Friday, 6 December 2013

Problems Being Faced by the Domestic Manufacturing Industry Related to Power / Electrical Equipment / Capital Goods

Bharat Heavy Electricals Limited (BHEL)
The domestic manufacturing industry related to power / electrical equipment / capital goods, of which Bharat Heavy Electricals Limited (BHEL) is a part, is currently going through a sluggish and difficult period since 2011-12 because of slowdown in the Indian power sector as well as subdued industrial activity. 

Giving this information in written reply to a question in the Lok Sabha today, Shri Praful Patel, Minister of Heavy Industries and Public Enterprises, said that this is on account of a combination of factors, which inter-alia include:

·         A sharp contraction in new orders maturing in the domestic power sector market due to issues/bottle-necks related to non-availability/acquisition/ lack of enabling requirements such as land, coal/fuel linkages, environmental clearances etc.

·         Orders getting deferred or being put on hold.

·         Weak investment sentiment, financing constraints from the banks / financial institutions.

·         Aggressive competition from new players / Joint Ventures formed in the private sector in the Country for super-critical boilers and turbine generators affecting price realisation and impacting margins.

·         A surge in imports of electrical equipment in recent years, mainly from China, resulting in loss of business to the domestic power equipment manufactures.

·         Inflationary pressures and hardening of interest rates impacting cost / domestic demand and cost of capital.

·         Lack of level playing field including infrastructure bottlenecks suffered by the domestic industry vis-a vis foreign suppliers / manufactures. 

·         Enhanced ceiling on External Commercial Borrowings (ECBs) for inter-alia financing of domestic power projects which generally facilitates sourcing of equipment from outside the Country.

·         Global slowdown, political turmoil, armed conflict in countries like Syria, resulting in lower demand for export etc.

The above factors have adversely affected the order booking position as also lower capacity utilisation of the domestic manufactures of power equipment, including BHEL which is a major domestic market player in the field, Shri Patel informed the House. Some of the existing power projects are going slow or are being put on hold due to customer’s constraints in releasing payments for deliveries and other constraints faced by them thereby curtailing progress of their projects. Department of Heavy Industry and Ministry of Power undertake review meeting with BHEL on regular basis and through suitable interventions provide required support in taking up the issues with other Government Agencies / Departments / Ministries etc.

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