There has been much talk about how India can become a favoured destination for electronics hardware manufacturing and how imperative it is for the country to have a staunch policy framework to invigorate hardware manufacturing. Associations like ELCINA have been lobbying hard to ensure that indigenous manufacturing in the country gets a boost. During the Componex Nepcon India 2009, one of the conference sessions concentrated on the topic, ‘Hardware manufacturing zones—A policy framework to boost manufacturing in India’.
By Atanu Kumar Das
Monday, April 20, 2013: Nokia—a shining example
The supreme example of a hardware manufacturing zone today is that of Nokia’s. It is the first telecom special economic zone in India and the company claims that its Chennai facility is the most cost-effective location. “Nokia is exploring the possibility of making India an alternate hub to China,” says Josh Foulger, head of India sourcing, Nokia India.
“When we initially planned to come to India and make it one of our manufacturing hubs, we were well aware of the country’s constraints, in terms of power supply, water supply, bad roads, etc. But we decided to build everything on our own. In the last four years, right from the conceptualisation stage to the final result that you now see, we have built a state-of-the-art manufacturing zone, where we have six suppliers, viz, Foxconn, Wintek, Jabil, Perlos, Salcomp and Liard Tech,” adds Josh Foulger.
Vinod Sharma, MD, Deki Electronics, feels that Nokia’s footsteps should be followed and its success in India should be replicated in India. “We will make a white paper, which can be presented to the government so that a proper policy framework can be created, an ideal way to start off a hardware manufacturing zone,” he resolves.
Govt needs to wake up
“It is integral to understand that we, as a country, will never move forward in the electronics manufacturing space if the right kind of support and policy framework is not provided by the government. We are lagging far behind China and the government has to address the issues of infrastructure in a major way in order to attract investments,” Sharma says emphatically. T Vasu, vice-president, ELCINA and director, Tandon Group, stresses that it is of utmost importance to have an intricately detailed policy framework for hardware manufacturing zones or else it will end up being just another policy that belies its documented form. “Take the case of the semiconductor policy, the government came out with a policy around one-and-a-half-years back and after the policy was announced, 17 companies committed to establish semiconductor units in India. However, none has taken off yet. This is primarily because there are many loopholes, chief amongst them, the infrastructural issues,” he points out.
Sanjeev Narayan, MD, SGS Tekniks, is of the opinion that India needs to labour industriously to reach a stage where it can be as viable as China. “India faces a 6-8 per cent disability factor compared to China. This is really the drawback which holds back big multinational companies from coming to India. The government needs to ensure that it provides better infrastructural facilities to attract more investments in the manufacturing sector,” he comments.
“It is also necessary to ensure that imported products meet local requirements like warranty, safety, energy consumption, technology standards, etc because this is important for encouragement of local manufacture,” adds Narayan.
Consumption vs production
A major cause for concern for India today is the interspace between consumption and production in the electronics sector. According to Vasu, “The gap between consumption and production will be $300 billion over the next six years—assuming 20 per cent growth and extrapolating the current gap between consumption and production.” Narayan believes that if we do not promptly enhance the manufacturing feasibility in India, then what could have been an amazing opportunity for Indian players will go to other competent countries instead.
A dash of hope
Stressing on Nokia’s plans for exploring the possibility of making India an alternate hub to China, Foulger says,“China is the biggest export hub for Nokia and every year, we export millions of mobile phones from China. It is very important for any company to not be solely dependent on one country. That’s why we are contemplating on making India an alternate manufacturing hub after China. Moreover, Chennai is the most cost-effective manufacturing zone for Nokia, thanks to the availability of skilled labour, friendly business environment and support from the government.”
Electronics Harware Industry
Current domestic demand: $40 billion
Domestic manufacturing output: $20 billion
Projected domestic demand by 2015: $320 billion (ISA & F&S)
Conservative demand projection: $200 billion
What could be done
India should take advantage of the declining viability of hardware manufacturing
in the developed world.
India needs to promote ‘matchmaking’ between existing Indian manufacturers
and manufacturers of developed countries.
Government needs to provide a conducive environment for east relocation.
Government-led, industry-supported programmes should be conducted in EU/USA, Taiwan, etc, with road shows to publicise the ‘quantum jump initiative’.
There is a necessity to mandate-locally manufactured sourcing. This will drive investments both in equipment and component manufacturing.
Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine