The pump industry contributes significantly to the country’s growth given its role as basic equipment in the infrastructure and agricultural sectors. The Indian pump market can be classified on the basis of end use. The key sectors that use pumps are agriculture (irrigation), water, wastewater/sewage management, building services, power, oil and gas, metals and mining, etc.
Pumps are also classified as positive displacement and dynamic pumps on the basis of their operating principle. While displacement pumps can be further classified into rotary and reciprocating pumps, dynamic pumps can be categorised as centrifugal and special effect pumps.
A look at the size of the pump market, key trends, industry structure, growth drivers and outlook…
Market size and trends
The Indian pump and valve industry has been registering significant growth for the past few years. The sector with the highest net value addition in the overall market size is engineering (over 20 per cent). Over the years, the engineering sector has matured significantly, with domestic sales increasing at a rate of 16-18 per cent.
As per industry estimates, India produces about 4.5 million pumps per annum. According to the Indian Pump Manufacturers’ Association, the pump industry has a turnover of about Rs 200 billion, with around 800 manufacturers making pumps of different capacities.
India’s imports of rotary positive displacement pumps had been increasing continuously over the years, before declining in 2019-20. These increased from Rs 3.99 billion in 2015-16 to Rs 4.93 billion in 2016-17, Rs 8.13 billion in 2017-18 and Rs 9.94 billion in 2018-19, and then decreased to Rs 7.78 billion in 2019-20. Imports during April-October 2020 stood at Rs 3.47 billion. Country-wise, Germany accounted for a 32.64 per cent share in overall imports in 2019-20, a marginal increase from 32.39 per cent in 2018-19.
Imports of centrifugal pumps increased at a compound annual growth rate (CAGR) of 6.72 per cent, from Rs 8.12 billion in 2015-16 to Rs 10.53 billion in 2019-20. Country-wise, China PRP accounted for the maximum share of 34.58 per cent (Rs 4.05 billion) in 2019-20, against 37.25 per cent (Rs 3.92 billion) in 2018-19. Meanwhile, the export of other rotary positive displacement pumps increased at a CAGR of 16.52 per cent, from Rs 1.12 billion in 2015-16 to Rs 2.06 billion in 2019-20. The export of other centrifugal pumps increased at a CAGR of 8.63 per cent, from Rs 13.62 billion in 2015-16 to Rs 18.97 billion in 2019-20.
With regard to its structure, the Indian pump and valve industry 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. It has over 800 domestic pump and valve manufacturers. In terms of pump type, centrifugal pumps account for about 95 per cent of the market and positive displacement pumps for the remaining 5 per cent.
Sector-wise, agriculture and building services account for a major portion of the market demand at 46 per cent in terms of value. The infrastructure sectors account for the remaining 54 per cent. Of the infrastructure sectors, the water and wastewater treatment segment accounts for the maximum demand. This is followed by power, oil and gas, and mining. This market segment is technologically intensive and hard to penetrate for small and medium enterprises. Meanwhile, almost 95 per cent of the country’s demand is met by domestic pump manufacturers and only 5 per cent is met through imports. Thus, both Indian and foreign players play a role in the local market.
Overall, the pump industry is witnessing change and consolidation globally. As such, major international players are seeing growth prospects in the Indian market and are thus seeking to increase their presence.
Foreign players such as KSB Pumps, Wilo AG, Grundfos Pumps and Flowserve Corporation are already active in the Indian market. Meanwhile, some of the big Indian players in the pump market are Texmo Industries, Kirloskar Brothers, CRI Pumps, Jyoti Pumps, WPIL Limited and Flowmore. Several medium-sized players such as Shakti Pumps, Roto Pumps, Falcon Pumps, Sharp Pumps, Kishor Pumps, Aqua Sub Pumps and Suguna Pumps also have a significant market share.
Agriculture accounts for about 18 per cent of the country’s total electricity consumption. However, the majority of the pumps installed on farms are highly inefficient. With the government’s thrust on increasing efficiencies and cost savings, Energy Efficiency Services Limited (EESL) has taken the initiative to accelerate the implementation of the Agriculture Demand Side Management scheme. Under the pilot project, over 2,200 old and inefficient pumps are being replaced with BEE star-rated energy efficient pump sets. In addition, free operation and maintenance services will be provided for the entire project duration. EESL undertook the replacement of more than 1,800 pumps in Mandya and Hubli districts of Karnataka. EESL took up another project in Andhra Pradesh for the replacement of 2,500 agricultural pump sets, with estimated energy savings of over 30 per cent.
In addition, the government’s Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) targets the installation of 1.75 million stand-alone solar pumps and the solarisation of 1 million existing grid-connected agricultural pumps by 2022. A number of state governments have also launched schemes such as the Atal Solar Krishi Pump Yojana (Maharashtra), the Saur Sinchayee Yojana (Himachal Pradesh), the Surya Raitha scheme (Karnataka) and the Saur Pump Yojana (Bihar) for promoting the installation of solar pumps in the irrigation sector.
Flagship government programmes such as the Smart Cities Mission and the Atal Mission for Rejuvenation and Urban Transformation are also expected to open up significant opportunities in the pump sector. Projects to clean up the Ganga river and create inland waterways by interconnecting rivers are likely to result in several opportunities for the sector.
What lies ahead in the aftermath of Covid-19?
Covid-19 did not spare any infrastructure sector. With the mass migration of the labour force to their native places, disruptions in the supply chain and rise in input costs, the pace of project implementation was impacted across all infrastructure sectors. Further, the Covid-induced lockdowns, both domestic and global, disrupted the import of pumps and related equipment. The availability of solar water pumps, which are being installed under the PM KUSUM scheme, is also expected to be impacted. The domestic solar industry is heavily dependent on imports. As much as 80 per cent of the demand for solar cells and modules is met by imports from Chinese companies.
Further, owing to delays in construction due to the lockdown, there will be additional interest costs on the working capital loans, which will have to be borne by the developers or contractors depending on the risk sharing mechanism. The revised standard operating procedures, incorporating social distancing norms, provision of safety kits, regular sanitisation of premises and equipment, etc. are also likely to escalate costs in the near term.
Nevertheless, the growing focus on infrastructure development is expected to increase the demand for capital goods, including pumps and pumping systems. The government’s push to renewable energy development spells promising prospects for manufacturers of the highly engineered pumps required in renewable energy projects. By 2023-24, it has been estimated that 3.06 million solar pumps will be installed across the country. Under PM-KUSUM scheme alone, the Ministry of New and Renewable Energy has envisaged the installation of 1.75 million stand-alone solar pumps (Component B of the scheme) and 1 million grid-connected solar pumps (Component C). This translates into a growth rate of around 73 per cent over the period 2019-20 to 2023-24. This is expected to create several opportunities for existing pump manufacturers to expand their presence and for new players to enter the irrigation market and come up with innovative, technologically advanced pumps.