Electrical machinery sector: Exploring AUS - IND Opportunities
Chapter 2: ?Unravelling India’s electrical market and export opportunities for Indian companies in Australia
his Chapter delves into the Indian electrical equipment market, offering insights into its value, volume, and the opportunities it presents for both international and domestic manufacturers. It explores the export trends in India and their potential future trajectory, with a specific focus on Australia. Additionally, it discusses how Australian businesses can view India as an overseas manufacturing hub and trusted source for imports of electrical equipment.?
Electrical Market boom in India, Government Initiatives and outlook?
The electrical equipment market in India is set to grow significantly, with experts predicting a yearly growth rate of about 11.68% between 2022 and 2027. This growth could mean the market will be worth about USD 52.97 billion more by 2027. Many things are causing this growth, such as more homes and buildings being built, a greater use of renewable energy like solar and wind, and big investments in the power industry. The government is investing in power, and there's more trading of electricity between countries. The industry is garnering interest from electronics manufacturers, fostering a resilient ecosystem within the broader electronics and electrical appliances market.?
In the last ten years, it's been really important for India to grow steadily. This growth helps meet the increasing demand for things like energy, supports other parts of the economy, and makes India more competitive internationally so it can sell more goods abroad. To keep up, country needs to make sure that their own companies making energy-efficient products. Foreign companies often get help from their governments, like subsidies for materials, bonuses for exporting, cheaper loans, and better infrastructure. So, it's crucial that we level the playing field for our own energy-efficient manufacturers.
The electronics sector holds significant importance within global value chains, boasting extensive connections across major manufacturing hubs worldwide. With a focus on electronics, the government has consistently emphasized this sector, introducing various policy measures to foster its growth and expansion. Recognizing the sector's potential for domestic production and increased exports, the Government of India introduced the National Electronics Policy (NEP) in 2012, offering a roadmap for domestic electronics sector development. The NEP was formally approved in 2019, aiming to position India as a global hub for Electronics System Design and Manufacturing (ESDM) by cultivating capabilities for core component development and creating a conducive environment for global competitiveness.
Key initiatives such as large-scale electronics manufacturing, the Scheme for Promotion of Electronic Components and Semiconductors (SPECS), the Modified Electronics Manufacturing Clusters Scheme announced in 2020, and the Production Linked Incentive (PLI) scheme for IT hardware, notified in March 2021, have significantly bolstered India's domestic electronics sector. These schemes aim to increase manufacturing scale, enhance the global quality and efficiency of electronic products, and attract global companies to establish manufacturing operations in India, thereby facilitating India's deeper integration into Global Value Chains (GVCs).
The table presents India's annual exports of electrical equipment to the global market, measured in billions of US dollars. What stands out is the consistent growth in exports witnessed over the years, particularly marked by a significant surge from 2019 to 2021.?
This upward trajectory reflects India's strategic emphasis on increasing its manufacturing capabilities in the electrical equipment sector, aiming to establish itself as a prominent global hub in this industry and doubling its export by 20230, which aligns with its national electrical equipment industry mission.?
India's Exports to Australia
According to India Export data, shipments of Electric Supplies exported from India to Australia amounted to 83.1 thousand units. These were supplied by 1,552 exporters from India to buyers in Australia. The blow graph further shows how much India has exported electrical equipment to Australia. Overall there is significant growth in India’s exports to Australia.?
Recognizing the potential export gap is essential. Despite the increasing exports from India to Australia, it's clear that the Australian market is largely dominated by imports from China, USA, Germany, and Japan. To gauge the potential market for India's exports accurately, we must consider both realized and unrealized market scales. This metric relies on the ease of bilateral trade between countries.
Australian key commodities: India's export potential
The following section sheds light on the key commodities sought after in Australia from India. Despite the potential for these commodities to increase exports for Indian manufacturers, the demand remains largely unmet. As depicted in the images below, India falls significantly short in fulfilling Australia's demand for electrical equipments. These gaps represent straightforward opportunities for Indian manufacturers to establish a foothold in the Australian market.
Firstly, mobile phones exhibit a substantial export potential of $97 million, yet the actual exports stand at a significantly lower figure of $7 million. Similarly, machines designed for data transmission and processing show promising export potential at $28 million, with actual exports reaching $19 million. Conversely, photosensitive semiconductors demonstrate a notable gap between exports potential $5.9 million and actual exports $0.35 million, indicating significant untapped opportunities. Office machines also present a similar trend, with an export potential of $5 million and actual exports amounting to $2.6 million. Finally, smart cards exhibit export potential of $2.7 million, with actual exports totaling $1 million. These statistics underscore both the existing strengths and the untapped potential within India's electrical equipment export sector, highlighting areas for targeted growth and improvement strategies.?
The above Gap charts are based on the methodology followed by the International Trade Centre. For detailed information on definitions and statistical computation used to calculate this indicator, please visit on?https://exportpotential.intracen.org/en/resources/glossary#realized-potential?
SWOT Analysis on electrical equipment market in India?
Conducting a SWOT analysis for the Indian electrical equipment industry is indeed crucial for understanding its current position and potential for growth. By examining the industry's strengths, weaknesses, opportunities, and threats, we can identify areas for improvement and capitalize on its unique advantages.?
Strengths
?- Diverse and well-established manufacturing sector.?
?- Mix of large private and public companies, along with MNCs and small businesses.?
?- Technology comparable to global standards.?
?- Access to skilled labor at competitive rates.?
Weakness
?- Fluctuating prices of raw materials and metals.?
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?- Quality issues and shortages in raw material.?
?- Insufficient investment in research and development.?
?- Inadequate testing and calibration facilities for electrical equipment.?
?- Lack of standardization in product specifications.?
Opportunities
?- Rapid expansion of infrastructure projects.?
?- Export potential due to the burgeoning electricity sector globally.?
Threats
?- Challenges in securing fuel linkages, acquiring land, and obtaining environmental clearances.?
?- Increasing imports of electrical equipment affecting fair competition.?
?- High aggregate Technical & Commercial losses.?
Conclusion
The trajectory of India's electrical equipment industry is undeniably promising, fueled by robust domestic growth and increasing international demand. As the industry marches towards becoming a global powerhouse, it is imperative to capitalize on export opportunities and address existing gaps in key markets like Australia. By leveraging strengths, addressing weaknesses, seizing opportunities, and mitigating threats identified through a comprehensive SWOT analysis, Indian manufacturers can solidify their position on the global stage. With concerted efforts and strategic initiatives, India's electrical equipment sector is poised to not only meet but exceed expectations, contributing significantly to the nation's economic prosperity and reinforcing its position.?
In the upcoming chapter, we'll delve into the structure of the Australian electrical equipment industry, examining its key strengths and the opportunities it presents for manufacturers and exporters both domestically and internationally. Specifically, we'll explore the potential for Australian exporters to tap into the global market, including India. We'll also analyze the top commodities in demand and assess Australia's capability to fulfill this demand, highlighting areas of opportunity for growth and expansion in the industry.
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