a strong presence and engaged in metro rail projects in several Indian cities. It has also constructed an electric locomotive factory in Bihar, for manufacturing and supply of high horse power locomotives. The company has a rolling stock manufacturing unit in Andhra Pradesh, and an Engineering centre of excellence set up in Bengaluru, which has a strong manufacturing base and supply chain that can feed the demand across the globe.

General Electric - (GE) (USA)

General Electric, founded 1892 is an American MNC that operates in the area of power, renewable energy, transportation, oil & gas, lighting, health care, aviation, etc. GE has many achievements as a business organisation, including recognition as the 13th largest US firm in terms of gross revenue in 2017, 14th most profitable company as of 2011, and 4th largest company in the world as of 2012.

GE’s presence in India has a history of over 100 years beginning with the construction of a hydroelectric project. GE in India is partnered with BHEL, Wipro, SBI, Triveni, etc. focusing on the needs of Indian customers and producing goods on demand. The company has its R&D centre, JFWTC set up at Bengaluru and a technical centre at Hyderabad.

GE Oil & Gas sells advanced equipment and services for the offshore and onshore oil and gas industry, from subsea, drilling and production, LNG, pipelines and pipeline integrity solutions, sensor-based measurement, asset condition monitoring, controls, and radiation measurement solutions, storage to industrial power generation, refining and petrochemicals. GE Power works in all areas of the energy industry including renewable resources such as wind and solar, biogas and other alternative fuels, coal, oil, natural gas and nuclear energy. GE Energy Connections works on solutions for the delivery, management, conversion and optimization of electrical power for energy-intensive industries. GE Intelligent Platforms provides software, hardware, services, and expertise in business process management, discrete manufacturing, process automation, and embedded computing.

Ansaldo (Italy)

Ansaldo STS (Signalling and Transportation System) is an Italian company that operates in the field of railway signalling, integrated transport systems, and freight operations.

Employability in Indian electrical equipment industries

Heavy electrical equipment industry in India have large industrial size that makes India one of the major player in the sector when considering worldwide. BHEL has an asset of US$ 8.5 billion and employs around 39,821 people as of 2017. L & T has an asset of US$ 32 billion and employs around 104,027 people as of 2018 with around 10,000 in its EE division. Alstom, in India, employs around 3600 people in their various manufacturing and supplying units. According to the information available, these companies accommodate a large number of employees with technical skills, mainly from the engineering, diploma, Business management and other industry oriented professionals.

• B.Com graduates have a good vacancy over several of these companies, hired as accountants, managers, and other finance and accounts oriented position. Surely these jobs will be of considerable value, with a pretty amount salary.
• B.Tech Electrical/ Electronic graduates are hired for designing, and developing devices, components and new products. They are also hired to the R&D wing. In India, R&D in this sector has come up with large FDI and the country have a trusted maturity in research.
• MBA/PGDM graduates have a good opportunity in marketing, business development, strategy maintenance, human resource management, etc. in these companies. Candidates with a good attitude can shine themselves in these industries and can reach heights in business related jobs.
• M. Tech/MS graduates are mainly opted for jobs having sensitive character from the initial days itself. Mostly well experienced people are hired to reputed positions, and may be directly taken as project assistants in the R&D or as research scholars.
• BBA graduates having less colourful positions as there is a hand full of MBA graduates, are mainly hired junior positions, to reception or public relations, etc.
• Diploma holders can have technical positions in the assembling section, or in the assisting position of engineers. Highly skilled employees once proven in this position, can get higher posts of supervising or other attractive jobs.

Trainings in electrical equipment manufacturing

Industries are in search of valuable professionals with a good attitude, personality, confidence and positive approach for hiring them to fill their required vacancies. There are several private institutions that provides various certificate courses that include: CCNA, Embedded system, VLSI systems, Robotics and Intelligent Systems, Power Electronics, Signal processing, Hardware Networking, Verilog and VHDL, Aircraft Maintenance Engineering-Electrical System, Real Time Operating Systems (RTOS), DC and AC motors, Mechatronics, PLC, SCADA, etc. Apart from these, various Government owned organisations such as BHEL, KELTRON, IITs, Technical Universities, etc. provides traineeships and internships in different fields of electrical machinery industry. Private companies like GE, Intel, ABB, Synopsis, Alstom, Babcock, etc. also provide internships and industrial level trainings. Skilful students may be placed in the firm itself.

Study and review article prepared by content developers at Agrraj Consultancy Services Pvt. Ltd. for swapdial.com. Readers can also seek data from other sources for their proceedings to do Business in India.