Indian Distribution Transformer Market

The Indian economy is witnessing signs of restoration and so is the power sector. A shift in the Government of India's focus to strengthen the power T&D system opens up abundant opportunities for the transformer markets. The Indian distribution transformers market is predominantly unorganized with few participants supplying higher range of distribution transformers. However, many of them are gradually becoming medium-sized companies, thereby expanding the base of organized participants. With increasing demand for reliable power in the country, the distribution transformers market is witnessing a growth trend.

Market Overview

Reforms in T&D Sector Boost Prospects for the Indian Distribution Transformer Market The Indian distribution transformer market has grown by leaps and bounds for over five decades and has a well-matured technology base up to the 800 kV class. As there is a demand upswing for reliable power in the country, the transformers market is witnessing a growth trend. With huge demand for power evacuation from large generating stations and strengthening of the inter-regional transmission grid, the transmission and distribution (T&D) utilities are the major end users of transformers in India. The Indian economy is witnessing a restoration and so is the electrical industry and its various segments including the transformer industry. High demand arising from the energy intensive oil and gas, and cement segments has buoyed prospects for the Indian transformer market. Developments in the power sector will have huge ramifications for the Indian transformer industry. "The transformer industry which had more than doubled its capacity over the last five years anticipating huge domestic and overseas demand is today suffering from overcapacity," notes the analyst of this research service. "However, a shift in the government's focus to strengthen the power transmission and distribution system has unleashed abundant opportunities for the power and distribution transformer market."

The Government of India is encouraging investments at the transmission and distribution level to increase access to reliable power supply and reduce technical and commercial losses in the system through schemes such as Revised Accelerated Power Development and Reform Program (R-APDRP) and Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY). The R-APDRP scheme aims to bring down the Aggregate Technical and Commercial (AT&C) losses in the T&D network. This entails huge investments in the T&D sector including use of energy efficient transformers, besides renovation, modernization, restructuring, and up gradation of the T&D infrastructure. Evidence points to a conscious effort to upgrade the grid voltages to 765 kV to minimize the transmission losses and the corridor width. Major participants are gearing up their manufacturing facilities to this changing paradigm with MNCs bringing technology from their parent companies, while local participants are obtaining the technology through acquisition and technology transfer. The Bureau of Energy Efficiency (BEE), Ministry of Power, is actively working to ensure that quality products are procured by the electricity boards and has accordingly stipulated mandatory star rating for distribution transformers. Distribution transformer procurement for R-APDRP is likely to be set at a minimum of 3 star rating. A large number of distribution transformer manufacturers have already applied to BEE for acquiring star ratings.

Technology upgradations, however, will not be easily attainable due to the lack of adequate testing facilities, skilled manpower shortage, and uncertainty and slowness in the pace of reforms. Present testing facilities in India cater to short circuit test on transformers up to 90 MVA 220 kV. Even testing for this range is inadequate and suffers from delays. Transformers beyond this rating have to necessarily be sent abroad.

Dearth of cold rolled grain oriented (CRGO) steel, import of low grade secondary defective CRGO steel, and fluctuating metal prices have made it challenging for participants to operate efficiently in the Indian power and distribution transformer market. To ensure market progression, there must be more clarity on the price variation clause to minimize risks. Going forward, only the supply of CRGO steel with the accompanying mill. certificate must be allowed. Alternatively, the import of cut pieces of CGRO steel must be authorized.