“Make In India” a campaign to lead the country to in-house manufactured subjects, increase jobs opportunity and make economy export oriented, has been a area of admiration and encouragement for all industry, investors and consumers. But is the drive on the road? Are we achieving the set targets? What is the result Electronics Industry has seen in last 1 year from the launch of the campaign? Here we present you answers to these questions from experts in EMS industry, a comparative study by EM Media.
Make in India” a campaign Prime Minister Narendra Modi had hinted towards the initiative in his Independence Day speech of 15 August 2014 and was launched on 25 September 2014 in a function at the Vigyan Bhawan. The major objective behind the initiative is to focus on 25 sectors of the economy for job creation and skill enhancement and 1 of the very prominent sector was Electronics. It’s almost 1 year of this drive. Now we can see the results coming out and impact of industry and economy. Let’s see what leaders from Indian EMS industry say about thedrive and its impact so far and supporting facts and figures …
EOS Power India Pvt. Ltd
Mr. Vijay Gujarathi, Director and COO
(Manpower (In India): 450+, Turnover in FY 2014 –2015: 829 Million INR, No of Locations in India: 1)
The electronics system design and manufacturing (ESDM) industry is expecting significant benefits from the “Make in India” campaign in the coming days. Global players are already showing keen interest in this campaign and the early signs we see are promising. We already seeing that many Global OEM`s and EMS Companies are either setting up new plants or expanding their operations in India , Some are partnering with domestic Indian companies to make products in India. India Perspective, the overall market for electronics products from all segments, including consumer electronics, IT/Computers, Telecom, Automotive, Medical, Strategic etc. is growing at 22% per annum. Analysis and studies shows that the demand of electronics products in India is to reach an astounding US$ 400 BN by 2020 and the demand and supply gap would be an astounding $ 296 BN which would be challenge but provides BIG OPPORTUNITY for domestics EMS companies to take share of it. Giving global identity to “Make in India “was a very smart and timely move made by the present government in power, especially by the prime minister Mr. Modi and now CEO`s of most of Global OEM`s are looking at to share pie of it, Like it happened in China 40 Years before, Its Indian wave and everyone is discussing it and it is daily head line on every news papers and magazines. We and many like us electronics manufacturing entrepreneurs have been waiting for this moment and glad that “Make in India: Campaign has fired up our imagination and fueled Global companies to think about India Manufacturing. Make in India Campaign is coupled with the governments assurance of providing assurance for setting up world class infrastructure to the electronics industry, is expected to provide the much needed momentum to domestic manufacturers. This campaign which is backed by PMA policies, and incentives like MSIPS, EMC, EDF, Mandating safety standard for imports in India, Skill development policies etc. will provide vehicle to success of Make in India. The ‘Make in India’ initiative provides a medley of manufacturing and technology based incentives to well-regarded electronics companies to increase the speed of building up both India’s electronics infrastructure as well as its skills in this domain-the biggest catalyst being allowing 100 per cent foreign direct investment (FDI). ‘Make in India’ initiative appears to have all the components of an economic success, While there are some concerns which would need to be addressed to make it success. The relatively higher costs of finance ,energy ,logistics and high transportation costs create a disability to the tune of 8-14% as reported by several studies .The impact of the disabilities is directly proportional to the amount of value addition.
Elin Electronics Limited
Mr. B.S. Sethia, Owner Director
(Manpower (in India): 2000+, Turnover in FY 2014-15:Rs. 600+ Crores)
Make in India is a very powerful campaign. It is a clear cut indication to foreigners and the NRIs to invest in India and manufacture products for India market as well as for exports. If such low cost funds (foreign funds) are invested in the entire value chain, Indian products will become globally competitive. As per the recent study of the 25 competing countries by the Boston Consultancy Group, India’s Competitive Index Rating is 87 against China’s 96. Electronics manufacturing policy is very aggressive in providing incentives by the Central Government such as 25% capital subsidy through the M-SIPS and around 40 to 50% grant for development of common facilities in manufacturing clusters. Various state governments have started competing with each other by announcing many incentives. Government has also announced many steps to facilitate the “Ease of Doing Work” for setting up new units. In spite of all this, there is no positive impact on the industry in general. The existing manufacturing industries are rather facing more hardships. The real estate market is too much depressed; construction activities have tremendously slowed downed resulting in drop in demand for manufactured products. Corruption has reached to a level of state terrorism. Now rules are being framed to increase difficulties in doing work. Industries have to provide CA certificates to the banks for releasing payments for each and every consignment for import of input materials. Cost audits have been made mandatory for many items of electronics/electrical products whose imports are freely allowed. These measures do not serve any purpose other than increasing cost of made in India products making them incompetitive against the imports. It looks like many foreigners are waiting and watching the developments, and are still not investing in the way it was expected. So far it has attracted some investments in low value added products such as mobile phones. As per the current policy, even the low-tech inputs of the mobile phones will be imported. Fundamentally, manufacturing need level playing field in the cost of input materials, cost of power, cost of finance, logistics and labour productivity apart from technology and the indirect taxes. So far we do not have level playing field with the competing countries like China, Vietnam, Thailand, etc. in any of the above high value added manufacturing is concerned. So far we have been struggling with the ITA-1 of the WTO. The MTAs (Mega-trade Agreements) such as the RCEP are going to facilitate FTAs (Free Trade Agreements) with countries like China. This will mean thousands of products going to face zero duty of customs. We need to make our structure competitive in zero duty atmospheres. Level playing field in the cost of finance seems to be a major factor in creating such atmosphere.
