Thursday, September 05, 2013: There is an acute imbalance in the Indian printed circuit board (PCB) market between demand and supply, which is widening year-on-year. The present value of the Indian PCB market is Rs 48 billion, of which domestic production accounts for just Rs 16.5 billion, resulting in 63.5 per cent of the demand being met by imports. In 2012-13, the market grew by about 8-10 per cent.
The Indian Printed Circuit Association (IPCA), formed way back in 1985, is making efforts to promote the PCB industry in India. In a conversation with Srabani Sen of Electronics Bazaar, Viral Bhulani, president, IPCA, speaks of the challenges ahead.
EB: With the recent government policies designed to promote indigenous electronics manufacturing, including PCBs, local firms will get a boost. What is your opinion on this?
Manufacturers in India have the capability and technology to produce all kinds of PCBs; all they need is government support to upgrade their production volumes. They can cater to markets for even high-end products with high-level technology. Currently, only one-third of India’s PCB demand is met by the domestic producers, which is worth about Rs 16.5 billion. So, about two-thirds of the demand is met by imports. Since the PCB is a basic component in all electronics products we are hopeful that with the manufacturing of electronics goods getting a boost, demand for PCBs will increase significantly.
EB: If the producers in India have the capabilities, then what is stopping them from increasing their volumes?
Let me explain this with an example. There is a policy in China which mandates that 50 per cent of what goes into a product has to be manufactured within the country itself. As a result, many MNCs and other players have set up their factories and ancillary industries in China, boosting manufacturing significantly. If we implement this model in India as well, manufacturing will pick up to a large extent. We are the largest consumers of mobile phones in the world, but not a single bare circuit is made in India. If we have a similar policy to China’s, we can have horizontal integration of raw materials. China has grown from a market share of 8 per cent to 40 per cent in the last five years. We, too, have that kind of potential.
Another problem is that, even if we make a PCB, all the components like diodes, chips, transistors, etc are not manufactured in India, and the import of these components means additional cost of logistics, packing, etc. Therefore, manufacturers prefer to import PCBs from competitive countries like Taiwan and China. If we want manufacturing of PCBs to increase, components also need to be produced in the country. India can be competitive because there are many factors favouring us, like cheap labour costs. Overall, we are ready to explore this market with support from the government and the financial sector. The industry should also be confident to start hardware manufacturing.
EB: By how much do you expect manufacturing to increase because of the recent government policies?
The recent policies will definitely boost manufacturing, but it is difficult to measure the exact numbers right now, as we still do not know how much the manufacture of other products will increase and by when. We are waiting to derive the benefits from the policy.
EB: According to you, the global PCB majors are yet to set up operations in India for high volume production. Why is that so?
The global majors are watching the current scenario in the country and waiting for India’s next move.
Like I mentioned before, India needs to make some policy changes like China in order to kickstart manufacturing and attract investments. Currently, European companies are sourcing PCBs from Asian countries, and China and India are their main options.
EB: What is the current scenario in the Indian PCB industry?
According to an IPCA report, many PCB units in India have grown in volume and turnover. While European PCB producer AT&S, with its factory in India, is at the No. 1 position, and is also ranked as the largest PCB exporter from India, domestic companies like Ascent Circuits, Shogini Techno Arts and Epitome Components have also grown considerably.
EB: How competitive are Indian PCB makers technologically, in the global market?
India has the technology, engineers and experienced entrepreneurs to take the PCB industry to the next level. What we lack is the experience in volume production. We are still making PCBs semi-automatically, and the level of automation prevalent in other countries is not available in India as yet. But automation can be introduced into Indian manufacturing as and when required.
EB: Are Indian manufacturers ready to invest in the latest machinery?
Investments will come if the government gives its support. New policies and changes in policies are not enough. The intention has to be very clear. Policies cannot operate in isolation. For example, if we import raw material for PCBs, we pay an import duty but if we import a PCB, it is duty-free. So if a policy is made to boost manufacturing, then the other requirements of a manufacturer should also be taken into consideration, like taxes on the import of components. Right now, the government is not encouraging Indian PCB manufacturers. A global company should be allowed into India only if it produces 50 per cent in India by partnering with an Indian company.
EB: What is needed to develop a sustainable PCB manufacturing ecosystem?
If we systematically plan PCB manufacturing in India, other things will automatically fall into place. Subsequently, the supply chain industry will also join hands with the PCB industry. But there is no point talking about the ecosystem right now as we do not have much manufacturing happening in India currently.
EB: Does India have standards for bare PCB manufacturing?
No. There are IPC standards governed by the US. Even Europeans are following them. Then there are Japan Printed Circuit Association (JPCA) standards jointly signed by the IPCA. The Indian manufacturers are following these standards, which comply to the global standards.
EB: In the next two years, do you see the number of PCB manufacturers increasing in India?
Again, I will say that this will be possible with government support and IPCA is working in this direction. IPCA is voicing what the industry needs. We are trying to give all the help and data to the manufacturers. For instance, there is a cluster scheme, and we are creating awareness about this within the industry for manufacturers to come forward and avail the benefits of the cluster scheme.
If the Indian PCB industry grows by 10 times in the next five years, which is not difficult, then it will be the biggest achievement of my life. This is my vision; that’s how I can give back to the IPCA.
Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine