With the assistance from the government of India in unleashing Rs 2.35 Lakh Crore policy push, the home-grown electronics manufacturing cluster is expected to witness a healthy 30 percent growth in the coming financial year, which is around Rs 7 Lakh Crore. Experts in the industry believe that this policy unleash will help India to become globally competitive and self-reliant. But, amid this positive vibe, there are loads of serious impediments that the industry is struggling to deal with such as intricate duty and taxation structures and regulatory uncertainty. While the government is undertaking major efforts to grow the international electronics supply chain, the serious challenges are around electronic components, mostly electronics processors, and the prospective dangers of the COVID-19 pandemic. According to an exclusive report of the Mint, a senior official in the Ministry of Electronics and IT (Meity) opined that the value addition from local manufacturing units is expected to go up to 25 percent next year from 18 percent at present. We spoke to Sanjay Agarwal, managing director at Globe capacitors and President at ELCINA about how India is positioning itself to become a leader in electronics manufacturing, globally competitive, and self-reliant.
Q. What is your view on the current electronics manufacturing ecosystem in India? Do you think India now has the potential to become globally competitive?
India has a very strong potential in becoming a leader in electronics manufacturing. We had a good track record for two years in spreading the initiatives that are helping the industry a lot and developing the ecosystem. The government has been announcing more policies, which are favoring the industry in the form of Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) and Production Linked Incentive (PLI) and these are definitely supportive to the industry. The industry and the government have also undertaken major steps due to which actual manufacturing is now happening. Recently, India has grabbed the fifth ranking globally in economy size. My point is that the government has already offered a lot of things and the industry has to grab it, understand it and work on it.
Q. Amid the unleashing of incentives and policy frameworks, there are certain sets of challenges that are still making the industry struggle like supply chain disruptions and many more. What are your views on this and how to wish to tackle them?
During the pandemic, there were a lot of challenges in the global supply chain, and every industry suffered shortages. The tariff on the shipment from China to India increased from 1000 dollars to 10,000 dollars and the industry suffered a lot. Although the government tried to control the movement of the containers, nothing much has been done and the industry suffered losses because of such scenarios. But, those scenarios are slowly becoming normal and we are seeing the normalization of supply chains and tariffs and which should help us grow more in the overseas market. In the last two years, my company exported about 45 percent of the demand, but we found that getting a container was a big challenge and our supplies were getting hampered, customers were suffering and we lost four customers who are proprietors from China mostly. Now, as things are getting normal we are again hoping to get them back.
Q. After COVID-19 there were anti-China sentiments not only in India but also in Europe and in the US. Do you think this strategy is playing a key role in developing India’s manufacturing ecosystem?
Yes definitely. Anti-China sentiments are very strong in Europe and in the US and Indian companies must seize this opportunity by participating in trade fairs by showcasing themselves to the people and for that, you have to get out of your homes and visit those markets. The companies also need to showcase their products, then they will know the market very well and will get the opportunity to serve them. And of course, China is very desperate in selling its products, but Indian companies need not worry about that because we are very confident in our quality, and our country as a culture believes in our commitment. So, we always have a chance and for that, all our members and industry partners have to make an effort to make them visible because if you are visible the market will obviously come to you.
Q. What are your views on the export of India’s electronics items right now? Is it in a good shape now or do more things need to be done?
Indian exports are obviously growing but a lot of things still need to be done. We have to develop a very robust supply chain for our raw materials because there are many components that are important for our products and if we import them it hampers our growth. Today, 85 percent of PCBs are still imported whereas the government of India is trying hard to promote PCB manufacturing in India, but still some things need to be done here, which is not at all easy to find. Similarly, in the components sector, there are many which have to be sourced from outside and some quality policy from the government will help their manufacturing in India and we can have much better availability and competitive pricing of those items. Then, it will ultimately help us in making better and cheaper products to be sold overseas.
Q. You are also leading Globe Capacitors for over a decade. Can you please tell us why and when you founded the organization?
Globe Capacitors is one of the country’s largest capacitor makers for home appliances. We also make AC capacitors and our company was founded in 1988 by my father. Since 1980, we have seen a slew of changes. There was a time when we were dependent on the seasons like in the summer, we have a good demand, and if it is winter we have no demand. But, with the growth of the consumer durables industry or home appliances, we find the entire year a stable scenario. Our company is growing along with the market and now we have a turnover of Rs 200 Crores this year.
This market is now stable and this is a huge opportunity for the export market. In North America and in Central America, the market was majorly controlled by the Chinese as well as by the local Mexican companies. Still, we are now aggressively participating in those markets that are helping us to get our shares and we have had stable customers for the last 15-17 years. Now, the new buzzword is electric vehicles and they need capacitors as well. So, our focus will be to make capacitors for them. Now, we are capable of making the films that are required to make the capacitors. In the next three years, we intend to make these capacitors, test them, get the required approvals and manufacture them in India.
Q. What are your expansion plans? Do you have any focus on your R&D facilities?
Our company has been approved for PLI and we have invested in SPECS as well. So, we are aiming to grow double and increase our turnover by 50 percent in the next four years. Globe Capacitors is also on the verge of investing Rs 25-30 crores in the next two years and Rs 5-6 crores at least in R&D to develop the new products that we are planning to launch in the market in the coming few years. Currently, we have three manufacturing units at present and we employ about 1000 people. We also have an expansion plan to build another factory and increase the manufacturing capacity by 30-40 percent.
