21

Dec/Jan 2011/12 | A&D India

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Gaining insight into Indian automation sector
National Manufacturing Policy will lead to creation of national investment and
manufacturing zones along with increasing manufacturing activity in the automation
sector that will boost the demand for automation products
M A R K E T T R E N D S 21
Competitiveness of Indias
manufacturing sector is critical
for sustaining the growth of the
Indian economy. Thus, to develop
the manufacturing sector further,
the Government has announced
the National Manufacturing Policy,
which aims at increasing the share
of manufacturing in GDP to 25
per cent by 2022, from the current
level of 15 per cent.
Contribution from major end-user
industries

PLC and related HMI: Auto, auto

ancillary, food and beverage constitute
more than 30 per cent of the PLC and
related opportunity

Plant SCADA: Oil and gas, and

water and waste water are the top
two sectors for plant SCADA market
with a cumulative share of more than
20 per cent

DCS: Power generation, and oil and gas

(upstream and downstream) are the top
two sectors with a market share of more
than 50 per cent

Electrical drives: Rotating equipment

is the single largest end-user sector for
electrical drives with a market share in
excess of 30 per cent
E
conomic reforms and various
policy initiatives have made
India one of the fastest-growing
economies in the world today. The
manufacturing sector has played a significant
role in the growth of the Indian economy,
contributing nearly 15 per cent to the
countrys GDP over the last few years. The
National Manufacturing Policy announced
targets at raising the manufacturing share
in GDP to 25 per cent by 2022, from the
current level of 15 per cent. The heightened
industrial investment has contributed to
the growth of the automation market. This
includes programmable logic controllers-
human machine interface (PLC-HMI),
supervisory control and data acquisition
(SCADA), distributed control system
(DCS), and electrical drives (AC, DC and
servo drives) among others.
Perspective of the complex
business universe

Technology impact: The opportunities

include: Re-structured Accelerated
Power Development and Reform
Program (R-APDRP) initiatives by
the Government of India to facilitate
greater usage of automation and data
acquisition systems, contributing to
significant reduction in transmission
and distribution losses. The ultra mega
power projects (involving supercritical
generation technology) will increase
the scale of automation. There would
be preference for touchscreen HMI
over panel-based ones, replacement of
DC drives by AC drives and expanding
DCS functionalities resulting in reduced
PLC usage.
Dec/Jan 2011/12 | A&D India
M A R K E T T R E N D S
One of the challenges would include budget constraints coupled
with higher cost of automation products, which would deter
technology adoption.

Global opportunities
India is emerging as a preferred sourcing destination for automation
products (such as electrical drives). It has an increased presence
of IT and software vendors in the global SCADA market. There
have been rising exports to APAC and Middle Eastern countries.
Challenges in this regard would include: acceptance of domestic
(assembled) automation products; lack of relevant semi-conductor/
electronic infrastructure setup; adherence to global regulations;
uncertainty in the global economy.

End-user perspective: Opportunities here would comprise strict

regulatory framework that facilitates greater usage of automation
systems and ultra mega power plants (UMPP) that will increase
the opportunities for automation systems. Challenges would be:
budgetary constraints; regulatory framework (US and Europe
FDA regulations; pharmaceutical sector); limited awareness
(SMEs in particular) about the cost-benefit equation.

Industry convergence: Various leading software companies

in India are partnering with automation solution providers to
implement/support level 2 and 3 automation products such as
HMI, SCADA, and MES among others. Level four automation
companies such as SAP and Oracle are moving to level three to
provide automation products such as manufacturing execution
system (MES). One of the glitches faced here would include
domain expertise.
Strategic outlook for 2020
(mega trends)
Automation trends and opportunities have been mapped across five
core sectors:
Power

Large-size power projects coerce greater opportunities

Integrating process and business to achieve higher process

optimisation, monitoring real-time performance, and improving
profitability

Power trading and R-APDRP initiatives to facilitate greater

adoption of data acquisition and monitoring solutions

Growing participation of Chinese and Korean contractors in

India facilitate increased penetration of automation vendors
from these countries
Oil and gas

Network safety in the face of increasing concerns over security

of oil and gas infrastructure

New LNG terminals and expansion of existing terminals

City gas distribution projects

Cement

Integrating laboratory automation and quality management

system with the plant control

Increased usage of medium voltage electrical drives

Energy-intensive nature of the industry leading to widespread

adoption of energy management solutions such as energy
dashboards, report generation
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Consolidation in the Indian cement industry and increased

globalisation

Infrastructure

Greater emphasis on railway scheduling and safety will drive the

demand for railway management and monitoring system
Metro rail projects
Construction of new ports/airports and modernisation of the
existing ones
Metals and mining

Perform Achieve Trade (PAT) scheme will facilitate adoption of

energy management solutions

Widespread implementation of MES to manage production

scheduling (manufacturing operations)

Consolidation in the global mining industry necessitates usage

of asset management software among others

Entry of several global steel manufacturers (such as POSCO,

Arcelor Mittal) and global acquisitions (such as Tata Steels
acquisition of Corus and Hindalcos acquisition of Novelis) will
translate to adoption of global best practices
India and Japan have entered into a CEPA, which will boost
bilateral trade between the two countries to US $25 billion (over 10
years) from the current US $10.3 billion. Under CEPA, import duty
on completely built drives originating from Japan will be zero per
cent. Thus, Indian market will witness entry of many Japanese drive
vendors and thus an intensified price war.
Expected announcements
Goods and Services Tax (GST): GST will replace the indirect tax
regime in India. The dual GST will have Central and State GST
levied concurrently by the Center and States. GST will impact all
aspects of businesses; pricing of products and services and supply
chain optimisation.
Overall strategic conclusion
The increasing population coupled with rising disposable incomes
has resulted in tremendous rise in domestic demand. The core
sectors of power, oil and gas, cement, infrastructure, and metals,
among others continue to scale up to meet the burgeoning domestic
demand. While the looming economic recession has introduced
uncertainty in the investment climate, the Government of India is
expected to go ahead with its investment plans in the core sectors
to ensure balanced supply-demand. While free trade agreements
and economic partnerships will intensify competition, the overall
manufacturing climate and relevant Government/private initiatives
are expected to augur well for the automation industry in the next
few years.


Courtesy: Industrial Automation & Process Control Practice, Frost & Sullivan,
South Asia & Middle East
M A R K E T T R E N D S 23
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