Electrical drives market poised for big growth

Mumbai:  Indian Electrical Drives Market, which was valued at more than INR 15,000 million during FY2010-11, is expected to grow at a compound annual growth rate (CAGR) of 12 percent until FY2015-16, according to an analysis from Frost & Sullivan.

However, the Indian electrical DC drives market, which is losing out to the superior AC technology, was worth more than INR 800 million during FY2010-11 and is expected to grow at a CAGR of more than 4 percent until FY2015-16, the report said.

With energy accounting for 35-40 percent of energy-intensive industries’ production costs, the Centre is stressing the need for energy efficiency, thereby giving a leg up to the domestic electrical drives market.

Government initiatives such as the Bureau of Energy Efficiency’s (BEE’s) perform-achieve-trade (PAT) scheme that allows industries to derive business benefits through the exchange of energy savings certificates will give a huge boost to the uptake of electrical drives. Further, the BEE’s Star Rating program, which rates buildings based on their energy usage, will also drive the demand for AC drives.

There is substantial scope for the deployment of AC drives for energy conservation in the nine designated sectors of electric power generation, fertilizers, steel, cement, pulp and paper, aluminum, chlor-alkali chemical industry, textile, and railways.

Even while acknowledging the need to save energy, end users with limited budgets are deterred by the electrical drives’ high upfront costs. This issue will fade into insignificance in due course, as leading drive suppliers are setting up assembling/packaging facilities in India.

“Many market leaders have regional facilities that assemble/package drives, indigenizing various parts and auxiliary equipment as much as possible,” said the analysis, adding, “This reduction in production costs enables them to lower their drives’ prices and compete against import-based manufacturers.”

While the electrical drives market is anticipated to witness a high double digit growth over the next six years, budget constraints of small- and medium-sized enterprises (SME) segment impedes the market from growing at its optimum pace. The SME segment contributes significantly to India’s gross domestic product (GDP), but has been bogged down by inadequate funds. They are particularly reluctant to invest in the expensive MV drive segment.

“High price has been a major hindrance in the growth of MV drives,” noted a Frost & Sullivan analyst, adding, “However, with increasing standardization, their prices are expected to drop, facilitating their acceptance among SMEs.”