 "On technology front, India, China are on the same page: Claudio Facchin")
The fragility of India's power systems became evident in 2012 when power grids collapsed for two consecutive days. Since then, the country has not only been trying to strengthen its transmission systems, but is also witnessing new technology make its way into the domestic market. During a recent visit here, Claudio Facchin, global head (power systems division) at ABB, spoke to Jyoti Mukul on the importance of India market in his company's portfolio. Edited excerpts:
How has the demand from the Indian market changed in terms of technology?
In power systems overall, we see quite a dynamic market across the regions and India is part of this. There are a number of changes that are coming in not just in generation but transmission and distribution as well, leading to increased complexity of managing grid. The much higher penetration of renewables, which we saw in Europe, is coming in China, Brazil and India. The unpredictability of renewable energy creates the need to manage the grid. There is also the need to reduce losses, consumption and environmental impact. Smart grid has to match all this real-time with the demand.
Since you have watched the China market carefully, how would you compare India's needs to those of China?
Everybody thinks things are very different in China, but the drivers are similar in the two markets. The one point which is same is the focus on technology. In China, they are focusing on the best available technology and I see that in India, too. It is important that we nurture that need even more here since it will also allow a lot of things in infrastructure to leapfrog. The more leeway technology at the high-end gets, the more returns will be ensured on investment. So far, India and China are the only two countries that have HVDC technology under application. We see that coming in Brazil, too. In some instances, China is a bit ahead in certain areas like in 800 kilovolts. However, soon we will see it in India too. Vice-versa, India is going ahead on the alternating current (AC) side. The reason why India is a key market is because of the approach of customers. They look at the systems rather than just a specific equipment. We have been able to deliver technology in a competitive way.
How big is the India market in your global portfolio?
Of the $8-billion revenue from power systems, $400 million comes from here - which is about five per cent. India is among the largest single market for power systems. We took a decision to build capacity in India for the local market, but also found a fertile opportunity to build our capacity mainly in engineering side to support our business outside the country. In Chennai, for instance, 500 engineers are dedicated to support our projects in other parts of the world. Besides, 15 per cent of ABB India's revenue comes from exports and for power systems, it is 18-20 per cent of the revenue.
Haven't the problems in the power sector over the past few years impacted your company?
We are less exposed to power generation; we work in transmission and distribution and for industry. We can support with the breadth of our portfolio and experience of markets, which went through the same experience. We have done a lot of renewables. We have used the slowdown here as an opportunity to feed the neighbouring countries.
Do you see a resurgence in the power sector with the coming of a new government at the Centre?
On the soft side, there is a lot of motivation and good will. On the hard side, there have been changes in the past five years. There is a good momentum in infrastructure building. There is even more push for implementation. There has always been strong planning in this market. Implementation was not always following through as expected, but now I also see that gap is closing and there is positive momentum from that aspect. We are looking forward to momentum picking up in projects.
How has the demand from the Indian market changed in terms of technology?
In power systems overall, we see quite a dynamic market across the regions and India is part of this. There are a number of changes that are coming in not just in generation but transmission and distribution as well, leading to increased complexity of managing grid. The much higher penetration of renewables, which we saw in Europe, is coming in China, Brazil and India. The unpredictability of renewable energy creates the need to manage the grid. There is also the need to reduce losses, consumption and environmental impact. Smart grid has to match all this real-time with the demand.
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There is talk of smart city, but before you have smart city, you need to have a smart grid. ABB is offering its entire portfolio right from software to the higher end of technology such as supervisory control and data acquisition (SCADA), high-voltage, direct current (HVDC) execution, substation controls and automation.
Since you have watched the China market carefully, how would you compare India's needs to those of China?
Everybody thinks things are very different in China, but the drivers are similar in the two markets. The one point which is same is the focus on technology. In China, they are focusing on the best available technology and I see that in India, too. It is important that we nurture that need even more here since it will also allow a lot of things in infrastructure to leapfrog. The more leeway technology at the high-end gets, the more returns will be ensured on investment. So far, India and China are the only two countries that have HVDC technology under application. We see that coming in Brazil, too. In some instances, China is a bit ahead in certain areas like in 800 kilovolts. However, soon we will see it in India too. Vice-versa, India is going ahead on the alternating current (AC) side. The reason why India is a key market is because of the approach of customers. They look at the systems rather than just a specific equipment. We have been able to deliver technology in a competitive way.
How big is the India market in your global portfolio?
Of the $8-billion revenue from power systems, $400 million comes from here - which is about five per cent. India is among the largest single market for power systems. We took a decision to build capacity in India for the local market, but also found a fertile opportunity to build our capacity mainly in engineering side to support our business outside the country. In Chennai, for instance, 500 engineers are dedicated to support our projects in other parts of the world. Besides, 15 per cent of ABB India's revenue comes from exports and for power systems, it is 18-20 per cent of the revenue.
Haven't the problems in the power sector over the past few years impacted your company?
We are less exposed to power generation; we work in transmission and distribution and for industry. We can support with the breadth of our portfolio and experience of markets, which went through the same experience. We have done a lot of renewables. We have used the slowdown here as an opportunity to feed the neighbouring countries.
Do you see a resurgence in the power sector with the coming of a new government at the Centre?
On the soft side, there is a lot of motivation and good will. On the hard side, there have been changes in the past five years. There is a good momentum in infrastructure building. There is even more push for implementation. There has always been strong planning in this market. Implementation was not always following through as expected, but now I also see that gap is closing and there is positive momentum from that aspect. We are looking forward to momentum picking up in projects.