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Make in India: Trends and Opportunities for Electrical Engineers

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 International Journal of Electronics, Electrical and Computational System
IJEECS
ISSN 2348-117X
Volume 5, Issue 4
April 2016

Make in India: Trends and Opportunities for Electrical

Engineers
Mohd. Faisal Khan
EES, University Polytechnic
Aligarh Muslim University, Aligarh-202002, India

ABSTRACT: In ordered to augment the manufacturing capabilities in a better and more consolidated manner, the
Government of India launched “Make in India” campaign in September 2014. The basic premise of the scheme has been
defined in terms of stimulation of economy by promoting India as a new destination for manufacturing to attract the
foreign investors for making in India. The power sector has to play pivotal role in the success of Make in India as the
availability of adequate amount of power to the industry will be detrimental to its growth. India’s power sector has been
very vibrant in the past decade and a half especially with regard to consolidation on renewable energy generation. The
coal based generation has increased rapidly in last two years to the extent that FY 15-16 will yield highest ever power
generation capacity addition in the Indian history. In this paper an overview of the power sector is presented with regard
to Make in India specific measures announced for the electrical industry in general.
Keywords: Make in India, Manufacturing, Electrical Engineering Industry, Renewable Energy, Solar Power.

1. INTRODUCTION
Half a century ago famous U.S. economists William and Paul Paddock espoused the notion that Indian
population should be left to starve as the country was a hopeless case of population overgrowth [1]. However,
China has shown how a growing population can contribute towards nation building and turn into demographic
dividend. India is the youngest country of world with more than 356 million people in the age bracket of 10-
24 years [2]. The Government of India (GOI) in its endeavour to propel the industrial growth and augment the
manufacturing capabilities in a fresh manner has introduced “Make in India” (MiI) policy to utilize the
available youth energy. The electric power sector is going to be most crucial in the success of MiI initiative as
an increase in industrial output shall be directly linked with the availability of sufficient amount of electric
power.
With gross mismatch in demand and supply and a predicted market size of 900 GW by 2032[3], India’s power
generation, transmission and distribution systems are facing an impending technological and structural
realignment. Capacity addition in the power generation sector has expanded by over 6 per cent annual average
in the last five years and high targets have been set for the future [4]. With regard to MiI the key sectors are
identified as equipment manufacturing and transmission and distribution (T&D) infrastructure. To facilitate
targeted growth under MiI the renewable energy sector is entrusted to provide much needed assistance in
terms of meeting the future power demands. The envisaged targeted growth in the power sector to achieve the
MiI objectives of GOI is expected to upscale business opportunities in the sector yielding more number of
electric power sector intensive jobs.
In view of the above developments there are plenty of opportunities expected to be available for the electrical
engineering professionals in the foreseeable future in India. This paper articulates salient features of the
policies announced by GOI under MiI initiative for the power sector to create a conducing environment for its
growth to support manufacturing initiatives in India. The study also brings some of the recent advances and
achievements of the power sector to the fore. A closer look on the future of renewable energy installations is
undertaken as massive investments and capacity installations are planned for meeting the required power
demands by different sectors.

2. INDIAN POWER SECTOR at a GLANCE

The Indian power sector has been witnessing reasonable growth in the recent past both in terms of the coal as
well as the renewable energy based generations. The annual targets set for capacity addition have been met
and even surpassed in some Financial Year (FY) periods. The annual installed capacity additions achieved by
India since FY 10 are plotted in Fig. 1[5]. The sector has grown at a compounded annual growth rate of 6.3%

30 Mohd. Faisal Khan

 International Journal of Electronics, Electrical and Computational System
IJEECS
ISSN 2348-117X
Volume 5, Issue 4
April 2016

as can be seen from the plot. The ambitious target of the GOI of providing “Power to All” by 2019 is set to
stretch the available resources to their absolute limits. In its efforts to enhance the power generation capability
the GOI has already started exploring all possible avenues. Acceleration in coal based power generation has
paid dividends as the FY 16 will yield the highest power generation capacity in the country expected to be
tentatively around 33 GW [6]. The renewable energy source (RES) sector is due for massive capacity
expansion as India plans to generate 170 GW by 2022 from these sources with solar (PV as well as Thermal)
and wind (especially off-shore) being identified as major contributors.

