The size of Indian market for capacitors is estimated to be around Rs 1000 crore. During the last few years capacitors market has posted a healthy growth of 10 percent annually. Like any other electrical equipment market, capacitor market is also characterized by the co-existence of both organized and unorganized players. However, it is more fragmented with around 25,000 capacitor players operating in the country. Few of the leading capacitor players in the Indian market are EPCOS, L&T, Globe Capacitors, Vishay and Tibrewala Electronics Ltd. They manufacture wide variety of capacitors that too in various sizes. To name a few—LT Capacitor, HT Capacitor, ceramic capacitor, air capacitor, Mylar capacitor and tantalum capacitor.
Although the capacitors have common function of storing the electrons/energy, it is used in almost all the sectors of the economy. For instance, capacitors are used in various appliances like air-conditioners, refrigerators, motors, coolers, pumps and fans. Railways, power, cement, steel, automotive, electronics--almost all the sectors make use of them. New projects across different sectors will have direct impact on the demand of the capacitors. More the new projects more will be the demand for capacitors. Demand is also directly related on demand for consumer durables like refrigerators and air conditioners. Thus capacitors have universal application and in some form or the other it is used by both households as well as industries.
Due to economic recession and subsequent global meltdown, demand for capacitors too has adversely affected. According to market players, demand for capacitors nosedived in the second half of the last fiscal. All the major user industries like automobile, cement and steel were adversely affected (especially in the third quarter of 2008-2009 fiscal) and also the demand for the consumer durables like air-conditioners and refrigerators moved southwards. As a result capacitors market encountered sluggish demand. To cope up with the slackness in demand, many well-known manufacturers have reduced the prices of their products.
“Currently, the capacitor market is not in very good condition,” says Pradeep Chhabria, CEO, Shree Trading Syndicate. However, slowly, the market is started reviving and things are coming back to normal, adds Chhabria. Even then it will take another six to twelve months for the market to revive completely, says Raghavendra Singh, Manager Operations, (Electronic Division), Stumpp, Schuele & Somappa Private Limited. In fact revival signs started appearing since March 2009. This revival of demand is likely to continue till June and upon the onset of Monsoon demand from consumer durable sector may slightly cool down. However, demand from steel, cement and power sectors will continue to grow, feel the market players. Revival of the automobile market will see the demand for the capacitors. As electricity is expensive in our country, many companies like Reliance are educating its customers to save the power and due to this fact there may be good demand for power capacitors.
Ongoing general election in the country also has had its impact on the demand for capacitors as announcement and implementation of new projects are kept on hold till the formation of new government. Even after forming new government, it may get several months to see the normalcy return.
Indian capacitor industry is dependent on imports for some of its raw materials like metallised polypropylene film (MPPF). Domestic manufacturers complain about the aberration in duty structure which is hampering the growth. Duty on imports should be reduced, says Deepak Goel, CEO, Vijayshree Electronics (India).
Although the capacitors made in India are being exported to USA, South East Asia Middle East and African Countries, India is not a major player in the international capacitor market. However, experts in the industry feel that there is huge potential for export of capacitors. Currently, exports hardly account for 10 percent of the turnover but there is scope for increasing it substantially. Exports from the current rate of less than 10 per cent, it can reach up to 40 to 50 per cent. East Asian countries like Vietnam, Taiwan, Philippines along with African Countries, European Countries, USA and Middle East hold good potential for exports.
In the international market, capacitors made in India are facing tough competition from China. However, there is a general belief in the industry that the capacitors manufactured in China are of poor quality. “At the same time, Chhabria says, “We are importing the raw materials and still we are competitive.” At the same time he strongly feels that there is a need to reduce duties on the import of raw materials.
Indian manufacturers are feeling heat of competition from Chinese makers not only in international market but also in the domestic market as well. Due to import of some of the raw material and recent Rupee depreciation, for the Indian manufacturers (especially for small and medium scale manufacturers) manufacturing of the capacitors becomes costly and as a result they are not able to compete with the China made capacitors in terms of price. “Either raw materials should be made available in the country or duty on imports should be reduced or stop the China made products in the Indian market,” suggests Goel. Remove taxes on power capacitor as it saves the power/ electricity, avers Chhabria. It is learnt that the sales tax will be reduced further from two per cent to one per cent.
Over the years the development has taken place in the technology in manufacturing capacitors. The quality of the product has improved and they have acquired the compact size. But at the same time, cost of manufacturing has also increased. “Still we have to invest more in technology. Need is to opt for automation and invest in new machines. As a result, capacitors made in India will be more economical and more price competitive,” says Singh. With little more help from the government and signs of economic revival on the horizon, industry leaders feel that tough times are a thing of past.
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