THE ELECTRICAL INDUSTRY

An Interview with Hukmichand D Shah, Honorary General Secretary, Madras Electric Trades Association (META)

Industry wise, our State itself is lacking. We do not have many electrical manufacturers in the city or in the state itself. The Government of Tamil Nadu should encourage both foreign investment and local investment in Tamil Nadu, in the electrical industry. They also have to encourage the setting up of manufacturing facilities for electrical products. We have not grown like Delhi, Mumbai and Calcutta. We just import 95% of our electrical requirements for our state, from other states. A few decades ago, we were importing our electrical requirements from abroad.

There are over a 1,000 varieties of switches. But there is only one industry here in our state, which manufactures switches. There are only two factories producing cables here and they just cannot meet the requirement. Also the disadvantage they have is that the pricing for the products produced here is higher than in other states.

This is because the conditions are not investor-friendly in our state. This is also the reason why places like Maharashtra, Delhi and Calcutta are far more advanced in the area of manufacturing of electrical products than us. In Delhi, one can run a production facility without stocks, because the raw material required are readily available. Here we lack infrastructure, we do not have the raw material available readily. So the inventory increases, leading to higher costs. Also there are no incentives, like in the other states, for manufacturers of electrical products. But now the State Government is taking a few steps to encourage investment in this industry. They are looking at reforms to the sales tax structure and have promised to make the state more investor-friendly.

Because of liberalisation, a lot of products have started coming from other countries. Not only electrical products, but also other products. This problem is not only restricted to Chennai, but the whole of India. The main threat posed by the import of foreign goods is that these foreign goods are not subject to quality norms that are applied to goods produced in India. This means that the goods, which come from other countries are priced cheaper and are of inferior quality. While, goods produced in India are in many cases, of good quality, but are priced nearly four to five times higher than foreign goods. The average customer is taken in by the price and goes in for the cheaper product.

This places the whole Indian industry or in our case, the whole electrical industry amidst cut throat competition. The industry has been voicing its concern through the proper channels and its request is not that foreign goods be banned from the market, but that they be also subject to the same quality norms that Indian goods undergo. This makes the competition a level playing field, while at this moment the competition is one sided. One small example in this regard is the CFLs (energy saving lamps) we use at our homes and offices. Any leading brand produced in India is priced at around Rs. 100/-, while the same produced in another country and sold here is priced at just under Rs. 40/-. They are able to price it so cheap, because they do not adhere to quality norms. The man on the street is not bothered about quality. He is just bothered about the price. Because of this Indian products are losing out to foreign competition on the price front.

There is the Quality Control Act and the Bureau of Indian Standards.

Our main strength is that, even in the absence of manufacturing of electrical products in the state, we are serving the industry well. Basically, being a buying state, the dealers of electrical goods play a major role here in Tamil Nadu unlike in other states where it is the manufacturers who play a major role. Since Tamil Nadu gets over 95% of its electrical requirements from other states, we the dealers serve the industry in our capacity as mediators between the large industrial consumers, the governments and the manufacturers. Also the fact is that our state is a quality conscious state.

Our weakness is the lack of infrastructure and the not so investor-friendly conditions. These are the impediments, which hinder the state from progressing and exploiting the exciting opportunities.

The opportunity we have is that the state government can take up steps to encourage the setting up of more industries or manufacturing units. This will certainly give a fillip to the electrical industry within the state and help us tap this growing market. And maybe as other states are supplying to us, we will also be able to supply to them in the future.

The threat faced by the electrical industry, not only in Chennai, but all across the country, comes from the foreign imports. Until the government steps in and helps create a level playing field, this threat may well spell the doom for many Indian electrical manufacturers and dealers.

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