“Strategic initiatives should be taken to tackle factors hindering productivity and competitiveness of the sector”

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Monday, March 17 2014: Anirudh Dhoot, director, Videocon Industries, has been re-elected as president of the Consumer Electronics and Appliances Manufacturers Association (CEAMA) for the third consecutive year. Dhoot believes that the National Policy on Electronics from the Department of Electronics and IT (DeitY) is a commendable initiative, which will result in India’s current meagre contribution of 2.5 per cent to the global electronics industry being catapulted to 15 per cent in the coming years.

 In an exclusive interview with Srabani Sen of Electronics Bazaar, Dhoot talks about CEAMA as well as Videocon’s achievements.

Anirudh Dhoot, director, Videocon Industries
Anirudh Dhoot, director, Videocon Industries

EB: You have been re-elected as the CEAMA president for the third time. What were the association’s major contributions to the industry over the last two years?

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CEAMA pushed the government to ban the duty-free import of high-end LCD/LED TVs, which will come as a relief for consumer electronics and appliance makers and will boost demand for domestically produced TV sets. The government has now slapped a 36.05 per cent levy on imported high-end plasma TVs. Domestic manufacturers have invested more than Rs 15,000 million in setting up manufacturing facilities for flat panel TVs.

This notification will come as a relief to the industry, since the significant volume of flat panel TVs that were being imported as accompanied baggage will now come down, paving the way for an increase in local demand. The manufacturing of LCD/LED TVs has increased by 30 per cent during September-December 2013 as compared to the corresponding period in 2012. As per our estimates, the state exchequer was losing around Rs 7,500 million due to the import of TVs as hand baggage.

Second, CEAMA pushed the government to hike the import duty of set-top boxes (STBs) from 5 per cent to 10 per cent, a move that created a level playing field for domestic manufacturers in terms of end user prices, compared to importers. This will help the middle and small scale companies who are involved in this business. The total demand for STBs is estimated to be about 75 million in next one year because of digitalisation programme of cable TVs amounting to an overall turnover of around Rs 90,000 million by the end of 2014 for this segment.

Last but not the least, in October 2012, CEAMA organised an electronics exhibition called Home Electronics Show in New Delhi. It was a success and we intend to organise it this year as well.

EB: What, according to you, needs to be done to remove the hurdles facing domestic manufacturing?

Lack of adequate physical infrastructure such as roads, ports, airports, electricity, etc, is adversely affecting the competitiveness and productivity of the domestic home appliances industry in India. Uninterrupted power supply is necessary for the operation of manufacturing units, as power fluctuations can lead to major losses during the manufacturing processes.

Inputs for consumer electronics and home appliances sector are not available through indigenous sources and have to be imported. This is a big handicap and adds to the cost of manufacturing.

There is an immediate need to have a re-look at FTAs with ASEAN countries as far as consumer electronics and home appliance sector is concerned. As an immediate measure, the product specific rules should be made applicable for consumer appliances sector products. Critical inputs such as open cell for LED TVs should be made in country of origin.

Weak supply chain networks and lack of vendor support also affects the quality, productivity and competitiveness of the sector. There should be hassle-free import of raw material and components by streamlining the import policy and through the simplification of procedures.

In the context of achieving the necessary ‘scale’ and ‘speed’, it is necessary to target skills development at all levels and implement vocational education in schools.

Technology transfer, R&D and IPR creation should be incentivised by the government through a friendly tax regime.

To tackle the factors hindering the productivity and competitiveness of the sector, a number of strategic initiatives need to be taken up by industry associations, manufacturers and the government.

Labour policies in India are not favourable for manufacturing when compared to other competing countries such as China. Therefore, there is a requirement for flexible labour policies to enable manufacturers to restructure the labour force in response to the market demands.

EB: Is CEAMA working with the government on any projects?

CEAMA has been working with all stakeholders, particularly with the government, both at the Centre and state levels, to ensure that issues affecting the growth of the electronics industry are resolved. CEAMA has been working with the government in the energy efficiency (star rating) programme, in implementing appropriate waste management practices for electronic and electric equipment and in the digitalisation of the cable TV network.

