Consumer electronics firms to invest Rs.3,500 crore in India.

Mumbai: Consumer electronics firms plan to invest about Rs.3,500 crore to increase manufacturing in India to benefit from government incentives introduced last year.

“Global technology companies are planning to invest around Rs.3,500 crore cumulatively in India through the modified special incentive package scheme (M-SIPS) route,” said an official with direct knowledge of this development, requesting anonymity.

M-SIPS—prepared under the National Policy on Electronics 2012 that seeks to speed up local manufacturing and curb electronics imports—provides investors a subsidy of 20-25% on capital expenditure, as well as a subsidy of 50-75% for companies investing in so-called electronics manufacturing clusters.


The cabinet cleared the National Policy on Electronics late last year. Several foreign companies have begun or are lining up plans to increase domestic manufacturing.

Samsung India Electronics Pvt. Ltd, the local arm of the South Korean electronics maker, on 14 February launched its “Rex series” of affordable feature phones that will be made and sold in India as well as exported to China and West Asia.

“This is a big initiative by Samsung to produce something in India and sell it in China. We want to show the capability we have in India,” Ravinder Zutshi, deputy managing director, Samsung India, said at a recent workshop organized by the Consumer Electronics and Appliances Manufacturers Association.

Panasonic India and Haier Appliances (India) Pvt. Ltd that already manufacture in India are preparing for expansions.
Japan’s Panasonic Corp. wants to make India a manufacturing hub from where it can export products to West Asia and Africa to begin with, said Manish Sharma, managing director, consumer product division, at Panasonic India. “The main objective is that the products should not just be imported from other countries, but should be specially conceptualized and customized for the Indian consumers keeping the local needs and conditions in mind,” he said.

Haier India, the domestic unit of Hong Kong-listed Haier Electronics Group Co. Ltd that makes washing machines and other consumer electronics, plans to commission two more factories in the country. “Once our Pune factory is utilized to the maximum, we see us opening a factory in the north and one in the south for better logistics,” said Eric Braganza, president, Haier India.

The potential is huge for such companies, say analysts.

India’s electronic system design and manufacturing industry is estimated to grow at a compounded annual growth rate of 9.9% the next few years—from $64.6 billion in 2011 to $94.2 billion in 2015, according to a 22 January report by the India Electronics and Semiconductor Association (IESA), a lobby group representing the Indian electronics manufacturing and semiconductor industries.

Another lobby group, Consumer Electronics and Appliances Manufacturers Association, projected similar data in its 22 February report, stating that demand for electronics hardware in India will grow at 22% annually till 2020, making it a $400 billion opportunity.

Industry experts see India’s electronic imports surpassing its high oil import bill by 2030. “Currently, India imports $33 billion of electronic goods, third only to the oil and gold import bills ($155 billion and $62 billion in 2012, respectively),” said Deepa Doraiswamy, industry manager (electronics and security practice), Frost and Sullivan.

“I know of a lot of companies, both Indian and global, that are currently not present in the electronic space but are looking to set up facilities (in India) and benefit from this (National Policy on Electronics).” said Doraiswamy.

“India is a lucrative market. We have an edge over China as wages there are rising; we are good chip designers and the biggest reason being that MNCs (multinational companies) are looking for alternatives as good as China to invest to lessen the risk,” said Ajay Kumar, joint secretary in the Indian government’s department of electronics and information technology. Kumar is involved in the implementation of the National Policy on Electronics.


India has a huge market, large talent pool, low operating costs and now a conducive policy that makes it an attractive destination, said Kumar, adding that companies are attracted by India’s intellectual property rights regime “which protects their rights better than that of China”.

For Nokia Oyj, a handset maker, India is already an important manufacturing hub. “The manufacturing unit in Chennai is Nokia’s largest handset manufacturing facility and also the largest handset manufacturing facility across all vendors anywhere in the world,” said a Nokia spokesperson, adding its Indian manufacturing unit exports to more than 80 countries.

“India has the opportunity to increase handset production revenues from Rs.25,000 crore in 2010 to Rs.58,000 crore in 2020,” the Nokia spokesperson said.

M-SIPS “is a great policy for routing investments into electronics”, said P.V.K. Menon, president of IESA. “Even states like Karnataka and Andhra Pradesh have started positioning themselves, providing added incentives like cheaper power to the companies that invest...due to the enormous job creation opportunity.”


Source : livemint.com