Definition / Scope

A boiler is an enclosed vessel that provides a means for combustion, and heat to be transferred into water or other liquid until it becomes steam. The steam under pressure is then used for transferring the heat to a process.

Boiler belongs to the “Heavy Electrical Engineering Sector”, and forms a part of the BTG (Boiler-Turbine-Generator) island of power projects.

This report talks about the probable market size of boilers in India.

Market Overview

The boiler market in India is growing fast at a CAGR (Compounded Annual Growth Rate) of 24.53%, courtesy the ever increasing energy requirement of the nation. The thermal power sector, i.e. – coal and gas based generation are the key drivers of this growth of Indian boiler market. Other than them, it’s the biomass power plants which drive the small segment boiler market.

The outlook of the segment is positive as the nation is poised to increase its installed capacity, thus creating new business avenues for the equipment manufacturers.

Market Drivers

The phenomenal growth of the boiler market of the nation is the result of some key driving factors which are

• Growing demand: The electrical energy demand for FY 2021–22 is expected to be at least 191 TWh (Terawatt Hours), with a peak electric demand of 298 GW (Gigawatt).
• Foreign participation
• Moving towards advanced technology: The indigenous players are setting up or expanding their super-critical boiler manufacturing capacity. On the ultra-super-critical technology section a pilot project is under consideration with the collaboration of IGCAR (Indira Gandhi Centre for Atomic Research), BHEL (Bharat Heavy Electricals Ltd.) and NTPC (National Thermal Power Corporation). Construction of the plant is expected to commence by 2018.
• Large opportunity size for: Green field projects during 12^th & 13^th FYP. Brown field projects in the form of renovation & modernisation, will create a big opportunity size, considering the aging power plants of India.
• Attractive Policy Support: 100% FDI (Foreign Direct Investment) is permitted. Significant numbers of SEZ (Special Economic Zone) have been approved. Import duties on Chinese equipment.
• Increasing FDI inflow: The FDI inflows to the segment grew at a CAGR of 28.5% amounting USD 3 billion during FY 2012-13.

Industry Challenges

As the sector is dependent upon project installations in the thermal power sector, the problems faced by the project developers directly affect the market of equipment manufacturers. The power project developers in India usually face lots of problem due to the complex paper works, which requires 100 plus clearances from different agencies to set up a power plant.

In addition the availability of raw material, ie- coal & gas for the operations of these power plants have been a concerned since last three to four years. The coal block re-allocation and fuel pooling is anticipated to turn the tide again in the favor of the project developers and hence the equipment manufacturers.

Besides these, the equipment manufacturers in India face problem associated with the availability of some key raw materials.

Market Size and Forecast

The market size for boilers in India stood at USD 6 Billion on FY (Fiscal Year) 2013-14, and is expected to grow beyond USD 11.7 billion FY 2021-22.

The market demand for boilers would be directly depending upon the thermal capacity addition of the nation. The total planned thermal capacity addition during 13^th FYP is 63.4 GW, which translates to a market size of INR 585 billion.

Import v/s Export Scenario of the Boilers Market in Indian

Between the periods of 2000 to 2014 the imports of boilers in India grew at a CAGR of 29.63%, whereas the exports grew at the CAGR of 20.79% which currently accounts for only 0.8% of the global traded volume. But in terms of the cost associated India’s import is almost double its export.

China is the leading boiler import destination for India, it accounted for almost 45% of the domestic boiler demand in 2014. The USA is the major boiler exports destination of India, the export to the US accounted for 15% of the total Indian boiler exported in 2014.

Indian Boiler Market Forecast

The boiler market size in India till 2022 will be governed by the planned capacity addition or the green field projects and the probable market size for export. But as the quantum of export of entire mix of electrical equipment accounts for only 0.8% of the global trade, hence the opportunity size of export of boiler can be overlooked.

For the calculation of opportunity size of boilers from FY 2015-16 to FY 2019-20, the cost of boiler per MW of capital cost of project has been considered as

• INR 1.07 crore for the 660 MW unit size
• INR 1.02 crore for the 500 MW unit size

By FY 2019-20, the annual market size of Indian boiler market is expected to reach INR 608 billion, as a result of expected installations of 12.6 GW thermal power.

Market Outlook

The outlook of Indian boiler market seems positive. Despite a tough competition from Chinese manufacturers, the robust growth opportunity of Indian power sector provides a large opportunity size for the indigenous manufacturers.

Competitive Landscape

The Indian boiler market was dominated by the PSU electrical equipment manufacturer BHEL with almost 59% of the market share in 2014. The other notable players were- L&T, Siemens, ABB, Doosan, Crompton Graves. The sector also has witnessed growing interest of foreign players, marking their entry to the Indian market in the form of JVs (Joint Ventures). The list of few JVs in Indian boiler manufacturing industry has been represented in the following table.

The indigenous manufacturers are having a tough time in competition with the Chinese players. GoI (Government of India) has tried its fare bit to shield the domestic players by floating bulk tenders of super-critical units for the projects of NTPC and DVC (Damodar Valley Corporation) with specifying the eligibility clause for bidders, as mandatory domestic manufacturing presence with a valid technology transfer agreement.

But the same doesn’t hold applicable for projects developed by private sector, and as the share of installations of private sector is on the higher side in the 12th & 13th FYP, the competition between the domestic & Chinese equipment manufacturer will intensify.

References

1. CEA Planned Capacity Addition
2. Indian Electrical Equipment Industry Mission Plan 2012-22
3. DGCIS
4. Planning Commission, Working Group Report on Power

Appendix