With local electronics output exceeding imports for the first time, India’s electronics ecosystem looks very promising. In an interaction with Baishakhi Dutta, Vick Aggarwala, president and CEO of Supreme Components International (SCI), a Singapore based component distributor, shares his take on the current Indian electronics industry and the growth opportunities he envisages in the coming days. Excerpts follow…
EB: How has India been faring as a business destination compared to other global markets recently?
In May 2018, the US imposed tariffs on China. The effect of this move was felt on the groundin October-November of the same year. The trade dispute between the two countries went on and on, and tariffs were increased rather than withdrawn or reduced. The US and China are the top two world economies and control almost 75 per cent of the total semiconductor market in the world. Components make up more than US$ 1.00 trillion. The repercussions of this trade war between the two giants have spread to the rest of the world, including India.
Only the US is doing relatively well right now. The rest of the world is doing badly, including Japan, Korea, China, Germany, England, France, Italy and India etc. Here, we are facing challenges for two reasons – the first is due to our own internal problems, and the other is because of the US-China trade war. This has caused a slowdown in the Indian business environment. But I’m investing in India because I foresee that it has tremendous potential to grow and expand.
EB: What are your thoughts on the corporate tax cut?
Corporate tax in India is now down to 25 per cent, and is 15 per cent for manufacturers, which is the second lowest in the world. The No. 1 position in the world is held by Ireland, where this tax is 12 per cent. And then there are some Asian and European economies, where it is around 15 per cent. So, India is now at par with the world in terms of tax rates. This is going to help India, because the USA is looking to make investments in countries other than China.
India, with its large pool of English language speakers, a western legal system, and growing infrastructure, definitely offers a great opportunity to cash in on.
EB: What potential does India have as an electronics business market?
USA, Korea, Japan and Taiwan are looking to move out of China so that the country of origin can change, thereby ensuring the tariffs for shipments into the USA becomes zero. The countries being looked at are Vietnam, Myanmar, Thailand and India.
There is a tremendous electronics business potential in India because of the young population, infrastructure build-up, GST introduction, and the country getting more and more IT savvy.
EB: According to you, which domains have seen growth recently and where has there been a slowdown?
I think the industrial sector is still fine. Military and defence are also okay. The consumer
electronics segment is down, as is the auto sector. Cell phones and the smartphone market are not doing well. We have seen some slowdown in these segments. But this is temporary.
EB: What do you feel needs to be worked upon to improve matters?
The infrastructure is poor. The import and export clearance regulations in India are very
cumbersome. It takes forever to release shipments. Corruption is still prevalent. It can take three to seven days to address any objections raised by authorities. In Singapore, shipments get released in a matter of a few minutes or hours and not days. It takes a lot of time in India.
Businesses cannot work in such an inefficient environment. Supreme Components
International (SCI) is “obsessed about adding value at the speed of thought for our customers and suppliers.” Because of delayed customs clearances, the speed of thought cannot be enforced, and we won’t be able to develop customers and provide them
GST is great—it is effective now and will make a difference. India needs to remove red- apism and take care of infrastructure, roads, railways and, most importantly, work towards growing businesses, which should be done with ease.
EB: Do you have any further investment or expansion plans for the Indian market?
Yes. We are already physically present in three locations— Bengaluru, Pune and Mumbai. We want to expand by setting up an office in Delhi to cover our north & east Indian customers.
EB: In India, is it harder to get customers or to attract the right talent pool?
Getting the right talent pool that has a global mindset, and a global way of doing business with strong office and business ethics, is a definite challenge. We look for people who are dependable, aggressive, make things happen, have a positive mindset and havea appetite to succeed—in short, with fire in their belly.
EB: Do you see online businesses and e-commerce gradually taking over brick and mortar businesses?
It is going to change, but not soon. The traditional way of doing business will continue.
Personal relationships and the human touch are very important. Whether you are in the 21st or the 24th century, the personal connect and relationship-building will always matter. At least for the next three to five years, I don’t see brick and mortar businesses going away. Maybe ten years down the line one could start experiencing the real e-commerce impact. R&D engineers, hobbyists, designers and low volume-high mix businesses are the ones using e-commerce sites currently. But when it comes to the volume business, negotiations and the personal touch are important