Electronics manufacturing: North India sitting on huge opportunities

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North India offers various opportunities for the growth of the electronics industry. However, aggressive efforts from the government as well as the industry is the need of the hour

Electronics ManufacturingNorthern India, comprising Delhi, Noida, Rajasthan, Himachal Pradesh and Punjab, is a big market for electronics. While Delhi is known as India’s electronics trading hub, Himachal Pradesh and Noida host some major electronics manufacturing units. Rajasthan, on the other hand, has both manufacturing and distribution networks for electronics.

Being a distribution centre, the amount of business done in Delhi is high, which makes it a very competitive market. Also, Delhi is home to one of the biggest electronics markets in Asia Lala Lajpat Rai Market. Here, the buyers get a wide choice of all sorts of electronics goods.

Says Manish Kwatra, CEO, Metro Electronic Products, “Even though some manufacturing has started taking place in the NCR region, Delhi still remains primarily the main distribution centre of electronics for north India and, to some extent, even east India. But its very small share in electronics manufacturing is expected to pick up.”

Most electronics manufacturing units are located in the tax free zones of north India like Baddi and Parwanoo in Himachal Pradesh, and in some areas of Rajasthan and Jammu. These plants manufacture UPS systems, inverters, batteries, etc. Delhi hosts the manufacturing facilities of some big players like LG, Samsung, Intex and many manufacturers of remote controls.

Government initiatives

The government has announced various schemes and policies to boost manufacturing in north Indian states to develop their industrial base.

The Delhi government recently announced initiatives that will help Delhi become a manufacturing destination. It plans to set up a knowledge based industries (KBI) park in Baprola, west Delhi, and a multi-level manufacturing and services hub in Ranikhera, north Delhi. These, it hopes, will attract investments worth Rs 700 billion by 2015, and generate employment opportunities for nearly 300,000 people.

Rajasthan’s most recent Industrial and Investment Promotion Policy (RIIPP), announced in 2010, aims to promote not only industry, but also accelerate inclusive economic growth. The single window clearance system that was announced under the scheme will speed up approvals in order to attract investors.

In Rajasthan, investors have set up ventures in fields like IT, electronics and engineering. The state has 322 industrial areas at present and more are in the pipeline. A dedicated freight corridor, stretching nearly 1500 km, passes through Rajasthan, covering Uttar Pradesh, Haryana, Rajasthan, Gujarat and Maharashtra. The state government has provided for two major junctions at Marwar and Phulera, offering high speed, high load connectivity for the movement of freight.

At Baddi, a manufacturing hub for north India, the major attractions for investors include 100 per cent outright excise duty exemption for a period of 10 years from the date of commencement of commercial production; 100 per cent income tax exemption for an initial period of five years and, thereafter, 30 per cent for companies for a further period of five years; a capital investment subsidy of 15 per cent on plant and machinery subject to a ceiling of

Rs 3 million, which is also applicable to existing units, etc. Many electronics companies like Havells, Su-Kam, Luminous, Spice Mobile, Secure Meters, Intex, SGS Tekniks, Digital Systems, Landist+Gyr and Gem batteries have set up plants in the Baddi-Nalagarh-Barotiwala belt.

Strengths and weaknesses

The main advantage Delhi offers to its manufacturers and traders is its close proximity to corporate and government decision making bodies, especially when there is a complaint or a suggestion that needs to be shared through industry associations like the Central Radio and Electronics Merchants Association (CREMA) and All India Radio and Electronics Association (AIREA). Other all India associations that work for issues related to the electronics industry and operate from Delhi are ELCINA, MAIT, CEAMA, TEMA, CMAI, etc. However, the city has certain weak points as well. Shares Manish Kwatra, “Delhi suffers from major lack of infrastructure—specially land and electricity. However, I feel that Delhi with the NCR can be promoted as a major hub for electronics manufacturing units if there is a combined approach taken by the government, manufacturer associations and trade bodies.”

Rajasthan enjoys a strategic geographical position between the northern and western growth hubs in the country, and 40 per cent of the Delhi Mumbai Industrial Corridor (DMIC) runs through it. It is well connected through its well developed road network, domestic airports in Jodhpur and Udaipur, and an international airport in Jaipur, which also has an air cargo complex. There are inland container depots (ICD) in Jaipur, Jodhpur, Bhilwara and Bhiwadi. Broadly speaking, the advantages of investing in this state lie in its vast supportive infrastructure, rich natural resources and a competent talent pool. Riding on these, Rajasthan has already become a hub for a host of industries, attracting both domestic and global players.

However, while Baddi offers certain concessions to the manufacturers, it has its own share of challenges, one of them being a severe shortage of skilled labour. “As per the policy of the state government, it is mandatory to appoint 70 per cent of the workforce from amongst the locals,” Vipul Kumar Jain, senior manager, Su-Kam Power Systems Ltd, had earlier shared with Electronics Bazaar. However, the state lacks a proper technical institute. Due to this problem, while large and medium companies survive as they can afford to get manpower from outside the state or train the local people, small scale units find it difficult to survive.

Another major problem being faced by the companies in Baddi is the missing rail connection. The area is not connected to any major town or city by rail and the high dependence on roads makes transportation difficult.

—By Nitasha Chawla

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