Fig 1: Annual growth rate of installed electric power capacity in India

3. MAKE in INDIA for ELECTRICAL ENGINEERING SECTOR

The growth of electrical engineering sector in any country is tied with the economic prosperity on the whole.
Vibrant and growing economies have an automatically enhanced requirement of electric power both for the
industry as well as the population at large. With the GOI setting forth MiI policy in each sector for
consolidating the manufacturing capabilities a fresh, the electric power demand in the country is set to
escalate. The increased activity in power sector for capacity enhancement to meet future demands is expected
to create plenty of opportunities in the near future. In the ensuing sections an in-depth review of various issues
pertaining to the Indian power sector and various policy mechanisms for the electrical machinery industry are
under taken.
3.1 Electrical Machinery Industry
The electrical machinery industry contributes massively to the capital goods sector of India. Capital goods
industry covers heavy machinery such as cranes, hoists, boiler, generator etc., which are used for commercial
operations in their field of operation. The electrical machinery industry holds about 69% share in the capital
goods industry [7] in India and therefore it is an important stake holder in the industrial growth.
3.1.1 Key Facts
The domestic Electrical industry supported the nation’s GDP by 1.4% in 2011-12 taking an even better share
of 10.0% in the manufacturing GDP. On the whole, the industry provides direct and indirect employment to
about 0.5 million and about 1 million respectively to the nation’s work force. The entire activity chain of the
sector is estimated to account for a gross employment of over 5 million people. In the present Indian market,
the domestic electrical equipment industry amounts to a total capital exceeding USD 25 billion [8].
As per the projections the generation equipment industry in India is expected to grow to USD 25-30 Billion by
2022. Correspondingly, the T&D equipment market is predicted to expand up-to USD 70-75 Billion in the
same period. In terms of the net capital realization the combined electrical machinery industry will obviously
yield USD 100 Billion. The state incentives for capacity addition in power generation will increase the
demand for electrical machinery.

31 Mohd. Faisal Khan

 International Journal of Electronics, Electrical and Computational System
IJEECS
ISSN 2348-117X
Volume 5, Issue 4
April 2016

Indian manufacturers are becoming globally competitive with the help of their cost effective and technically
competent manufacturing and testing facilities. The availability of large pool of human resource and the
indigenously developed advanced technologies are expected to further consolidate India’s standing in the
market.
The scope for direct exports to neighbouring countries is continuously being explored by the Indian concerns
to expand their manufacturing base. The electrical machinery industry attracts largest investments in research
and developments amongst all the corporate sectors [8].
3.1.2 Growth Drivers for Electrical Machinery Industry
To galvanize the manufacturing environment in electrical machinery sector, the GOI announced various
supportive measures under MiI. Some of the policies are enumerated as [8]
• In general, the capacity generation in sectors such as infrastructure, power, mining, oil and gas, refinery,
steel, automotive and consumer durables are driving demand in the engineering sector.
• The nuclear capacity extension will open up substantial business opportunities to the electrical machinery
industry.
• Rapid consolidation in infrastructure investment and industrial production will pave way for further
growth.
• A comparative advantage in terms of manufacturing costs, market knowledge, technology and creativity.
• 100% FDI is now permitted under the automatic route in the electrical machinery sector, subject to all
applicable regulations and laws.
• For the ease of doing business, large scale de-licensing of the electrical machinery industry has been done.
This has promoted the entry of global giants into the electrical machinery industry in India.
• Customs duty on import of power generation equipment and the T & D equipment have now been levied
at the rate of 5% and 7.5% respectively to encourage MiI.
• With planned capacity addition of 88.537 GW, projected during 12th plan (2012-17) already revised the
government now proposes to upgrade this target to about 118.537 GW through increased coal output as
well as capacity enhancement in renewable energy sector [9].
• The thrust areas include technology and R&D, rationalization of customs duties on a number of
equipment.
• Establishment of Electrical Equipment Skill Development Council (EESDC).
• Development of electrical equipment industry clusters.
• Setting-up of more product-testing infrastructure in the country.
3.1.3 State Incentives [8]
Besides central government benefits, various states in India are encouraged to support industrial projects by
offering additional rebates, incentives and host of other leverages. Some of the common incentives include
subsidised land, stamp duty relaxation, exemptions on the sale/lease of land, incentives on power tariff, a
concessional rate of interest on loans, investment subsidies/tax incentives, backward areas subsidies, special
incentive packages for mega projects, etc.
3.1.4 Export Incentives [8]
1. Export promotion capital goods scheme.
2. Duty remission scheme.
3. Focus product scheme.
4. Special focus product scheme.
5. Focus market scheme.
3.1.5 Areas Based Incentives
In order to further facilitate manufacturing environment in the country, the new manufacturing policy of GOI
proposed to set-up SEZs and the NIMZs. The concept of setting special economic zones (SEZs) has been