EB: What do you think about the tax structure of the country?

We hope that the Goods and Services Tax (GST) will be implemented soon, and that the tax system will be made simpler and more transparent so that the honest tax payer is not hassled.

EB: As mentioned by you, the two major challenges that domestic manufacturers are facing are the weak supply chain network and lack of vendor support. What can be done to overcome these challenges?

We organise a number of buyer-seller meets along with DeitY. We are trying to create awareness among the world’s top vendors who are based in Taiwan, China and Korea, and are planning to bring them to India under the Electronics Manufacturing Cluster (EMC) policy. These efforts will take time to show results, but I am sure that in the coming years, these efforts will be very fruitful.

To create interest in new technologies, CEAMA for the first time had organised an international conference on ‘Emerging Trends in Flat Panel TVs’ in October 2013 in New Delhi. The conference covered the progressive steps taken to find practical solutions to create a long-term, sustainable investment model that will prepare the industry for the technological advancements taking place in the flat panel TV segment. The world’s biggest vendors from Korea, Taiwan and China participated in the conference.

Now, we, along with the other associations like ELCINA and MAIT, plan to organise a number of sourcing fairs like the Chinese Fair. Next month, there will be a big fair in Mumbai and Delhi as well.

EB: What is your take on free trade agreements?

We are not against Free Trade Agreements (FTA). What we want is that certain goods that can be manufactured domestically should not be imported. As we all know, India’s imports are much higher than exports. So our next aim is to increase the volume of exports. The African markets do not have many electronics companies and India can become a gateway to Africa. There, we are comfortable, and we do not have any problem with FTA. But we face severe competition within Asia.

We oppose the FTA in the Asian region. CEAMA has written and made representations to the ministries of commerce, finance, communications and IT, saying that Japanese companies like Sony and Toshiba do not fulfill the value addition norms specified under FTAs and yet enjoy nil or concessional duty, creating an uncompetitive business environment for domestic manufacturers.

Domestic manufacturers like us are suffering under a 10-12 per cent margin of disadvantage against a few Japanese companies. This is pinching us when the market has become so competitive.

EB: What is your opinion about labour policies in India? Do we need any changes?

Right now we do not require any kind of change in the labour policies, though may be some kind of flexibility is required. We are more concerned about FTAs.

EB: How has your tenure as the director of Videocon been? What have been your achievements?

In the last 15 years we have seen many good things happening in the company. We have been able to get a good ecosystem in the company and we have been able to attract new talent through our new MBA recruitment policy.

On the technical side, in the last four to five years, many innovative products have been launched. We are also trying to get more into R&D and after sale services. So these are the areas where we are trying to improve things.

EB: What are the growth plans for Videocon?

Our main aim is to remain one of the strongest players in the market. The Videocon group is planning to capture 25 per cent of the market, at least in the colour TV segment, in the next few years.

We also do a lot of local manufacturing because we have one of the biggest electronics set-ups in the country, with eight different manufacturing locations. In the coming years, we want to upgrade these plants with the latest technology similar to that in China or Korea. R&D is the area where we want to focus and we also plan to invest more on technology. We will launch a new product in every quarter, which will be different from those in our existing range.

Videocon Industries will set up a new STB manufacturing unit with an annual capacity of 1 million by the end of 2014. We have not decided yet, but we are evaluating either setting this up in Punjab or Madhya Pradesh. It is easy to manufacture STBs in India because of the new production technologies and equipment.

In fact, we aim to continue to create ‘value for money’ products that are 8-9 per cent cheaper than the competition, especially as most of Videocon’s sales come from rural areas and smaller cities. Videocon’s products will be for the masses—low cost, yet hi-tech.

EB: What are the products that we can expect from Videocon in the near future?

Very soon, we are planning to launch an Android-based TV and a new frost-free refrigerator. We also plan a new range of air conditioners. Before the end of this year, you will see a lot of new products being developed in Videocon.

Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine 

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