In developing countries such as India, growth in the pump market has primarily been on account of agricultural and industrial growth. Pumps play a dominant role in sectors such as agriculture, water and wastewater management, power generation, oil and gas, mining, petrochemicals, construction, etc. Pumps are generally classified into positive displacement and dynamic pumps based on the type of operating principle. Displacement pumps can be subclassified as rotary and reciprocating pumps, while dynamic pumps can be centrifugal and special effect pumps.
Market size and trends
The global pump market was estimated to be around $53 billion at end 2018. Of this, the centrifugal pumps segment accounts for approximately two-thirds of the overall consumer demand. In India, the total pump market is estimated at around Rs 150 billion. In the past four years, the market has grown at the rate of around 6 per cent. Most of the market (about 95 per cent) comprises centrifugal pumps, while the remaining 5 per cent are positive displacement pumps.
India’s pumpset imports have seen a fluctuating trend, decreasing to Rs 9.3 billion in 2016-17 from Rs 11.4 billion in 2014-15, before increasing to Rs 12.3 billion in 2017-18. India imports 30 per cent of its pumpsets from China, Germany accounts for almost 20 per cent and the US for around 12 per cent. Pump part imports have witnessed a similar fluctuating trend as pumpset systems. Imports reached a five-year high at Rs 12.7 billion in 2017-18 after the lowest annual import level of Rs 10.6 billion in 2016-17.
India exports pumps to over 100 countries. There has been a steady increase in exports of pumpsets over the past four years, growing at a compound annual growth rate (CAGR) of 4.6 per cent. In 2017-18, the pumpset export market reached a five-year high of Rs 11.6 billion. The Middle East and Southeast Asia are the two regions which account for the largest exports of pumpsets from India, while the US accounts for 8.6 per cent of total pumpset exports. Meanwhile, exports of pump parts have remained steady, around the Rs 5 billion mark every year between 2014-15 and 2017-18.
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 sectors together account for the remaining 54 per cent. Of the infrastructure sectors, the water and wastewater treatment segment accounts for the maximum demand for pumps. This is followed by power, oil and gas, and mining. The country’s solar pump market stands at over Rs 21 billion currently. Shakti Pumps and Lubi Pumps (also a solar module manufacturer with 150 MW of capacity) are the only integrated solar pump manufacturers that provide engineering, procurement and construction (EPC) services as well. Other companies supply pumps to system integrators who do the installation and EPC work.
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. The organised pump market is represented by over 300 players, with the top 10 accounting for 45 per cent of the overall market share. The share of the organised market has jumped from 35 per cent to 55 per cent during the 2009-16 period.
The pump industry comprises a few large players – both Indian and multinational companies – and many small and medium enterprises (SMEs). 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 such as 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 undergoing 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 such as Shakti Pumps, Falcon Pumps, Roto Pumps, Kishor Pumps, Sharp Pumps, Suguna Pumps and Aqua Sub Pumps also have a significant market share in the domestic pump industry.
The introduction of the goods and services tax will remove interstate tax variations and result in higher costs for the unorganised sector, which will further accelerate the transition towards organised players.
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 are making 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 non-star-rated pumpsets is in the range of 25-30 per cent, while that of star-rated energy efficient pumpsets 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 pumpsets by star-rated ones.
Solar energy-driven pumpsets is an emerging alternative to electrical and diesel pump systems in farm irrigation. So, with the aim of offering financial and water security to farmers, the government has launched various schemes to promote the installation of grid-connected solar power plants and solar pumps.
The Kisan Urja Suraksha evam Utthaan Mahabhiyan (KUSUM) is the latest scheme introduced by the government. With a total financial outlay of Rs 480 billion, KUSUM aims to encourage farmers to use solar power for meeting their irrigation requirements through the solarisation of existing pumps, and the installation of new solar pumps and grid-connected ground-mounted solar power plants. The scheme not only provides a capital subsidy to farmers but also allows them to sell surplus green power to discoms. Many states have also rolled out similar schemes. For instance, the Gujarat government announced the Suryashakti Kisan Yojana in July 2018 to provide solar panels to farmers for generating clean and low-cost energy. The Himachal Pradesh government approved the Saur Sinchayee Yojana, worth Rs 2.24 billion, in August 2018. In Madhya Pradesh, the Chief Minister Solar Pump Scheme was launched in June 2018, under which subsidies of up to 85-90 per cent are being given to farmers for establishment of solar pumps ranging from 1 HP to 5 HP. Other states such as Maharashtra, Uttar Pradesh, Bihar and Karnataka have also initiated comprehensive solar pump programmes to address farmers’ woes and reduce discom losses.
Growth drivers and outlook
Agriculture accounts for 18 per cent of the country’s total electricity consumption, as the majority of pumps installed on farms are highly inefficient (20 per cent efficiency). With the government’s thrust on higher efficiencies and cost savings, Energy Efficiency Services Limited has outlined plans to replace 20 million pumps installed on farms across the country at an investment of around Rs 710 billion.
The status of water treatment in the country also remains critical, as 80 per cent of the country’s surface water is polluted. Domestic sewage, which is discharged untreated into local waterbodies, is the cause for 75 per cent of water pollution. The government’s flagship projects of building 100 smart cities and the Atal Mission for Rejuvenation and Urban Transformation are likely to open up opportunities for the pump sector. Also, projects to clean up the Ganga river and create inland waterways by interconnecting rivers are likely to result in several opportunities for the sector. Further, the anticipated boom in the hotel industry is expected to pave the way for construction of new properties, thereby leading to increase in demand for water management systems.
At present, the industrial sector, including power and oil and gas, is not in expansion mode. However, a few industries – sugar, chemicals, paper and pharmaceuticals – are spending on greenfield capacities, thus opening up incremental opportunities for the pump sector.
In sum, greater thrust on infrastructure development is expected to lead to an increase in consumer demand for capital goods comprising pumps and pumping systems required for municipal water supply and wastewater treatment. The government’s thrust on the use of renewable energy is positive news for the manufacturers of highly engineered pumps that are required in renewable energy projects. Since the Indian pump business accounts for just about 5 per cent of the global pump market, the opportunity is huge, and the domestic pump market is expected to grow at a CAGR of 10 per cent in the next few years.