Plan to counter threat from Chinese suppliers

Pricewaterhouse-Coopers (PwC) and the Indian Electrical & Electronics Manufacturers' Association (IEEMA) have recommended that the Centre and state governments ensure 15 per cent price preference for government enterprises.

It said such a decision would help counter the growing threat from Chinese suppliers.

The statement called for preference in bids for both domestically- and externally-funded international procurements.

In a statement, they also said that the Central Electricity Authority should frame regulations for standardisation of specifications for grid-connected equipment, adding that this should cover higher voltages and, subsequently, extend to downstream voltages.

Executives said these measures were immediately required as the power equipment manufacturing industry in India [Images ] was concerned about proliferation of Chinese suppliers.

While Chinese manufacturers were at an advantage due to certain benefits and incentives made available to them, Indian manufacturers did not enjoy similar comforts, they said.

Chinese manufacturers benefit from a lower level of lending rates, financial support to state-owned enterprises, cheaper raw materials, undervaluation of currency, lower transaction costs and a favourable tax regime.

Already, Chinese companies have bagged 41 per cent of the main power plant equipment for thermal plants to be set up by private developers during the 11th Plan.

Similarly, China's share in the imports of transmission and distribution equipment into the country increased to well over 26 per cent in 2008-09 from 7 per cent in 2000-01. That's more than the annual value of imports of electrical equipment in India that has grown at a compounded annual growth rate of 23 per cent over the same period.

Further, the domestic main plant equipment industry is facing the issue of non-standardisation of layouts and design parameters for power plants in the country.

Other problems include anomalies in the mega power policy favouring foreign suppliers over the domestic industry, lack of critical infrastructure for handling heavy consignments and domestic constraints in the availability of certain critical inputs and raw materials domestically.

Interestingly, Minister for Heavy Industries and Public Enterprises Vilasrao Deshmukh [ Images ] on Saturday shared the concerns of Indian manufacturers and said his ministry would make all efforts to protect their interest to effectively tackle the China factor.

"The Indian industry has already voiced its concern over the growing Chinese threat. The industry has argued that India should not become a dumping ground for Chinese equipment. My ministry will try to protect the interests of the industry, whereby Indian manufacturers get a proper environment," Deshmukh told Business Standard. Earlier, he released the PwC-IEEMA report at the Elecrama 2010 event.