Pumpsets can help bridge the power deficit in India

Pump Testing

Dinesh Patidar explains that the challenges from the unorganized sector may prompt some of the organized players to look at exports, while the bigger opportunity is clearly in India – but lot will depend on what extent the measures announced by the government are implemented.

Dinesh Patidar

Dinesh Patidar

The Indian power sector suffers from acute shortages, with the shortage for the current financial year being projected at 5.1 % by the Central Electricity Authority (CEA). This is not an isolated case that the country has witnessed such shortages for years. The challenge is even more acute in a country that is planning to get back to the heady days of 9 % GDP growth.

There are two ways of meeting this deficit: the first is to manage the supply side i.e. generate, transmit and distribute more power. The other way is to manage the demand side i.e. consume less power/opt for more energy efficient solutions. In a country where power supply trails demand, the solution at least partially lies in the second option.

This is where pumpsets can play an important role. Increased usage of energy efficient pumps can alleviate the pressure on the national grid as well as offer a more cost effective solution.

In India the growing pumps market can be segmented into agricultural, industrial and domestic.

Recent trends in pump industry:

The Indian Pump industry has so far been traditional and conservative in nature due to its specific and highly fragmented markets but is now on a transformation path in terms of use of technology and brand awareness with advanced manufacturing processes. Increased infrastructural development and higher industrial production will boost demand for better quality pumps and pumping solutions. Use of innovative technologies in pump manufacturing has significantly contributed to the competitiveness of the pump industry. Largely dominated by unorganized players, end users in pump industry are gradually being shifted to organized players due to increased brand education and technology awareness.

Emerging demand scenario:

The renewed hopes on higher industrial production, infrastructure development, urbanization, and farm sector incentives by government with focus on more areas for cultivation will be the determining factors for the growth of the pump industry. Various governments from time to time had stressed the need for more focus on agriculture and farm sector. There are huge prospects for this industry in Asian economies like India and China which are significantly planning to add more capacity to pump industry. Growing interest in alternative energy sources to counter greenhouse gas emissions are likely to contribute to the growth. Solar pumping system, which runs fully on solar energy, is an example. These systems can be installed even at the remotest locations where grid electricity is not available. The focus on energy-efficiency offers considerable potential for growth, mainly due to rising energy costs and the intense efforts on driving down costs of processes/production. End users are increasingly seeking the optimization of their processes to reduce energy consumption.

I would like to dwell at length on the agricultural pumpset market due to the importance of the farm sector to the Indian economy. Agriculture may contribute only about 14 % to the GDP but accounts for about 18 % of the power consumption and about 60 % of the Indian population directly depends on it for a living. Further, thanks to the growth in rural wages, it has emerged as an important market for goods and services. Needless to say the contribution of Indian agriculture to the Indian economy goes far beyond its contribution to the GDP.

The criticality of electricity availability for the farm sector cannot be underestimated. It is here that we believe that agricultural pumpsets can play a key role bridging the power supply gap by providing cost effective and energy efficient pumping solutions. The chief drivers for this market are the depleting groundwater levels coupled with highly subsidised or sometimes even free power and fairly supportive policy environment. The unorganized sector is a huge player in this market which accounts for about 40 % of the market share. The players from this sector are able to price their products at a discount of 30-40 % to those in the organized sector and this gives them an advantage vis-a-vis the organized sector.

The market dynamics are compelling many of the organised players to cater to export markets where they can earn higher margins since they do not have to face similar competition from the unorganised sector. The Gulf countries, Europe and Africa are emerging as major export destinations.

The government has meanwhile introduced several favourable measures to spur growth of the solar pump business in India. In March this year, it announced that the Ministry of New and Renewable Energy (MNRE) will provide a grant of Rs.300/- for the installation of 17,500 solar irrigation pumping systems by 2016 which will be funded by carbon tax on coal.

The president too has in his recent address (post swearing in of the new government) announced a thrust on agriculture with an emphasis on only allowing non–cultivable land for non-agricultural purposes like construction. This coupled with other measures like launching massive irrigation projects at the village level and inter-linking of rivers can only give a massive fillip to the growth of the pump industry.

All in all, while challenges from the unorganized sector may prompt some of the organized players to look at exports, while the bigger opportunity is clearly in India. Much will depend on to what extent the measures announced by the government are implemented.

(The author is Chairman and Managing Director – Shakti Pumps (I) Limited.)

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