Home / Industry / Manufacturing /  Chinese, South Korean firms to set up plants in India

New Delhi: Attracted by Prime Minister Narendra Modi’s ‘Make in India’ programme, and, more pertinently, to meet conditions that make it mandatory for foreign companies wishing to sell equipment to large Indian government projects to have factories in India, China’s Baoding Tianwei Group Ltd (BTW) and South Korea’s Hyosung Corp. plan to set up electricity transmission equipment manufacturing facilities in the country.

India and China have been at odds over the supply of cheap Chinese equipment to Indian firms in sectors such as telecom and power generation over security and quality concerns.

“Due to the mandatory requirement that one needs to have a manufacturing base in India and the size of the electricity transmission equipment market here, firm such as BTW and Hyosung have firmed up plans to manufacture transformers and reactors here," said a person aware of the development requesting anonymity.

Queries emailed to BTW remained unanswered till press time. Repeated phone calls to Hyosung’s New Delhi office also remained unanswered.

State-owned Power Grid Corporation of India Ltd (PGCIL), which operates around 113,587 circuit km of transmission lines plans to spend 1 trillion to increase India’s inter-regional power transfer capacity of 46,450 MW to 72,250MW by 2017.

Some other firms that supply equipment in the high-voltage segment are Siemens AG, ABB Ltd, Areva SA, Alstom and state owned Bharat Heavy Electricals Ltd (Bhel). This comes in the backdrop of 300 million Indians lacking access to electricity with per-capita electricity consumption being one-fourth of the world’s average.

Mint reported on 27 May 2010 that PGCIL was making it mandatory for overseas equipment suppliers to have factories in India to participate in its tenders, ruling out imports from China. Another state-run firm, NTPC Ltd, India’s largest power generator, has also made domestic manufacturing a pre-qualification criteria for companies to bid for its equipment tenders.

Subsequently, China’s largest manufacturer of high-voltage transformers, Tebian Electric Apparatus Stock Co. Ltd (TBEA), which has been a major supplier of transformers and reactors to the Indian transmission sector started manufacturing locally.

“PGCIL has been increasingly mandating the supply of power transmission and distribution (T&D) equipment from facilities in India, besides specifying a local service setup in India for HV (high voltage) and EHV (extra high voltage) power T&D equipments, as clause in the PQR (pre qualification requirment). This has resulted in many global Power T&D majors (Alstom T&D, ABB, Siemens, etc.) setting up local facilities in India for manufacturing HV and EHV equipments (viz Transformers, Reactors etc.)," said Amol Kotwal, director, energy and environment practice (South Asia & Middle East) at Frost & Sullivan.

The electricity transmission equipment firms’ plans comes at a time when US-based First Solar Inc. and China’s Trina Solar—the world’s largest maker of photovoltaic modules—is considering plans to set up manufacturing facilities in India, drawn by the nation’s ambitious solar power generation target.

Modi, after leading the National Democratic Alliance to victory in the April-May general election, launched the Make In India campaign in September to attract foreign companies to invest and manufacture in India and export to other countries.

Modi and his Bharatiya Janata Party (BJP) have placed special emphasis on manufacturing, in which India lags behind Asian economies such as China, to boost economic growth.

“The Chinese equipment suppliers, not to be left behind, have also established facilities in an effort to tap the burgeoning demand for Power T&D equipments in India and meeting PGCIL’s domestic content clause. TBEA has already set up a huge Green Energy Park at Vadodara," Frost & Sullivan’s Kotwal said.

“Given this trend, it is expected that Korean and other Chinese majors shall soon follow in setting up their manufacturing facilities in India."

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