Friday, August 3, 2012

Will India's problem be China's gain?

Over the past few days, loads of print spaces were devoted to India's pitiable power sector. How the country's super power dreams have sunk into darkness was the most widely read headline. Not just in domestic but also in the international media. But unlike the ego brushing West, the Chinese have a more practical way of dealing with this news. They did not criticise Indian policy makers. Nor did they ridicule India's ambitious plans for the power sector. They are in fact quietly trying to make the most of the opportunity in disguise.

The Chinese companies in power equipment space are well positioned to feed the unmet demand in India.  Some like Shanghai Electric, Harbin Electric and Dongfang Electric have already established themselves in the country. They are competitive on costs and are giving local equipment suppliers, including Bharat Heavy Electricals Ltd (BHEL), a run for their money. As reported by Firstpost, Chinese players are expected to participate in projects set to generate an additional 40,000 MW of power over the next few years.

India has missed every capacity addition target since 1951. Despite this, nearly 30% of the total planned infrastructure outlay over the next five years is on the electricity sector. Transmission and distribution losses still account for 27% of power generated! It is time India takes some concrete steps. One is to facilitate private sector participation in the power equipment space. That, along with partnership with Chinese players, could be the only way to reduce our electricity woes.

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