Overview of the Electrical Industry in India
The electrical industry includes manufacturing units that manufacture products required for electricity generation, supply, and distribution, as well as the manufacturing of electrical appliances. Electrical devices are mainly used to produce and utilise different forms of energy, such as heat, sound, light, etc. People often need clarity about the difference between the electrical and electronics industries. The electrical industry deals with manufacturing electrical devices that can convert electrical energy into other energy, whereas electronic devices cannot. An electronic device is not focused on converting electrical energy to different energies. For the scope of this write-up, we will adhere to the manufacturing industry dealing in electrical appliances. The electrical industry is diverse but can be broadly classified into the following categories.
- Electric Lighting Equipment Manufacturing
- Electrical Equipment Manufacturing
- Household Appliance Manufacturing
Electric Lighting Equipment Manufacturing
Companies under electric lighting device manufacturing are primarily engaged in manufacturing electric bulbs, parts, and components, lamps, residential electric lighting fixtures, institutional electric lighting fixtures, commercial, industrial other lighting equipment such as flashlights, spotlights, Christmas lights etc.
Electrical Equipment Manufacturing
The electrical component manufacturing subsector manufacture products that generate, distribute, and use electrical power. This is the largest segment in the Electrical manufacturing market, with more than 55% of the electrical market share. Electrical equipment manufacturing establishments make equipment such as generators, transformers, electric motors and switchgear. The domination of this category is due to the comparatively high sales volume of switchgear, switchboards, transformers etc.
Household Appliance Manufacturing
Household Appliance Manufacturing establishments make small as well as major electrical appliances and their parts needed by households like electric housewares, kitchenware and major household appliances such as microwave ovens, fans, air conditioners, vacuum cleaners, blenders, mixers and coffee/tea makers etc.
Waste Generation in Electrical Industry
Waste is generated not only during the manufacture of electrical products but also from the end-of-life waste of the product. The manufacturing process generates all three types of pollutants (air, water and noise); therefore, such industries are categorised in the red category by Central Pollution Control Board. Being a manufacturing industry, the electrical industry is responsible for extended producer responsibility or EPR, for the e-waste management of their products under the E-Waste Management Rules, 2016. The number of stakeholders in the product's whole life cycle, from its manufacturing to its disposal and the complexities of methodologies in the electrical industries make it difficult to regulate and coordinate the entire waste management system of the electrical sector effectively. When appliances come to an end-of-life, they are categorised as waste from electrical and electronic equipment (WEEE). Waste electrical products come under that category of waste that has the fastest pace of generation worldwide and covers 90% of the world's WEEE, of which 34% are ICT-related appliances,42% are large household and electronic appliances, and 14% are consumers' electronics.
Licences and Documents needed to start Electrical Equipment Manufacturing
All electrical manufacturers must obtain a series of licences and approvals from the Central government and their respective state governments before setting up a unit in the electrical industry. Apart from the entities falling under the definition of ‘producer’ as per the E-Waste Management Rules, they must adhere to some post-compliance guidelines and achieve their EPR-mandated targets. Electrical devices that fall under the compulsory Registration Scheme will also need a self-declaration of conformity. Therefore the goods falling under this category must be manufactured after submitting a self-declaration that they comply with the prescribed standards. The following licences are needed to start electrical equipment manufacturing.
All manufacturers in the electrical industry must register with their concerned SPCB/ PCC under the Air Act and the Water Act before starting construction of the unit. The unit must obtain NOC for the discharge of industrial effluent under the respective category in the form of Consent to Establish or CTE and Consent to Operate or CTO. The documents required for this licence are
- Business Registration Certificate
- PAN Card of the Authorized Signatory
- GST Certificate
- Layout plan/ site plan
- Process flow chart
- Proof of ownership of site/ rent agreement
- Balanced sheet by CA
- Proof and details of air and water pollution control devices and waste management authorisation.
- Lab report of the trade emissions and effluents
- Any document specified by the concerned Board.
- Any permission needed from the state government, such as environmental clearance.
As producers of EEE are mandated to fulfil their EPR target concerning the waste generated by the end of life of their products, they are required to obtain EPR Authorisation for EPR and submit an EPR Action Plan for the same. The manufacturer in the Electrical industry can either fulfil this target or avail of the service of a Producer Responsibility Organisation (PRO).
The documents required for EPR Authorisation for include the following:
- Form 1 for EPR authorisation
- GST Certificate
- Importer Exporter Code (IEC)
- Land Ownership documents
- Memorandum of Association
- Details of imported products like EEE code, quantity imported etc.
- EPR plan copy of permission from relevant Ministry/ Department for selling their product.
- Copy of agreement with dealers, collection centre, recyclers, treatment storage and disposal facilities
- Copy of trade licence issued by Directorate General of Foreign Trade.
- Self-Declaration, including the importer’s name and authorised person, brand name, and contact details.
Other licences and Authorisation needed by Electrical Industry include
Factories Licence: Manufacturing units that indulge in Electrical item manufacturing and falling under the definition of factories under the Factories Act of 1948 must obtain a factory licence from the concerned state’s labour department. The chief inspector is the entityauthorisedtogrant this licence.
BIS Registration: Electrical item manufacturers must ensure that their products fall within the BIS standards designed for the respective category in which the electrical product falls. BIS will grant a licence to the electrical manufacturer to use a standard mark.
Fire NOC: This certificate is issued by the State fire department after ensuring the unit has been built as per the fire safety protocols and is equipped with firefighting measures.
RoHS certificate: The RoHS certificate stipulates that the electrical products do not contain harmful chemicals such as heavy metals, flame retardants and plasticisers. Most of the EEEmanufacturing facilities are required to obtain a RoHS compliance certificate.
Market Overview of the Electrical Industry in India
The domestic electrical device market is expected to grow at 12 per cent annually to reach 72 billion USD by 2025. The total worth of India's electrical equipment market currently stands in the range of 48-50 billion USD, as per the reports by the Indian Electrical & Electronics Manufacturers' Association. The scope of the transmission and distribution market expanded at a CAGR of 6.7 per cent over FY07-13. This growth was most evident in the manufacturing of boilers (at 16 %) followed by cables at 15 %, transmission lines and conductors at 12 %. The electrical generation equipment market grew at a CAGR of 12.7 per cent over FY12–22.
Scope of Electrical Industry in India
The electrical industry's contribution to a country's development is huge. We all are dependent on different electrical appliances in many ways. Therefore, the expansion of the electrical industry is highly beneficial for the growth of a country to keep pace with the modern era of technological advancement. The Government of India has de-licensed the electrical machinery industry and has allowed 100 % FDI in the electrical sector. GOI plans to set up the Electrical Equipment Skill Development Council (EESDC), which would focus on identifying crucial skills required in manufacturing electrical machinery within the country.
Export Opportunity: The exports of electrical equipment will rise from 8.62 billion USD in 2021 to 13 billion USD by 2025. Boilers and parts and electrical wires and cables were the primary drivers of the increase in exports. The local electrical equipment industry will help meet India's renewable energy targets and the overall carbon reduction targets under the Paris agreement.
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