The global electronics market both industrial and IT hardware, is growing at a rapid scale .The government in various countries has framed new strategies and unleashed incentive schemes to grow the ecosystem so that they become self-reliant and less dependent on China. For instance, Europe has a huge automotive manufacturing sector, which is spiking the demand for electronics components in the automotive sector. But, IT hardware manufacturing is not growing in the region. As per reports, the European IT hardware market had total revenues of $124,734.6m in 2021, representing a compound annual growth rate (CAGR) of 2.3% between 2016 and 2021. India, on the other hand, which is now a preferred destination for electronics manufacturing witnessed a total of $15.5 billion in 2022, representing a compound annual growth rate (CAGR) of 5.6% between 2017 and 2022. Recently, the government of India approved the six-year PLI scheme for IT hardware products with an outlay of Rs. 17,000 crore (PLI 2.0). In an exclusive joint interaction, Pierre Krasnovsky, Vice President of International Sales at Thomson Computing / Metavisio and Varun Manwani, Director Sahasra Group highlighted the key challenges of IT hardware and electronics industry in India and France, how memory chips would revolutionize the electronics manufacturing sector, why India is becoming a top manufacturing destination for global brands.
Q. Where do you see the growth of India's IT hardware electronics market as compared to France and what do you think is the growth potential of this nation?
Krasnovsky- The market for IT products and other segments of electronics are growing in France, but the pace is not swift. Today, we are selling through all the retail chains in France and we have now started doing some B2B business with the government and some private companies and so, we know we can grow larger outside France. We now have a business presence in almost 52 countries. Other than the US, the potential in India is tremendous because we started exploring the market two and half years ago. And for the past seventy years, India has been telling us that we will be replacing China as the manufacturing hub but it started happening from the past five years only. Very soon, China could have serious problems with another pandemic and their support for Russia and border dispute with Taiwan could prove to be more advantageous for India. And therefore, we want to move all our operations from China to India.
Q. Can you please highlight how your MoU with Thomson Computing will benefit the Indian IT hardware and electronics market and what are the advantages?
Manwani- The MoU we signed is a very close working relationship between Thomson Computing (Matavisio France) and Sahasra Group. We will be manufacturing products under the Thomson brand exclusively for the sales of the products within India and for the international market as well. In terms of the product portfolio, India today has a colossal population and at the same time, every price point has a market. Therefore, there is a price point at the apple level and there is a price point at the entry level. Thomson has products available for every price point and they have entry level solutions to flagship solutions even at the educational level. Every market cannot be addressed instantly and however, based on the success, each market will be addressed slowly. But, this initiative is just not a quick buck to be made, but it’s a long term association we are looking at. Youths in India are willing to look at new brands and try out new solutions.
Q. The IT hardware market in India and in Europe is dominated by Chinese and US brands. What will be Tomson’s business model, which you think can gain traction in the market?
Krasnovsky- It is an easy task because if you speak about Chinese and American brands, both the countries have three brands and Apple is completely a different market. Those brands cannot move things easily because they are selling various products in numerous countries and they are abided by a strict policy. Thomson has the ability to move very fast and we are a small company compared to them. Therefore, we are flexible and we are providing top-notch quality and technology in every price range. When a company unleashes a new product, they launch at a higher price and then after six months they start decreasing the price and that’s not the case with Thomson. We try to bring the product as fast as possible to the consumer at the best possible price. In emerging countries such as India and the Philippines, the penetration of laptops is still low and people cannot afford to buy $600-700 worth products easily. There is a demand from the end users and the manufacturers are willing to make it, but no company wants to sell the products. We are here to unleash the cheapest and quality technology, which can be accessible by every person.
Q. India is now focusing on semiconductors and ESDM and which are the other key segments of electronics, which the country must focus on?
Manwani- If you look at the overall focus of the government, they are not leaving anything in the entire ecosystem. The semiconductors are the base of the ecosystem and then you look at the IT hardware products, which are at the end of the ecosystem. The government is trying to incentivize all of it. This is a process, which is going to take a lot of time for India to become a giant in all these areas. But, the initiatives are at the right time and at the right level. On the one hand, we are looking at semicon, which is developing the component ecosystem and at the same time, there is a focus to develop IT hardware, which is the product ecosystem. The manufacturing sector is already existing and yes, at a smaller scale, but they are growing at a rapid scale with the help of incentivization. For instance, Sahasra is now focusing in the IT hardware space and we are focusing on the semicon space and also the memory chips. If you look at the server of the IT hardware products, other than the CPUs, which have a lot of contribution in terms of cost, memory is one of the largest contributors.Very soon memory chips will contribute to India’s overall manufacturing.
Q. How are you planning to provide the IT hardware products at an affordable price, when the component ecosystem is still dominated by China? As per reports, import of components is the major price factor.
Krasnovsky- India is already developing the component ecosystem and very soon, they will develop it at a large-scale. But some of the major components such as CPU, intel India is providing directly in the country. Although it depends on the type of configuration, it can be 10-15 percent of the product or it can be 40 percent. It is not that we give affordable products because we buy components cheaper than the competitors, but we take a very less margin based on configuration. That’s how an electronic product can be cheaper. Bringing the products in India is more convenient for any companies these days. It’s a need to address the market in the country and India can be a real choice for the future. The PC penetration market in India is only 24 percent vis a vis 76 percent of the smartphone market. Around 11 percent of Indian households have PC availability and it shows the scalability. We would like to address that gap. In France, we are one of the few companies who are specialized in electronics and IT. This market is dominated by few brands and there are some people who hesitate to buy from them because of higher costs and the market is ridiculously penetrated.