Asha Electronics Private Limited
Mr. Amit Bhargava, Managing Director
(Manpower (In India): 95, Turnover in FY 2014 – 2015:10 crores, No of Locations in India: 2)
The Made in India campaign is a brilliant initiative, something very close to even my heart as I have always felt and voiced my concern that for a Country like India which relies heavily on Oil Imports it is imperative that either we have very substantial exports or we must meet our other needs by domestic production. The reduction of the trade deficit figure will play an important role in the strengthening of the economy thereby bringing overall stability. The government although aware of this was reluctant to unleash this initiative for all these years. The Modi Government has taken this up as a priority and if this does turn out successful then India will surely see “Achche Din”.
campaign is driving people to think of India as a viable alternate to the Dragon for manufacturing, a lot of inquisitiveness is getting generated, people are looking at India positively. Not only customers but suppliers too are ringing bells to look for opportunity. A lot of international players are seriously considering putting shop in India, some have moved ahead with the decisions by inking agreements with either the Government or a local partner. We are infact at a cusp of an opportunity, where we seem to have an competitive edge due to recent increase in the cost of production in China, and if policy favors then we can seize the opportunity to grow rapidly. The upcoming policies need to be framed in such a way that they do not increase our own cost in terms of labor, freight etc else all the advantage will be lost even before we start. The campaign seems to be moving at good pace, prodded by the PM himself, the Government is promising many things like quicker and simpler registration, hassle free starting procedures which are good. Many giants like Foxconn have already initiated investment process; all this is largely aided by the potential of domestic demand. Brands like Sony have restarted manufacturing again in India; these are all positive outcomes and largely signal that the campaign is generating positivity and results. However, the government also needs to look into existing procedures and simplify them; in the name of E-governance they have more or less pushed most of their desk work to the industry. Entrepreneurs investing should not get a red carpet on arrival and then fall into a mess. When indigenous production happens, ancillary industry gets an impetus which only buoys the investment cycle further. Even existing businesses can expect inquiries and inquisitiveness which will definitely get transformed into orders. The entire supply chain will benefit with increased domestic manufacturing, we will see growth in related industries like packaging, logistics etc etc. This will further trickle down the prosperity to the masses leading to an increase in home consumption. In short the picture looks bright so long as the positivity remains.
SGS Tekniks Manufacturing Pvt. Ltd.
Mr. Sanjiv Narayan, Managing Director
(Manpower (In India): 950, Turnover in FY 2014 – 2015: Rs. 195 Cr, Locations in India: 3)
Make in India has given a new life to the manufacturing industry. There is increased activity by both due to economic benefit and PMA (Prime Minister Campaign) push. This is an invitation to investors to come and invest in Indian growth story. Most of the foreign companies are exploring option to set up operations in India. They are also tying up with EMS companies for PCB assemblies and box build products. All companies realized that, to get success in Indian market they will have to manufacture locally to make product competitive and stay relevant. This is the biggest positive impact. To lead the campaign to success, we need to ensure the tax structure of various products are quickly corrected as done for mobile, set top box to speed up the campaign and ensure competitiveness. All major Govt, PSU must have a local value add clause. Investment in manufacturing especially in the manufacturing ecosystem is expected. Key components manufacturing needs to be push on. The eco system development will ensure long term sustainability.
