• Anchor bajaj CG Khaitan Havells Lazer India Ortem Orient Polar Usha
  • Anchorbajaj CG Khaitan Havells Lazer India Ortem Orient Polar Usha
 
 
 
 
 
 
 
 
 
 
 
 
Address by Mr. Shekhar Bajaj, Chairman Indian Fan Manufacturers Association

Fourteenth Annual General Meeting 22 September 2014 at Kolkata

Members,

I welcome you to the Fourteenth Annual General Meeting of the Association
at Kolkata.

Ever since the economic reforms were set in 1991, the Indian economy has grown at a steady pace in comparison to some of the other developing economies around the world. The overall growth of India's real GDP was 4.78% during 2013-14 compared to 4.5% during 2012-13. The country's GDP had posted a CAGR of 7.9% for the 10-year period ending 2012–13. During 2013-14, the country had registered a fiscal deficit of 4.5% of GDP, while the current account deficit had moderated to 1.7% of GDP from 4.7% of GDP during 2012-13 due to restrictions on gold imports. The Index of Industrial Production (IIP) had rallied to grow from (-) 2.5% in May 2013 to 4.7% during May 2014. During 2013-14, the WPI inflation was reported to have moderated to a three year low of 5.98%, while the Consumer Price inflation had moderated to about 9.49%, although the food inflation continued to remain very high, derailing the process of containing the overall inflation.

Urbanization and innovation plays a significant role in driving the consumption pattern of the population. It is estimated that by 2025, India would become the world's fifth-largest consumer market. Between 1990 and 2010 the urban population in the country had increased from 25.5% to 30.9%. Going forward the urban population is expected to touch 38.9% by 2030. The demographics of India is quite young with around 65% of the population in the age group of 15–64 years with the median age being 26.7 years, which is lower than many countries in the world. India benefits from the burgeoning domestic demand created by this young demographic whose consumption is driving the middle class.

The Central Government had recently proposed developing 100 smart cities that would generate atleast 5 million new homes to address the problems of overpopulation and bring down the load on the existing metros. These initiatives would help to boost the real estate segment which would augur well for the electric fan manufacturing industry.

The members of the Association comprising of ten leading fan manufacturers in the country represent the organized segment of the fan industry. During 2013-14, the membership of IFMA had achieved a consolidated production of 40.26 million fans registering a marginal growth of 2.65% in comparison to the growth of 8.29% recorded during 2012-13. In domestic production, the association members had registered 38.31 million fans, a growth of 2.47% only. However, exports had registered a growth of 6.33% during 2013-14. The consolidated figures for IFMA members since 2002-03 are presented in the table below:

Year % Growth
  Production Domestic Sales Export
2002-03 12.34 15.33 (-) 7.48
2003-04 14.14 10.03 48.02
2004-05 29.87 29.00 35.26
2005-06 5.38 8.73 (-) 14.24
2006-07 23.84 26.03 7.53
2007-08 16.11 18.07 (-) 0.96
2008-09 2.62 4.27 (-) 14.58
2009-10 29.89 32.21 0.49
2010-11 28.55 29.82 7.40
2011-12 (-)3.13 (-) 3.35 1.28
2012-13 8.29 7.97 14.50
2013-14 2.65 2.47 6.33
CAGR 13.92% 14.58 % 6.00 %



To explore the possibilities of bilateral trade between India and Pakistan, the Association had invited the Pakistan Electric Fan Manufacturers Association (PEFMA) to visit India. A 12 member delegation comprising of the leading Pakistan electric fan manufacturers, led by Mr. Taimur Rafiq, Chairman, PEFMA had visited India during 24th- 27th March 2014 to interact with the association members and understand the Indian manufacturing processes. While the Indian fan industry is pegged at 7000 crores represented by many large scale manufacturers, the Pakistan fan industry was relatively small at 800 crores comprising of around 200 manufacturers from the medium, small and cottage industry segments. The Pakistan fan industry was reported to export about 2 million fans per annum out of 7 million fans manufactured by them and imports equivalent to 17 million USD. Currently the Pakistan fan industry domestically manufacturers 95% of all the models sold in Pakistan, including luxury and niche products like hand painted electric fans.

Although the Indian fan industry has a strong export market in other countries, exports to Pakistan has been restricted in absence of an MFNstatus with India. The Pakistan Fan manufacturers shared their ideas which helped them to scale down their manufacturing costs. Since Vendor Certification from China is expensive, the Pakistan fan manufacturers agreed to explore the possibility of importing Vendor Certification from India in future. The visiting delegation had also visited a manufacturing plant of Havells India Ltd. on 26th March 2014 at Haridwar and another plant of Usha International Ltd. on 27th March 2014 at Hyderabad. The interactions had paved the way for sharing ideas, developing friendship, building contacts and initiating collaboration for the mutual benefit of businesses between India and Pakistan.

The engagement with the Bureau of Energy Efficiency on the Star Labeling program for fans had been a work-in-progress during the year. The program was launched by BEE during October 2009 for voluntary compliance by the fan manufacturers to address the government’s commitment of reducing carbon intensity by 20-25% within 2020. The Star Labeling program provides an opportunity to all end users to make informed choices at the time of purchase and also results in savings of approximately 30,000 MW of electricity over the next few years, as fans account for nearly 30% of the total power consumption. Although the star labeled fans are now available in the market, the demand for such fans was yet to pick up probably due to its lower performance parameters in terms of air delivery arising from the low voltage supply in the country. The higher cost of star rated fans was perceived to be a deterrent in the price sensitive fan market.

The Super Efficient Energy Program (SEEP) initiated by BEE with the support from World Bank is expected to address the pricing issues and provide time bound financial incentives to not only offset the additional capital expenses required for upgrading the existing manufacturing facilities but to also incentivize the manufacturers to develop and sell super efficient appliances. The objective of launching the SEEP program was not only to complement the Star Labeling program but also to provide the initial market push and increase the sales volume of super efficient appliances to bring down their cost.

The price differential between Indian and Chinese make fans which was earlier estimated to be about 35% had narrowed down with the prices of Chinese make fans going up significantly. This had resulted in an opportunity for increase in exports from India to the Middle East countries, earlier dominated by Chinese fans. Although the Indian fan industry has the wherewithal to become one of the best manufacturing hubs for electric fans in the world, the existing export policies for the industry has always acted as a deterrent in boosting exports. The Duty Drawback Scheme which was meant to ‘offset the taxes that were paid end-to-end in the domestic production cycle’ and provide a level playing field to the Indian manufacturers to accelerate exports, has failed to achieve its objectives. The government should take a holistic view and come out with enabling policies to facilitate export promotion in the fan industry.

Manufacturing of spurious fans of established brands had affected the industry. The Association considers this menace a serious concern which not only affects the quality of products available in the market but also seriously dents the image of the branded fan manufacturers. The Association has been committed to unearth such duplicate fan manufacturers for which IFMA had successfully organized 53 raids all over the country during 2013-14 resulting in a large catch of spurious fans and other accessories.

Thank you.

Shekhar Bajaj
Kolkata
22 September 2014.

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