“We are in advanced stages of negotiations, and may start domestic sales in late 2014”

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Monday, March 17 2014: A global provider of manufacturing solutions, Jabil Circuit Pvt Ltd designs and manufactures for major OEMs in diverse industries like automotive, point-of-sales, digital, home, mobility, industrial & energy, difence & aerospace, etc.

Jabil began its operations in India in 2003 with the acquisition of the Philips facility in Pune. It later relocated to its ‘greenfield’ facility in Ranjangaon, Pune. Along the way, Jabil also acquired Celetronix India Pvt Ltd, a move that gave it additional customers. Jabil India exports 95 per cent of the products it manufactures—90 per cent to USA and 5 per cent to Europe.

In a conversation with Srabani Sen of Electronics Bazaar, Jabil’s country manager, India, Anoop Mehrotra, speaks about Jabil being a major EMS company in India.

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Anoop Mehrotra, Jabil’s country manager, India
Anoop Mehrotra, Jabil’s country manager, India

EB: What role does Jabil play in the overall growth of the electronics industry in India?

Jabil has set up its state-of-the-art manufacturing plant in India in 2004. The Indian operations are supported by technical expertise developed across the globe. We can say with confidence that we have one of the best EMS factories in the country with the capability and resources for manufacturing products across different segments.

EB: Despite the National Electronics Policy being in place for the last one-and-a-half years, we did not see much growth in the electronics manufacturing sector. What, according to you, should be the changes made to the policy to experience faster growth in this sector?

The Government of India’s recent initiatives to accelerate the growth of the electronics manufacturing industry have certainly caught the attention of major global players. As a result, their future expansion plans may include India as a top favourite destination to set up new plants for their growing needs. However, due to the global economic situation and the current low plant utilisation of existing facilities, it may take a while to see actual investments coming into India. The situation may change in the latter half of 2014.

EB: This year the government wants to focus on promoting 25 high value products. Do you think this focus will lead to better developments in the electronics manufacturing sector?

Such a move is a welcome step for the electronics industry. If the move is also supported by rationalising indirect taxation and VAT/CST vis a vis import tariffs, it will certainly give a boost to domestic manufacturing. Also, all Free Trade Agreements (FTA) that offer concessional rates of duty on these products may be reviewed since, currently, imports against these FTAs adversely affect domestic manufacturers.

EB: What are the major challenges an EMS company faces in India? What can be the possible solutions to these challenges?

Domestic manufacturing is very competitive with very low margins. Without indirect tax rationalisation, domestic manufacturing cannot compete with imports. Indirect duties have a cascading effect and inflate the cost of a product substantially.

The CENVAT (Central VAT) on Countervailing Duty and Special Additional Duty is allowed for components and capital goods. However, the credit can be utilised only for payment of excise duty, not for VAT or CST. This results in accumulation of CENVAT credit, which becomes an irrecoverable cost for local manufacturers and blocks huge cash flows. This issue needs to be addressed without delay by expediting GST implementation.

EB: Does Jabil cater to the domestic market?

At present, Jabil’s share in the domestic market is very low. As mentioned earlier, the major reason for our lower share of the domestic market is due to the indirect tax structure vis-a-vis imports.

EB: Any plans to cater to the domestic market?

The company is very keen to be in the domestic market. We are in the advanced stages of negotiations with a few leading Indian companies and are expected to start domestic sales in late 2014.

EB: How does Jabil work with suppliers to improve quality? 

We collaborate closely with our suppliers and partners to develop proper processes and production controls, and we perform constant audits to ensure regulatory compliance.

EB: What type of supply chain challenges does Jabil India face? And how are these addressed?

The major challenges in our supply chain are related to quality and compliance. Jabil is a member of the Electronic Industry Citizenship Coalition (EICC), and we work very diligently with our suppliers to be compliant in these initiatives. As a global company, many regional and even local initiatives from different parts of the world are rolled out, such as RoHS, conflict minerals, etc. We are actively engaged with our suppliers and partners not only upfront through the selection process but also upon product launch, where we collaborate with our suppliers using statistical tools and process audits to ensure that all products arriving at our factory adhere to our standards.

EB: Automation, in general, and robotics, in particular, have become favourite buzz words in the electronics manufacturing industry. Today, automation in electronics manufacturing is on the rise, and automation integration—combining various automated and manual assembly steps—is playing a critical role. Is this true of Jabil’s Indian plant?

We follow the right mix of automation, lean methodology with manual assembly steps. all critical steps related to manufacturing are automated, and steps related to testing and inspection are done manually.

EB: Is Jabil making any investments under any of the Indian government’s recently announced policies and schemes, like the MSIPS, EMC, etc?

Jabil plans to invest in expanding its existing facilities over the next 10 years as per the MSIPS scheme of the Government of India.

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

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