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Still a long way for 'Made in India' tag in electronics [Financial Express (India)]
[December 06, 2012]

Still a long way for 'Made in India' tag in electronics [Financial Express (India)]


(Financial Express (India) Via Acquire Media NewsEdge) The government's ambitious plan of making India a manufacturing hub for electronics hardware by 2020 may turn out to be a far-fetched one with the country neither having the cost competitiveness of Taiwan and China nor the required expertise in this sector.



Though many might like to believe that the country can manufacture components for electronics hardware such as personal computers (PC), tablets, televisions and mobile phones, industry feels that it is much cheaper to import components from other countries and then assemble them domestically than manufacturing them here.

Consider this: the most expensive component of a computer is the microprocessor which accounts for 10-15% of the total cost and it is not manufactured in India. The other big chunk comprises LCD screens and batteries that are also imported from East Asian countries as there is no manufacturing base in India.


"The reality is that we don't have components as a country and hence, it is justified to import from other locations. China is far ahead of us in volume terms and hence, we need to identify a niche and develop it instead of focussing on mass market products because China is doing that. Moreover, there is no incentive for large scale manufacturing because of which we import," said a senior official of an electronics hardware association.

While less than 10% of the total PC manufacturing takes place in India, experts said for tablets, it is limited to packaging and labelling only. Circuiting and processing is the costliest function of all tablets and PCs accounting for 25-40% of the costs and neither is done in India at present.

"We don't manufacture any products here and everything is 100% imported. We only do the assembling of our products because there is no ecosystem for manufacturing. Putting up a plant in India is expensive and it is easier to import our components. Also, there are no incentives to manufacture in India," said Devita Saraf, CEO, Vu Technologies which makes televisions in India.

"Only a certain amount of manufacturing happens in India and as far as personal computers and tablets are concerned, it is mostly assembly that happens here. Of that, there is a 10% value addition," said Anwar Shipurwala, executive director, MAIT.

To encourage manufacturing, the government has come out with the National Policy on Electronics which intends to develop the Electronic System and Design and Manufacturing (ESDM) sector to meet domestic demand and to use the capabilities so created to successfully export ESDM products from the country.

As per PVG Menon, president of India Semiconductor Association Industry, "A significant part of what Indian hardware firms do is assembling of the electronic products. Only 7-10% is contract manufacturing." While China, Japan, Taiwan and Korea have been the traditional import destinations, Vietnam is fast catching up.

Micromax, which makes smartphones, tablets, and LED TVs does not manufacture any component in India but sources them from Beijing, Thailand and Indonesia. Aakash, the low-cost tablet, which recently got embroiled in controversy on being manufactured in India, has a similar story. Suneet Singh Tuli, CEO of DataWind, the maker of Aakash said: "Our key technological advantage is that we provide high speed internet access over the networks that are prevalent in rural India. Our business model is similar to that of Apple where we use subcontract manufacturers to build our products. So, these are built in facilities of our contractors." Copyright 2012 The Indian Express Online Media Pvt. Ltd., distributed by Contify.com Credit: Kiritika Suneja (c) 2012 The Indian Express Online Media Pvt. Ltd., distributed by Contify.com

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