SFO Technologies Pvt Ltd
N. Jehangir, Vice Chairman and Managing Director
(Manpower In India: 4000+, Turnover in FY 2014 – 2015: Rs.860 Crores, No of Locations in India: 2)
This campaign has been going on for quite some time , even before Make India program is launched by the New Govt. Electronic Components and products constitute second largest import into the country, next to Petrol. If the present trend continues, Electronics will overtake Petrol import. This is basically because all the Electronic components for Electronic Products are imported into the country. The new Govt. is wooing Indian and overseas entrepreneurs to invest in India for the manufacture of basic components. Electronic Component Industry is highly Capital intensive. Also, there is stiff competition in the International market where the profit margin is very low. Because of this, large Indian Business Houses are shy to enter the field. The M-SIP Program (Modified) where 20% to 25% of the Investment will be reimbursed by the GOI is a major breakthrough to attract new Investments. We will have to keenly watch the type of Investment taking place and India become self sufficient in producing the Electronic Components and Products in the Country. The Govt. Offset program for all Defense Purchase from abroad will give an impetus to manufacture Defense related products in India. The Overseas Companies, who win the contract for supplying to Indian Defense, will be required to source 30% of the input from India. It is expected that several Indian Companies will have the opportunity to participate in the Offset program and eventually make Defense Equipments in India. This will be a major breakthrough for the success of the MAKE INDIA program.
Rangsons Electronics Pvt. Ltd.
Mr. Jacob Pappen, President – Product Realization Business
(Manpower In India:600 employees, Turnover in FY 2014 – 2015: 443 Crores, No of Locations in India: 3)
I would like to look at the Make in India campaign as “ Design a new India “campaign, wherein over the years, India as a country was struggling in the manufacturing sectors especially in the electronics segment with minimal/no ecosystem around it, which made it very difficult to compete in the global market. In this regard, I would like to applaud the Prime Minister for this great initiative which is going to improve this situation. I am sure with global manufacturing giants entering India as a result of this campaign, will help building an Electronics component manufacturing ecosystem which is what Rangsons, one of the few EMS companies who had been in the forefront to beat global competition even with all struggles is looking for. In addition to this, this is going to bring in tons of manufacturing opportunities to India. The CYIENT vision of “Designing Tomorrow Together” is in synergy with this campaign and hence this initiative is nothing but “Designing a new India Together”. This campaign is going to bring a positive impact to the industry for sure. Firstly, this will help Indian manufacturers to produce for the country and at the same time compete in the global market with cost effective solutions. Secondly, this will boost the morale of our customers. Thirdly, this will help increasing the employment opportunities in India in a big way and contribute to the GDP. Forth, this will help bring in new technologies to the country. The investment plans and commitments showed by global biggies show the success of the program. But again, it is not an easy task and hence is going to take some time. The commitments from government coupled with Indian Industry are the driving factors. This shows the confidence levels we have built with global OEM’s even in the past challenging times. This campaign will surely take us multi fold in the coming days. Labor is not a shortage in India, but we need to upgrade ourselves with skill sets which are mandatory for high skilled and technology intensive opportunities which will come up in the country. We need to quickly adapt to such opportunities which will grow the skill sets in the country too. That will bring in global competitiveness in the industry which will bring in more opportunities back to India again. Infrastructure development, improved labor laws, better business environment are all by products of this campaign.
Sahasra Electronics Private Limited
Mr. Varun Manwani, Director
(Manpower In India: 375, Turnover in FY 2014 – 2015: 8 million USD, No of Locations in India: 3)
It is an excellent initiative by the NDA Government to revive the economy by promoting industries in India for large scale manufacturing for Global acceptance all over the world. A lot of foreign investors are looking for investment in India particularly related to manufacturing based on Supplier partnerships which in turn is a positive sign in the electronics industry which always felt the heat when engaged in competition with China. The campaign is making a positive feel in India and throughout the world and the driving factors are mainly due to the new Government’s policy towards the industry sector of our country which was lacking the push during the previous Government’s time.
Indic EMS Electronics Pvt Ltd
Mr. Vivek Khanna, Managing Director
(Manpower In India: 350, Turnover in FY 2014 – 2015: 55 Cr, No of Locations in India: 1)
Make India campaign is a good policy being adapted by Government of India. Currently India is importing majority of electronics products from countries like China, Malaysia and Vietnam. India is losing opportunity of giving employment to people of India also losing lot of foreign currency. Make in India policy can help government in generating more employment also will strengthen India’s manufacturing segment. It is too early to say, but definitely we are getting more Inquires from OEM’s to make their products in our facilities. It is quite successful as we see world’s big EMS Companies like Foxcon planning to enter in manufacturing in India; also many mobile companies are starting manufacturing setups in India. Make in India campaign, if gets fully implemented will move India in High growth manufacturing country. India can turn as an exporter of electronics products instead of currently being importer.
