In terms of number of manufacturers and consumers, the low-voltage cable segment is the largest in the electrical cable industry. Also known as the building wire industry, this segment refers to cables that have low voltage rating, usually 1.1kV. The estimated market size of the building wire segment is around Rs.12,000 crore and the current growth rate is in the region of 8-9 per cent. Real estate is of course the biggest demand driver for this industry.
Though building wires are closest to human lives—be it in homes, offices or establishments—the segment is highly unregulated. Simply due to the sheer size of the building wire industry and due to limited entry barriers, the segment is crowded with a large number of players in the unorganized sector. Reputed manufacturers are well versed with the huge demand but cannot penetrate the remote markets as they simply cannot compete with the local players on the price front.
The building wire segment is crowded with a large number of players in the unorganized sector, as entry barriers are limited.
The reason why local brands continue to flourish is that they have a market. Consumers continue to buy local substandard brands either willfully—to save on the cost front—or unknowingly. When it comes to real estate projects, home wiring is something that comes with the house. Consumers are not even aware of what wires have gone in their homes. Unfortunately, a critical aspect like electrical wires is nowhere on the priority list and ironically, something like the granite kitchen top could merit more attention and detail. When new homes are built or re-wiring is done, the choice of wires is usually left to the electrician or the contractor. Even here, the electrician might go in for cheap brands and still charge the customer based on the prices of reputed branded wires.
Products made by marginal players in the unorganized sector obviously use inferior material, be it copper or the PVC insulation.
Low-voltage cables made by local manufacturers could be up to 50 per cent cheaper than reputed brands. Products made by marginal players in the unorganized sector obviously use inferior material—be it copper or the PVC insulation. The copper used is not oxygen-free, which results in poor conductivity. Worse is that the insulation is made from cheap polymer, which can pose a grave hazard to human lives in case of accidental fire. Studies have shown casualties during a short-circuit induced fire are not because of the fire per se but due to the toxic fumes emanated during the burning of the insulation material. Flame retardant cables of the highest quality are produced only by organized sector players but they come at a price. Unorganized players simply cannot afford to produce quality material at prices that they offer.
It is encouraging to note that over the past decade, home owners and real estate developers are getting increasingly conscious of the safety element of building wires. Aggressive awareness campaigns launched by reputed manufacturers and trade associations are responsible for this change in mindset. In an interaction with T&D India, Amol Kalsekar, Chief Manager – Building Wire, International Copper Association India (ICAI) said that ICAI does promotion of high quality wire products through training programmes on safe electrical installation practices for both electricians and contractors. “We also conduct series of seminars and workshops for electrical consultants and government department electrical engineers that highlight latest provisions/revisions in Indian standards and regulations, wherein use of good quality wire and other electrical accessories is the primary message we convey.”
The biggest market for local wire manufacturers is circumscribed by tier-3 cities, towns and villages. This is precisely why awareness campaigns by industry bodies like ICAI are targeted to tier-2 and tier-3 cities, notes Amol Kalsekar, Chief Manager – Building Wire, International Copper Association India (ICAI).
It is worth mentioning that the government is also a big consumer of building wires, which is why organizations like ICAI also work with related government agencies like Public Works Departments, CPWD, Military Engineering Services, Railway Engineering Services, housing boards, etc. to align their specifications to those prescribed in the National Electrical Code (NEC) and the National Building Code of India (NBC). “This contributes to promoting wiring products of good quality,” observed Kalsekar.
It is estimated that in the four metropolitan and tier-1 cities, organized sector players have a market share of 90 per cent in the building wire segment. However, when one moves to tier-II and tier-III cities, this share drops sharply to 30 per cent. At a national level, the share of unorganized sector players is around 40 per cent.
This is precisely why awareness campaigns by industry bodies like ICAI are targeted to tier-2 and tier-3 cities, notes Kalsekar. The biggest market for local wire manufacturers is circumscribed by tier-3 cities, towns and villages. However, even here, the trend is slowly but surely shifting towards national brands like ANCHOR by Panasonic, Polycab, Finolex, KEI, RR Kabel and V-Guard, Kalsekar explained.
“Some credit remains with us (ICA India) for shifting focus of decision makers to go for quality products rather than going for cheaper options, but still lot of awareness is required in this segment,” was how Kalsekar put it.
Finally, it all boils down to lack of awareness and the absence of “immediate impact”. Electricians can easily compromise on quality because it helps them tender an “affordable” and “reasonable” estimate to the property owners. Most importantly, the ill effects of using an inferior electrical cable are not felt immediately. For the property owner, the use of an inferior or superior cable makes no visible difference.
Generally speaking, the Indian consumer is low on technical awareness, especially for products as commoditized as wires. What is recommended by the dealer or the electrician is generally accepted, and the dealers and electricians in turn promote those products with which they get greater financial incentives, rather than on the basis of safety and quality.
Thanks to the Centrally-sponsored Saubhagya scheme that envisages complete household electrification of all rural and urban households by March 31, 2019, the demand for low-voltage wires will go up even in towns and villages. It is therefore of utmost importance that all stakeholders involved ensure that safety and efficiency take precedence over cost. Only this can ensure the usage of high-quality wires. Some industry players are optimistic about the gradual loosening of the grip of fringe players. In the coming 5-7 years, the market share of unorganized sector is set to fall to 10-15 per cent, even at the national level.
(Images used are for illustration purpose only; source unknown)
