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  • Demand Outlook for Power & Distribution Transformer till 2020

    India has been witnessing a significant rise in power demand for the past few decades on account of rapid growth in population, industrialization and urbanization.

    The government has taken up various initiatives ncluding DeendayalUpadhyaya Gram JyotiYojana (DDUGJY) for electrification of rural pockets of India, which has spurred significant investments in the country's power sector. Notable technological upgrades are underway to reinforce the country's transmission and distribution network, which would continue to drive the demand for power and distribution transformers in India.

     Considering the negative impact of these technological developments on the environment, the industry has been undergoing a paradigm shift towards green technologies. As a result, transformer manufacturers inIndia as well as in other countries have started investing heavily towards their research and development efforts.

    Foreign players, especially Chinese and Korean electrical equipment manufacturers, have captured almost one fourth of Indian transformers market, mainly in EHV and UHV class power transformers, as the products offered by them are considered cheaper and technologically advanced.

    According to "India Power & Distribution Transformers Market Forecast & Opportunities, 2020", the power and distribution transformers market in India is projected to grow at a CAGR of over 10% till 2020. Power transformers contribute a major portion in overall market revenues due to their higher price points. Under the 12th five year plan (2012-2017), Indian government allocated US$ 200 billion for strengthening the country's power generation, transmission and distribution sector.

    One of the major developments underway includes the country's shift from 765 kV to 1200 kV power transmission. This, in turn, is fuelling the demand for EHV and UHV class power transformer installations throughout the country. India is also focusing on use of alternative energy resources like nuclear and solar energy for power generation, which is expected to further boost transformer deployments in the country in the coming years.

    According to the reportgrowth of the country’s power transmission and distribution (T&D) sector remained sluggish during 10th and 11th five year plan due to inadequate investments allocated by the Indian government. However, under the 12th five year plan, the Indian government is focused towards expansion of the country’s T&D network with significantly higher investments than previous five year plans, which is expected to result in robust growth of the power & distribution transformers industry over the next five years.

    Upcoming government projects like Green Energy Corridor for power generation from renewable sources would further add to the overall power and distribution transformer installations in the country.

    India has also entered into a technological collaboration with Germany under which Germany would extend its technical assistance for upgrading India’s existing power grid and facilitate flow of renewable energy through the grid. Other initiatives like Restructured Accelerated Power Development and Reforms Programme are aimed at providing basic power infrastructure to rural inhabitants and households in the country, thereby buoying the demand for power and distribution transformers in India. The report also highlights the increasing penetration of Chinese transformer manufacturers in the Indian market, signalling higher competition ahead for domestic transformer manufacturers.

    Two major Chinese companies, TBEA and Baoding TianweiBaobian, have already set up their transformer manufacturing units in Gujarat, while other Chinese players are showing interest in entering India through joint ventures and collaborations. Indian companies, on the contrary, are more focused towards exports as they earn higher profit margins on transformer exports to countries like the US, South Africa, Cyprus and Iraq.

    ‘To reduce their dependence on overseas laboratories for testing extra high voltage transformers, Indian players are also focusing on establishing their in-house testing facilities, mainly for UHV class transformers,’ said Mr. Karan Chechi, Research Director with TechSci Research, a research based global management consulting firm.

    &ldquo India Power & Distribution Transformers Market Forecast & Opportunities, 2020” has analyzed the potential of power & distribution transformers market in India and provides statistics and information on market size, industry behaviour and trends. The report includes market projections and demand forecasting. The report will suffice in providing the intending clients with cutting-edge market intelligence and help them in taking sound investment decisions. Besides, the report also identifies and analyzes the emerging trends along with essential drivers and key challenges faced by the power & distribution transformer market in India.

    Power transformers contribute a major portion in overall market revenues due to their higher price points. Under the 12th five year plan (2012-2017), Indian government allocated US$ 200 billion for strengthening the country's power generation, transmission and distribution sector. Power requirement is the keydriver for the transformers market and due to increasing electrificationratio in India, the demand is on the rise. In addition, load growthcombined with high transmission and distribution (T&D) losses are likely tocreate the need for more substations, thereby increasing the demand for power and distribution transformers.

    Realizing the importance of private participation in the power sector, the Indian Government is strengthening its policies to encourage private investments. The Electricity Act 2003 caused the compulsory unbundling ofthe State Electricity Boards (SEBs) to improve their operational efficiencies, thus creating new market demand for better transmission equipments.

    New analysis from Frost & Sullivan -- Indian Power and Distribution Transformers Market-- reveals that revenues inthis industry totalled $1.04 billion in 2005 and is likely to reach $5.31billion in 2012

    "Government's emphasis on the transmission and distribution sector reforms and investments are showing signs of fruition, thus creating a phenomenal growth opportunity for the Indian transformer market," explainsFrost & Sullivan Research analyst S. Bharath Srinivasan.

    Due to rapideconomic development and government's target of 'power for all by 2012,'the Indian power sector will need to replicate what has been achieved during the last 50 years in the next 10 years.

    Growing presence of global participants in the power and distribution transformers market is a cause for concern for local manufacturers.

    International manufacturers have expertise in segments such as extra high voltage (EHV) power transformers and unitized substation technologies. Moreover, low investment in transformer research and development (R&D) in India pose a challenge to domestic participants, who eventually tie-up withmultinational giants for high-end technologies.

     The global price hike in transformer raw materials such as copper, aluminium, and oil resulted in the increase in transformer prices in India.

     Also, shortage of cold rolled grain oriented steel (CRGO) is further escalating the price of this essential 'transformer core' material. With growing demand and price correspondingly rising, manufacturers are finding it difficult to maintain margins in the long term, thereby transferringburden of increased costs to end users.

    The regulatory structure of the power sector has faced someuncertainties due to the reluctance and failure of certain states to put the regulations into practice. Furthermore, utilities are confronting financial problems because of high T&D losses, thus increasing their debt.

    Despite these setbacks, the power sector in India is likely to remainbuoyant. Reforms in the sector and the enlargement of the power distribution network under the Accelerated Power Development and ReformsProgramme (APDRP) is driving the growth and strengthening of sub-transmission lines. In addition, the increase in transmission gridreliability will result in heightened demand for power transformers.

    "Other than the central and state utilities plans for power capacityaddition, private sector investment is also expected to have a profoundinfluence on the development of the power industry," notes Srinivasan.

     "Also, ageing equipment is creating potential for a booming replacement market and this demand will be sustained by the growth in industrial demand."

    The demands driving the transformer market are dependent on urbanization and infrastructural developments within the country. With India leap-frogging into the future, this market is less likely to hit any speed bumps along the way.

    Indian Power and Distribution Transformers Market is part of the

     Transmission, Distribution and Metering subscription (9852-A4) and it evaluates the power and distribution transformers used in power generation, transmission, and distribution. It analyzes the usage of these transformers by the following end users -- utilities, SEBs, and heavy industries in

     India. In addition, it includes unique end user and competitive analysis that aid market participants to evaluate their market position. Executive summaries and analyst interviews are available to the press.

    Frost & Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company's industry expertise integrates growth consulting, growth partnership services, and corporate management trainingto identify and develop opportunities. Frost & Sullivan serves an extensiveclientele that includes Global 1000 companies, emerging companies, and the investment community by providing comprehensive industry coverage that reflects a unique global perspective and combines ongoing analysis of markets, technologies, econometrics, and demographics