IEEMA strategy can boost India's electrical equipment exports | SupportBiz


IEEMA strategy can boost India's electrical equipment exports

Small to midsize electrical equipment manufacturers in India, whose share in the global electrical exports pie is an insignificant one-percent only, must look at the global market, if not for growth, at least for survival. Exports will ensure a healthy financial situation for the smaller players in the long run, according to a trade body.

Electrical equipment exports out of India, valued at Rs. 20,000 crore, have grown 42 percent year-on-year, said J.G.Kulkarni, president, Indian Electrical and Electronics Manufacturers Association (IEEMA). “We hope to grow our exports to five to seven percent within five years and are working on a plan to help IEEMA members increase their exports,” Kulkarni said. 75 percent of IEEMA’s 795 member companies are small to midsize firms.

IEEMA has a two pronged strategy to grow exports – develop clusters or industrial zones wherein several manufacturers can pool in their resources to research and develop better products; and work with the Export-Import Bank of India’s (EXIM bank) and tap it vast expertise on the exports front, Kulkarni said.

IEEMA hopes to make it easier for its members to borrow funds from EXIM and sell to emerging market such as the growing economies in Africa. “The details are being worked out,” Kulkarni said.

The focus of the cluster-approach “is co-operation, not competition. Companies can share resources effectively, at minimal costs. We hope to develop four clusters in India, one in each region” said Kulkarni.

South-east Asia, Africa and South America are the key export markets for Indian electrical equipment makers. As such, fluctuations in demand from the US and the Eurozone, top destinations for Indian goods, do not affect local electrical equipment manufacturers, Kulkarni said.

On the domestic front, IEEMA views the government’s decision to bail out cash strapped distribution companies by restructuring their loans as positive for manufacturers of equipment such as transformers, cables and meters. “My hunch is that the electrical equipment industry has not seen any volume growth over the last few quarters. With discoms’ financial health improving, the industry could witness a 10 percent volume growth annually,” Kulkarni said.

Government intervention will also speed up disbursements by discoms to their suppliers. “At present payments are held up for 150-180 days, which is a burden on a company’s working capital. The industry norm, of 90 days, is a comfortable position to work with, especially for the smaller firms,” Kulkarni said.