India’s Electronics System Design & Manufacturing (ESDM) is growing at a rapid scale, which is expected to grow at a CAGR of 32.5 percent from FY22 to FY27 as opposed to 22.2 percent CAGR recorded from FY17 to FY22, as per a report by Niveshaay, a SEBI based research body. But amid these huge growth potentials, there are a couple of grave challenges such as high costs of electronic components, inadequate supply chain, unskilled labor, and high costs of power. In an effort to boost India’s electronics manufacturing ecosystem and to deepen the value additions, the Source India platform was initiated by Electronics Industries Association of India (ELCINA) in 2009 in Chennai to accelerate the development of the Indian Electronics Supply Chain. Vinod Sharma, managing director of Deki Electronics in an exclusive interaction highlights the current challenges of electronics manufacturing services in India, the policies required to tackle this hurdle, and how events like SourceIndia is in line with the fulfillment of the ambition to the electronics industry in India to source more locally and deepen the value addition.
Q. What are the specific challenges you would like to mention that you encountered in establishing your manufacturing facility in India?
The challenges are very traditional and it’s there for a long time. There are various improvements in the industry of late because of the smooth government policies, and also because of digitization of a lot of approvals. For instance, there is NSWS: India's National Single Window System for Business, every state has their own approval portals. Therefore, you do not go from door to door for approvals and negotiations. In fact, new laws are also coming in, which will prescribe a sort of determined period in which you will get your approvals. Manufacturing in India is always a tough thing.
We have a bureaucratic system who wants to control, manage, and govern everybody. The industry is now dealing with every single officer in the government whether it’s ground water, electricity, air pollution, customs duty, labor laws, GST, taxation etc. The rules are opaque, they are not well-defined. The challenges of manufacturing are mostly capital-intensive, high costs of electricity and logistics, and water. Labor is cheap, but they are very ineffective because they are not skilled, and they require a lot of education. Therefore, when they come to the factory, they are not geared up.
Q. Is inadequate supply chain a major challenge and how do you think upcoming events like SourceIndia can address this issue? Is this kind of platform needed for the industry?
Inadequate supply chain is a major impediment because it is still now mostly in China and even if the companies are Japanese or Korean, they are housed in China. They are now in a different era of manufacturing and when you try to shift that to India and do that with our rules and regulations, it becomes a problem. While we are trying to do a lot of assemblies in the country, the component manufacturing is still to take off. Therefore, we are hoping that with some changes in policies and mindset, we will also be able to do manufacturing of components and their raw materials and capital goods in India.
Q. Until now, huge chunks of electronic components/semiconductors are still imported, which is not a sustainable situation for a country like India. How do you think the component manufacturing ecosystem, especially the semiconductor ecosystem can be boosted in India?
The semiconductors sector received excellent attention from the government, and we now have one of the best policies in the world. And the way SourceIndia helps, it is a platform for the companies to showcase their technology and products and in this event, it is not just only about semiconductors, but we are also discussing deeply about other components. It is helping the supply chains to move into India. As of now, there is PLI scheme for mobile and components, SPECS, and electronics manufacturing clusters. These are helping the component companies to expand capacities, but they are not that attractive enough to move value chains or supply chains to move into India.
Q. Can you highlight some of the specialization of Deki Electronics and in the coming event, which are the products you would like to showcase?
The idea is to showcase the entire Deki group working because we are often known as a company that produces capacitors and people do not know that we also do other things. We have a division for electronics for retail like anti-shop lifting, automated football counting, and a lot of RFID based solutions. Then, we have a joint venture with my colleagues in Bengaluru where we are into electric vehicles, charging solutions and we will be showcasing that all in the Chennai Trade Center.
Q. In your opinion, how a platform like Source India is helping in the development of the ecosystem for the Electronics industry?
From the portal perspective, which is largely a contributory portal made by the members themselves. Therefore, it is made by the component makers and buyers together and this is why it is so important. From the exhibition perspective, once in a year we try to come together in Chennai and we also buy half yearly program under the name of ‘Supply Chain’ where we try to discuss with both buyers and sellers together, producers of electronic products and components come together to develop the supply chain and to escalate the velocity of business within India.
Q. According to you, what is the unique feature of Source India platform which you feel is contributing the most and how do you like to see this platform in future?
The unique thing is based on the very strong intention, and this is the 13th edition of this event. We have been trying to bring customer’s attention to buy more components in India and also the component maker’s attention to make more in India. As of now, I do not think there are any other such trade events on electronics, which focuses deeply on manufacturing in the country. This time, I would like to give a message to the buyers that no country is built by buying all the components abroad. They will also have to extend themselves a little bit in order to help and encourage manufacturing of components within India.
