Indian manufacturers should turn serious on the concept of “reverse engineering” – as a stepping stone to building adequate domestic manufacturing capacity, observed Union power minister R.K. Singh. He was addressing, as Chief Guest, the digitally-conducted IEEMA Annual Convention: 2020 with “Atma Nirbhar Bharat” as its theme.
“Every country knows reverse engineering, but we don’t!” was how R.K. Singh opened his talk on the subject. His frankness was striking. He gave several instances where countries have acquired competence in manufacturing products that were never considered their traditional forte. For instance, televisions were never invented in Korea but today Korea was a leading global supplier of televisions.
He asserted that reverse engineering can help India reduce its dependence on imports, which is the essence of the national AtmaNirbhar ideology. The power minister pointed out that even in a product-line like domestic air-conditioners, 90 per cent of the compressors are imported. “This is a matter of shame,” expressed Singh.
Government and industry: R.K. Singh admitted that India was amongst the few developing countries where there is a glaring disconnect between government and industry. He gave the instance of France where he noted that government representatives work very closely with industry captains. This helps in formulate policies and provide support to products and services that are of national importance. “Industry and government has to work as a team,” Singh emphasized adding that he was working towards building such a partnership for the power ministry, to start with.
Economic strength: Singh brought to fore a very valuable point. He said that for a long time India has failed to realize that economic strength is critical to national power and growth. He recalled instances from history where the British fought two wars with China, with the objective of British being able to sell their products in China. “Economic strength is critical, and we have failed to realize this for a long time because we are late learners,” was how Singh put across his point.
Proposed manufacturing zones will help keep cost of production down.
Manufacturing zones: Singh observed that the government was now getting very sensitized to the fact that import dependence has to be reduced and local employment opportunities need to be bolstered. To this effect, the government is working on a plan to set up 3-4 manufacturing zones for electrical equipment, supported by common testing facilities. The government is also trying to offer land and electricity at competitive rates so that overall production costs could be kept in check. This supported will be complemented by putting a check on imports. Singh felt that in such an environment even foreign companies would find India an attractive destination for setting up manufacturing facilities. “Our cost of credit is high so our final cost is high. Our cost of power is also high. In manufacturing zones, cost of power will be low,” the minister assured.
To further support Indian suppliers, especially the small and medium ones, there will be no international bidding for projects costing less than Rs.200 crore.
Dumping from China is rampant and needs to be checked seriously.
China: In his remarks and also in those made by other IEEMA officials, the reference to curbing imports from China was prominent. Dumping from China was rampant and this needs to be checked seriously, the minister said. If any equipment needs to be imported, from China or any other country, this equipment should be subject to rigorous testing before it finds application in India.
Singh spoke about the unified power grid of India. “Our grid is complex and is open to cyber attacks,” he cautioned. Every piece of equipment that goes into the power grid needs to be critically examined before deployment. Without mincing words, Singh asserted,” We need to check imports. Stop importing from countries which are of concern. If you have to import, don’t import from that country,” making a veiled reference to China.
Loss-making discoms cannot access funding from PFC and REC.
Health of discoms: R.K. Singh explained that during the COVID-19 lockdown period, demand for electricity had dropped but it is now picking up. He even highlighted that power demand in recent weeks has shown a year-on-year growth, which is a solid indicator of revival.
To help discoms honour their pending payments to generation companies, a package of Rs.90,000 crore was devised earlier this year. Through this, discoms could access financing from PFC and REC, the key financial institutions in the power sector. All said, Singh assured that the government is not inclined to supporting discoms unconditionally. Discoms need to commit to achieving commercial efficiency.
On this often-quoted topic of subsidy, Singh emphatically stated that state governments are entitled to offer subsidy or even distribute free power to consumers. However, state governments need to compensate the discoms, through upfront payment of subsidy. In several of his addresses in the past, R.K. Singh has ascribed poor health of discoms to haphazard subsidy policies of the state governments.
Singh also highlighted that prudential norms of REC and PFC have are being tightened. Discoms making losses will not be able to access funds from these lending institutions. Incidentally, though the Rs.90,000-crore relief package discussed above is going to be enlarged, accessing funds will be subject to conditions.
Economy is coming back on track; power demand is now showing year-on-year growth.
The days ahead: R.K. Singh assured that power demand was picking up and the country’s economy was coming back on track. However, the wall that restricts imports of electrical equipment should not be breached. “If anyone is found importing against the ban, it is our duty to counsel the importer.” This duty was not restricted to the government but to fellow domestic manufacturers as well. This was another expression of how the government-industry partnership could strengthen.
Featured photograph sourced from www.themocracy is for illustration only.