32 Mohd. Faisal Khan

 International Journal of Electronics, Electrical and Computational System
IJEECS
ISSN 2348-117X
Volume 5, Issue 4
April 2016

around since quite a while in India and many such initiatives have already been implemented. However, the
National Investment & Manufacturing Zones (NIMZs) have been proposed specifically for developing
manufacturing facilities in India. From the manufacturing point of view four areas have been ear marked for
SEZs and NIMZs. These include North-East, Jammu & Kashmir, Himachal Pradesh & Uttarakhand primarily
due to the fact that all these areas are rich in electrical power resources.
3.1.6 Training and Skill Development
The success of MiI to a large extent will depend up-on the availability of sufficient and adequately trained
man power. A number of policy documents of the GOI have drawn attention of the policy makers towards
inefficacies of present technical education system to impart requisite training and skill development. It is often
rued that about 60 to 70 % of the youths coming out of the technical institutes are un-employable. As per the
estimates, electrical industry requires almost 80,000 to 90,000 skilled workers every year. To address the
issue, stake holders such as National Skill Development Corporation (NSDC), IPP (Independent power
producers), PSE (public sector enterprise) etc., proposed to provide training to the man power deployed in
their power projects through technical institutes located near the project sites.
3.1.7 R & D Initiatives
To facilitate R & D activities so as to increase the revenue base of the sector the MiI policy proposes a
weighted tax deduction under section 35 (2AA) of the Income Tax Act. A weighted deduction of 200% is
given to assesses for a sum paid to a national laboratory, university or institute of technology, or individuals
through a specific direction, provided that the allocated sum is utilized for scientific research in a programme
approved by the relevant authority. By such measures the GOI is endeavouring to increase the Engineering
R&D revenues to from USD11 billion in 2012 to USD 45 billion in 2020.
3.1.8 Major Foreign Investors [8]
1. MHI (Japan)
2. Hitachi (Japan)
3. Babcock (UK)
4. Alstom (France)
5. Toshiba (Japan)
6. Ansaldo (Italy)
7. Colfax Corporation (USA)
8. Schneider Electric (France)
9. Legrand (France)
10. GE (USA)
3.1.9 Concerned Agencies
1. The Department of Heavy Industries, The Ministry of Heavy Industries & Public Enterprises Industry
associations,
2. Indian Electrical and Electronics Manufacturers Association
3. Engineering Export Promotion Council

