The market can be broadly divided into three segments namely the small diesel generators (15 – 75 kVA), medium diesel generators (75.1 – 375 kVA), and large diesel generators (375.1 – 2000 kVA). Chronic power shortages and prolific growth in industries, infrastructure, telecommunication, information technology (IT), and IT enabled services triggered market growth.
The total genset market is now estimated to grow steadily at a compound annual growth rate (CAGR) of about 10.1 percent in revenue terms between FY2010 and FY2015. High growth in the industrial sector and peak power deficit at about 15 percent is expected to boost diesel generator set sales in India.
New analysis from Frost & Sullivan (energy.frost.com), Indian Diesel Generator Set Market, finds that market earned revenues of $1372.3 million in 2009 and estimates this to reach $2,444.5 million in 2015.
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"With the successful auction of 3G spectrum in May 2010, major telecom firms such as Bharti, Reliance, and Aircel have made huge investment in acquiring frequencies across major urban regions such as Mumbai and Delhi," says Frost & Sullivan Industry Manager Bhaskar Majumdar. "New telecom towers are expected to be added to accommodate the needs of 3G service deployment, creating a fresh wave of demand for diesel generator sets in the range of 15 – 30 kVA."
The telecom sector was the key growth driver for the small diesel generator set market in the recent past. The 15 – 75 kVA diesel generator set market witnessed a slight slowdown in the last years on account of saturation in certain telecom circles which necessitated several tower infrastructure firms to place their tower addition plans on hold. However, with the advent of 3G services in 2010, the small diesel generator market is expected revive and project high growth rates.
Although market prospects look upbeat, there are some challenges clouding the landscape. Import of low cost diesel generators and price competition from the unorganized diesel generator suppliers are some of the key restraints that are expected to curtail growth. Low-cost imports from China have impacted the pricing trends of domestic manufacturers, causing erosion of profit margins, especially in the 15 – 75 kVA range.
The threat is likely to continue as several new entrants in this market are expected to import diesel. With the hike in the global price of crude oil, diesel prices are expected to rise significantly, thereby causing huge losses to end users and necessitate shutdown of diesel based generation. This will negatively impact the demand for new diesel generators in the future.
"The emission norms in India are being continuously updated to match those in the European Union," says Majumdar. "As the new norms are likely to be established in 2013, and major suppliers of the diesel generator sets in India will have to upgrade the design of the engines to conform to the new emission standards."
This will entail substantial investments and several technology transfer agreements with global engine suppliers. Going forward, the degree of competition in 15 – 75 kVA and 75.1 – 375 kVA is expected to increase significantly with several new participants, both domestic and international suppliers, venturing into these market segments. For participants in this space, product positioning and service strategies that offer additional value added services will help enhance business prospects.
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Indian Diesel Generator Set Market / P420