Spark missing in electrical components exports to China

China is missing from the radar of the Indian electrical goods makers despite a furiously rising demand. Instead, the domestic companies in the sector are focusing more on regions such as the Gulf, North Africa, south east Asia and South America.

"Exporting to China is not a lucrative business as the prices are not as attractive as elsewhere in the world," said A K Dhagat, president, Indian Electrical and Electronics Manufacturers' Association (IEEMA).

According to Dhagat, there are some factors which make China unattractive to Indian manufacturers. "Their technical specifications are different from ours, and we have to manufacture products according to their specifications, which is a costly exercise," he said.

But China is a big manufacturing base for electrical products with the demand for components at almost five times that in India. Indian exports in the sector has almost doubled to Rs 4,167 crore in FY05 from Rs 2,295 crore in FY01. "The industry is doing fine and this trend will continue ," said Dhagat.

Transformers, switchgears, cables, rotation machines and insulators are India's top electrical goods exports making 50 per cent of the annual electrical component export.

"Indian electrical manufactures are focusing more on these regions," said Sunil More, secretary general, IEEMA.

However, in the last two and half years, the price of CRGO steel (cold rolled grain oriented), the raw material used for manufacturing electrical products, has seen a steep rise. It has jumped from $1,200 per metric tonne to more than $4,000 per metric tonne, registering a jump of more than 200 per cent. This has impacted product prices too. For instance, transformer prices have gone up by 40-50 per cent in the period.

"Rising prices are a serious concern. A dialogue is currently on between the suppliers and buyers on the issue," said More.

Further, Indian manufacturers are looking ahead for collaboration with firms in Korea and Taiwan. "Korea is focussing more on India and many of its companies are well established here. Such a move will indeed be very productive," said Dhagat.

However, the aim is not to export to these countries but to target other countries, thereby expanding the horizon of Indian exports.