SGV Industries
Mr. Jagdeep Thakur, CEO
Manpower (In India): 200 nos, Turnover in FY 2014 – 2015: 20 crores, No of Locations in India: 2)
This campaign was launched by our Honourable Prime Minister Mr. Narendra Modi on 25th of September 2014. In our opinion, this was the boldest step since last 10 years; we have seen to boost the Manufacturing industry in India by any Government or person who claims himself to a part of Ministerial power. Just have a look of Foreign Investment in just last six months. Our sensex and nifty has touched new height. Banks have started supporting manufacturing companies even after they were not performing well in last few years. (This is a hidden fact which is not to be quoted but has to be mentioned verbally because it gives us support to work even harder). Thus far, 16 sectors have been identified and investments have been encouraging. 330 foreign companies attended this year’s Aero India biennial air show held in Bangalore; China’s Huawei invested $170 million in an R&D centre; French aerospace manufacturer Airbus said it would increase its Indian outsourcing to $2 billion; Japan announced it would pour $33.5 billion into Indian infra-projects over the next five years; and many more commitments have been made in response to the thrust of “Made in India” campaign. We think It need little more time to be successful, that way, because business can be done in only one way and that is “at the rate of speed of thought”. It means when you find exponential growth in business then only it can be called a growing business otherwise it would become standstill. So till we start importing only raw material from other countries, we find it difficult to say this campaign is success. But in other words this is a fantastic idea to be implemented and we all should support and give strength to this.
Smile Electronics Ltd.
Mr. Gururaj A, Director
(Manpower In India: 450, Turnover in FY 2014 – 2015 : 380 Million, No of Locations in India : 01)
In view of increasing costs in China and growing visibility given by the Prime Minister to look at India as a manufacturing destination, coupled with incentive schemes, organisations across the world look at India as a possible destination for manufacturing. A number of leading global defense and aviation industries have made announcements for investments in India. It is reasonably successful and the driving factors have been the strong visibility created by the Prime Minister and the Government. Creation of a strong supply chain for various parts coupled with increasing creation of design, testing and product development capabilities in India.
Flextronics Technologies Pvt. Ltd.
Mr. Sekaran Letchumanan, VP, Operations
(Manpower in India: ~7000, Locations in India: 7)
As a Foreign Direct Investor in India, Flex supports this initiative fully. We see this as the much awaited runway for manufacturing to really take off in India and bring the country’s competitive edge to a different level. “Make in India” is the need of the hour that will form the foundation of India’s growth in the decades to come. Take for instance Flex Chennai Industrial Park (CIP) — this 645,000 sq. ft. manufacturing campus contains both an SEZ unit and a DTA unit which allows us to produce and deliver products (ranging from computer and communications equipment to energy, food testing equipment and mobile devices) for both domestic and export markets, with zero customs duty. We are optimistic about manufacturing more innovative products for the domestic market in tandem with India’s burgeoning electronics industry. As demand grows, naturally the supply ecosystem will grow as well. For “Make in India” to be successful, it requires a solid strategy and favorable manufacturing environment. I.e. continue to improve the ease of doing business in India, enhance infrastructure, reform labor laws, invest in skills development, and make it easier to acquire land, implement Goods and Services Tax (GST) and fast track approvals. On the demand side, growing the middle class is critical to generate domestic demand, to create a healthy and well balanced economic cycle. In addition to manufacturing, we foresee more product design activities to be carried out in India, in the spirit of Design & Make in India.
S. B. Technologies
Mr. Srikanth V.S. – Chief Executive Marketing
Make in India campaign is a good initiative from the government towards electronics industry. It will definitely make our country to be one of the top manufacturing regions in Asia, especially in electronics sector for global market. Make in India is having a positive impact in the electronics industry. Global brands have announced to start their manufacturing from India. Major OEM’s have already started developing local suppliers for their spare parts. Job opportunities have been increasing. It may be too early to decide on the success of the campaign but definitely there are some major driving factors which will make one of the most successful campaigns ever. From the government sectors defense and railways a percentage of procurement from India companies which is being implemented is positive move towards make in India. Directly it will help for human resource development and creating lot of job opportunities. We expect growth on electronics manufacturing industry, consumer electronics and in solar industry to utilize the schemes available in expanding the infrastructure to produce quality products from India for global market. Indian should become a benchmark in electronics manufacturing sector.
Conclusion
“Make in India” Lion is no doubt making moves in right progressive direction, at this point of time commenting on results is not possible. EMS industries operating at all levels are optimistic from the campaign and look forward to better opportunities from both local market and global investors. Future prospects expected by the campaign are:
– Foster innovation, enhance skill development, protect intellectual property, build best-in-class manufacturing infrastructure.
– Capitalize on China’s manufacturing losses
– Increase in GDP
– Turn India into Manufacturing Powerhouse.