4. ROLE OF RENEWABLE ENERGY for MAKE in INDIA

The RES are expected to contribute significantly in meeting future demands in India. The main focus of the
GOI in renewable sector has been on solar and wind due to their wider scope in the country. As per the newly
announced plan for the RES sector the GOI hopes to channelize around 170 GW of electric power from
renewables by 2022. Out of the planned 170 GW the major share of 100 GW is to come from the solar
(including PV and Thermal) about 60 GW from wind and remaining 10 GW from Bio/Co-generation, small
hydro etc. The GOI in its endeavour to achieve these targets has already initiated a number of steps. The
formation of international solar alliance (ISA) consisting of more than 100 solar power rich countries of the

33 Mohd. Faisal Khan

 International Journal of Electronics, Electrical and Computational System
IJEECS
ISSN 2348-117X
Volume 5, Issue 4
April 2016

world is the most important development in this regard. The ISA headquartered in Gurgaon, India has already
received major financial pledges from France (EUR 300 million) and India (USD 30 million) [10].
The Indian RES has been overwhelmingly dominated by the wind power over the years. A break-up of power
generated from various sources in the total installed capacity of 288.66497 GW as of Feb’ 2016 for
conventional and Dec’ 2015 for RES in India shown in Fig. 2. The numbers clearly show that close to 60% of
total RES installed capacity in India is still attributed to wind power. Recent studies [3,11] have suggested that
wind power resources in India have a total potential of 302 GW of electrical power generation at a hub height
of 100 m. Off shore wind based generation is an area which is still largely un-tapped and thus holds good
potential for capacity addition.

Data Source: cea.nic.in

Fig 2: Installed electric power capacity and its break-up in terms of generation from different sources

The 10th (2002-07) and 11th (2007-12) plan periods yielded substantail capacity additions in RES primarily
due to the provisions such as [12]:
1. Generation Based Incentives
2. Accelerated Depreciation
3. Renewable Energy Certificates
4. Renewable Purchase Obligations
5. Grid Integration Framework
6. Tax and other benefits
Of the above many have been persisted with as they are, while some have been continued with certain
modifications. Some of the the reviewed policy mechanisms for RES are enumerated as [13]:
1. The rate of Accelerated Depreciation policy for the RES sector to be reduced from 80% to 40% w.e.f.
April 1, 2017.
2. Proposed Increment in coal cess to Rs 400/ ton from Rs 200/ ton.
3. Massive increase in the allocation of budget grant to MNRE from Rs 262 crore in FY 15-16 to over Rs.
5,000 crore in FY 16-17. These are expected to kick-start large projects.

5. CONCLUSIONS
• Electrical industry has to play pivotal role for the success of Make in India campaign in other sectors of
manufacturing.
• Expected rise in electric power requirement over the next few years will lead to the growth in power
sector intensive jobs.

34 Mohd. Faisal Khan

 International Journal of Electronics, Electrical and Computational System
IJEECS
ISSN 2348-117X
Volume 5, Issue 4
April 2016

• Electrical manufacturing industry at the moment amounts to about USD 25 billion which constitutes about
1/4th share of equipment manufacturing and the rest is due to T&D infrastructure manufacturing.
• The government is targeting to raise the EE industry market to USD100 billion through Make in India
campaign.
• Renewable energy is a key sector for meeting future power demands and the GOI has set a target of 170
GW of REG installation by 2022.
• India has joined the ISA to achieve the target of 100 GW of solar power by 2022.
• Remaining shall come from wind (60 GW) and rest 10 % from Bio-Mass, small hydro, co-generation etc.
• Allocation of funds to MNRE has increased from Rs. 262 crore in FY 15-16 to over 5,000 crore in FY 16-
17.
• To promote MII in power sector GOI has brought in important provisions such as introduction of import
duties, de-licensing of electrical machinery industry, 100 % FDI through automatic route, setting up SEZs
and NIMZs, industrial clusters etc.
• setting up of the Electrical Equipment Skill Development Council (EESDC).

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35 Mohd. Faisal Khan

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