The expanding transmission and distribution (T&D) network, along with overall infrastructure development, is driving the demand for cables and conductors. The expansion of the T&D network is vital for ensuring evacuation infrastructure for renewable energy plants, as well as for providing 24×7 reliable power supply. However, in the past one year or so, the Covid-19 pandemic has adversely affected the overall demand for cables and conductors owing to the shutdown of industrial and commercial activities, and economic slowdown. At the same time, supply chain disruptions have affected cable and conductor manufacturing in the country.
Market overview
The Indian cable and conductor industry is characterised by a large number of unorganised players accounting for around half of the market share. However, in the last couple of years, there has been a gradual shift towards an organised sector comprising pan-Indian branded market players on account of growing technological and product complexities, increasing marketing and branding activities by leading cable manufacturers, and the roll-out of the goods and services tax. This has been more pronounced in the case of low voltage power cables and building wires. The high voltage and extra high voltage power cable segments already have fewer unorganised players, since the manufacturing process is technology and capital intensive, and governed by strict quality regulations. Going forward, industry estimates suggest that the share of organised players in the cables and wire business will reach around 74 per cent by 2022-23.
With regard to market size, as per the Indian Electrical and Electronics Manufacturers Association, the cable industry in India was estimated to be around Rs 476.8 billion in 2019-20, recording a decline of around 15 per cent from Rs 558 billion in the previous year. In 2020-21 (till December), the industry registered a degrowth of around 26 per cent. Meanwhile, the size of the conductor industry stood at Rs 93 billion in 2019-20, a decline of 13 per cent from the previous year. In 2020-21 (up to December), the market for conductors shrank by 24 per cent. The cable and conductor business has witnessed a slackening with the outbreak of the Covid-19 pandemic, leading to a disruption of commercial and industrial activities and a slowdown in the domestic economy. Moreover, the pandemic has disrupted manufacturing and supply chains as well, leading to delayed payments. Decreasing metal prices (on the London Metal Exchange) and optical fibre prices have also had an adverse impact on the market, on account of reduced realisations.
Growth drivers
The growing power T&D network is the key demand driver for conductors and cables. The Indian power sector is witnessing a rapid expansion of renewable energy sources, and the government has set a target of installing 450 GW of renewable energy by 2029-30, which requires the setting up of a matching transmission network for the evacuation of power. Apart from this, the goals of building an interregional grid to ensure a seamless flow of power from one region to another, and cross-border interconnections with SAARC countries, are driving transmission network expansion. In addition to this, the growing public-private collaboration in the transmission segment, with the award of projects through the tariff-based competitive bidding mode, is driving private investments in the segment.
Meanwhile, in the power distribution segment, the demand for conductors and cables is primarily for network strengthening and expansion purposes. The government has set a target of providing 24×7 power for all, which requires a robust and resilient distribution network. Apart from this, under the Union Budget 2021-22, the government has announced a new reform-linked scheme with an outlay of Rs 3,059.84 billion for five years for the power distribution segment, which will provide assistance to discoms for infrastructure creation, including feeder separation and upgradation of systems.
Further, network strengthening and expansion, feeder segregation, and underground cabling is being carried out under the government’s Integrated Power Development Scheme and Deendayal Upadhyaya Gram Jyoti Yojana. Moreover, in a key recent development, the government has announced plans to privatise the power distribution business in the union territories. Based on the experience there, the government could expand the privatisation across India. With this, there is expected to be greater investment in the power distribution segment towards network strengthening and expansion. The setting up of charging infrastructure for electric vehicles is another emerging opportunity.
The ongoing smart city projects, wherein large-scale developments are being carried out in the power, telecom, housing and other infrastructure sectors, constitute another demand area for cables and conductors. Underground cabling is an essential part of smart city projects. It has become almost mandatory in densely populated areas, owing to increasing right-of-way (RoW) issues. Another key growth area for the cables and conductors industry is railway electrification. So far, Indian Railways has electrified 39,866 route kilometre (rkm), which account for about 63 per cent of the total rkm of Indian Railways. The Ministry of Railways has planned to electrify all broad gauge routes of Indian Railways by 2024.
Technology trends
In the power transmission segment, there is a growing uptake of advanced conductor technologies such as high temperature low sag (HTLS) conductors and high temperature superconducting (HTS) cables. HTLS conductors can withstand high operating temperatures, and have around 30 per cent more current carrying capacity than conventional conductors. They can thus help in achieving greater ampere capacity (ampacity) without modifying most of the existing towers. Meanwhile, HTS power cables can carry five to ten times the current carried by conventional conductors. They have a compact size and can be installed in dense urban areas with high load requirements, within existing RoW agreements. Moreover, HTS cables have exceptionally low transmission losses – about one-fourth those of conventional copper or aluminium conductors.
Apart from this, obsolete fluid or gas pressure cables are being replaced by new cross-linked polyethylene cables, which offer greater tensile strength, elongation and impact resistance. They have higher dielectric strength, resulting in low dielectric loss. Meanwhile, another emerging technology in the segment is gas-insulated lines (GILs), which have nitrogen and sulphur hexafluoride as the insulating medium. GILs serve as a viable alternative to overhead lines in places where RoW is not available for electricity transmission, as they can be installed underground as well as in tunnels and trenches. Besides this, the deployment of specialised cables to meet specific end-use requirements is gaining traction. For example, solar cables are designed to suit the specific purpose of evacuating solar energy from PV modules. They have a high thermal rating, which allows them to withstand extreme temperatures; high resistance to heat pressure; and superior abrasion and notch resistance. Similarly, various cables used in wind power plants are designed to meet particular requirements.
Conclusion
With the outbreak of Covid-19 and the ensuing economic slowdown, the cable and conductor segment has undoubtedly witnessed a corresponding demand slowdown. At the same time, domestic manufacturing has suffered owing to supply chain disruptions. However, there is expected to be robust demand for cables and conductors in the medium to long term, primarily on the back of the expanding T&D network and infrastructure. It is worth noting that the government has announced a $1.4 trillion National Infrastructure Pipeline for the infrastructure sector over a five-year period, aligned with the vision to make India a $5 trillion economy by 2024-25. Infrastructure spending by the government will boost demand for cables and wires. Further, the government’s emphasis on the Make in India and Atmanirbhar Bharat initiatives has put the focus back on minimising imports and promoting domestic manufacturing of cables and conductors.
Priyanka Kwatra