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Indian switchgear market to recover in 2010

Posted: 02 Jun 2009     Print Version  Bookmark and Share

Keywords:low voltage  medium voltage  switchgear  power distribution 

The growth of the Indian low voltage (LV) and medium voltage (MV) switchgear markets is expected to comparatively slow down this year amid the economic downturn. By 2010, however, the market is expected to rebound, driven by demand from utilities, infrastructure, and industrial, residential, and commercial user segments.

A new study by Frost & Sullivan indicates this market to have witnessed growth of 15% in 2008, to register revenue worth Rs.8,098.89 crore ($1600 million). The market research group estimates this market to reach Rs.21,123.93 crore ($4173.2 million) by 2015, growing at a CAGR of 14.2%.

The government of India is encouraging investments at the power distribution level to increase access to reliable power supply and reduce technical and commercial losses in the system through schemes such as Accelerated Power Development and Reforms Program (APDRP) and Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY). Burgeoning economic and industrial growth is set to drive demand for higher energy consumption. Key end-user sectors such as oil and gas, petrochemicals, steel, and cement have been growing at a rate of more than eight per cent over the last two to three years.

All indicators point towards the power sector being one of the key future drivers of India's economic growth. The switchgear market has exhibited excellent growth primarily due to sustained demand from the vibrant residential, commercial construction, and infrastructure sectors. Demand from these sectors is likely to persist in the near future.

However, fierce price competition among the market participants impedes the overall revenue growth of the Indian LV and MV switchgear markets. Tier II and tier III suppliers target end users that prefer low-priced products, affecting the profit margins of established and organised tier I participants. Multinational companies are restrained by the competitive pricing for imported products.

Market participants should adopt best practices to improve production efficiencies and achieve economies of scale. Such an approach will help companies reduce manufacturing costs and maintain profit margins and will be critical to overcoming price challenges instigated by tier II and tier III suppliers, concludes Frost & Sullivan.

Get related application notes and technical articles on Power Design India.

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