On a Strong Footing: Market size and growth of pump segment

Market size and growth of pump segment

The Indian pump industry contributes significantly to the country’s growth given its role as a basic equipment in almost every sphere including infrastructure and agriculture. The Indian pump market can be segregated on the basis of end use. The main sectors in which pumps are used are agriculture/irrigation, building services, water, wastewater/sewage management and industrial uses (power, oil and gas, metals and mining, etc.). Pumps are generally classified into positive displacement and dynamic pumps based on the type of operating principle. Displacement pumps can be sub-classified as rotary and reciprocating pumps, while dynamic pumps can be centrifugal and special effect pumps.

Expanding market

The Indian pump segment has registered significant growth in the past few years. Notably, the sector provides one of the highest net value additions (over 20 per cent) in the engineering sector. It has matured significantly and domestic sales are increasing at the rate of 16-18 per cent per annum. According to industry estimates, India produces about 4.5 million pumps per annum. As per the Indian Pump Manufacturers’ Association, the pump industry has a turnover of about Rs 200 billion. The segment has around 800 manufacturers making pumps of different capacities.

Indian pumps and valves are exported to more than 100 countries across the globe. The present market scenario suggests that export growth is likely to double in the next two years. India’s key export markets include the Middle East, North Africa, the US, Germany, Russia, China and Latin America.

With regard to imports, Indian pumps are sourced from the US, China and France. The availability of low-cost models makes local manufacturers competitive and this has limited the inroads by Chinese products, especially in the agricultural sector. Also, the lack of adequate after-sales service has restricted the acceptance of Chinese supplies by industrial sectors.

Industry structure and key players

The industry’s structure is characterised by a high level of market fragmentation with the presence of a few big players and a large number of medium- and small-sized players. There are over 800 domestic pump manufacturers and the industry employs over 120,000 people. Pumps perform two key functions – the transfer of liquids from one system to another and the circulation of liquids within a system. Some of the key components that determine the configuration of pumping systems are pumps, prime movers (electric motors, diesel engines or air systems), piping, valves (to control flows in the system), other fittings, controls and instrumentation, and end-use equipment.

Most of the pump market (about 95 per cent) comprises centrifugal pumps, while the remaining 5 per cent are positive displacement pumps. Agriculture and building services account for the major portion of demand at 46 per cent of the market in terms of value, while the rest of the infrastructure sector together accounts for the remaining 54 per cent. This segment of the pump market is technologically intensive and hard for small and medium enterprises (SMEs) to penetrate. Almost 95 per cent of the country’s demand is met by domestic pump manufacturers and about 5 per cent through imports. Thus, both Indian and foreign players play a role in the local market.

The pump industry comprises a few large players – both Indian and multinational companies (MNCs) – and many SME players. Some domestic SMEs have entered foreign markets such as Egypt, the US, West Asia, Greece and Italy, while MNCs have either entered into joint ventures or made direct investments in the Indian market.

Some of the larger Indian players like Kirloskar, CRI Pumps, Texmo Industries, Jyoti Pumps, WPIL Limited and Flowmore have a considerable footprint in the pump market, and offer customised solutions to different segments. The pump industry is seeing change as well as consolidation globally. Major international players are seeing growth prospects in the Indian market and are thus seeking to increase their presence.

Foreign companies such as KSB Pumps, Grundfos Pumps, Wilo AG and Flowserve Corporation are already active in India and are leaders in industrial pumping systems. In addition, several medium-sized players like Shakti Pumps, Falcon Pumps, Roto Pumps, Kishor Pumps, Sharp Pumps, Suguna Pumps and Aqua Sub Pumps also have a significant market share in the Indian pump industry.

Issues at hand

While the sector product footprint is pervasive in almost all key segments, the penetration of medium- and small-scale enterprises in the product manufacturing space is relatively low. One of the biggest challenges faced by pump manufacturers is the unpredictable business scenario which makes it difficult for them to maintain a certain level of inventory. Besides, site conditions across different states with regard to voltage bands, water levels and quality of fluids makes it difficult for pump manufacturers to adhere to actual standards. Another big challenge is the lengthy approval process for certification which varies from department to department across states. Other issues include the poor selection of pump sets with respect to head and discharge as well as poor maintenance practices.

Focus on energy efficiency

The ever-increasing need for companies to economise on energy use is motivating pump manufacturers to enhance their products with sustainable design features. Despite several challenges, pump manufacturers in the country are undertaking continuous improvements to enhance productivity, quality and service. There is significant engineering expertise in pump manufacturing, and as a result, industry players, especially leading manufacturers, are able to offer a wide variety of efficient products.

Currently, the average efficiency of inefficient, non-star rated pump sets is in the range of 25-30 per cent, while that of star-rated energy-efficient pump sets is 40-45 per cent. However, there is huge scope for improvement. According to the Indian Pump Manufacturers’ Association, there is a potential of 20 per cent savings by the mere replacement of inefficient pump sets by star-rated ones.

Future outlook

The country’s pump industry has a vast scope for expansion in the years to come, given the government’s mandate to push its Make in India agenda. Since the Indian pump business accounts for just about 5 per cent of the global pump market, the opportunity is huge. The Indian pump market is expected to grow at a compound annual growth rate of 10 per cent in the next few years. Also, India is one of the world’s fastest growing economies and is all set to surpass China to become the market leader for pumps and pumping systems in Asia.