The Indian electronic goods industry is one of the fastest growing in the world and is expected to be worth US$ 400 billion by 2020, according to IBEF (India Brand Equity Foundation). The government is working on an export-oriented policy for electronic products in order to attract investments, with plans of setting up port based electronics manufacturing clusters. The Ministry of Electronics and Information Technology (MeitY) released a new electronics manufacturing policy earlier this year, and is in the process of setting up industry-specific groups to promote manufacturing.
In order to support this growth, the government of India has set up the Electronic Hardware Technology Parks (EHTPs), Special Economic Zones (SEZs) and brought about a favourable climate for foreign direct investment (FDI). The government has also lowered tariffs to promote growth in the sector. And under the Modified Special Incentive Package Scheme (MSIPS), the Central government will be offering up to US$ 1.7 billion in benefits to the Indian electronics sector over the next five years. But are all these moves enough?
Electronics Bazaar’s Nijhum Rudra spoke to Anil Bali, VP, Deki Electronics, about the potential for growth in electronics exports, the policies needed to strengthen the Indian electronic component sector, and how Deki Electronics is promoting its products.
EB: What, do you think, should the government do to transform India into a global electronics manufacturing hub?
To become a global hub, the government has to take some hard decisions immediately and then set up a team to implement them. What the government achieved with mobile phones should be replicated with LEDs.
Taking a broader view of Indian industry, we can become globally competitive in any field provided we are given a level playing field – by reducing the cost of finance and energy, by improving infrastructure, by ensuring VAT and GST exemption for exports, etc.
EB: What do you think are some requirements to improve exports?
As I mentioned earlier, India is now a global manufacturing hub for mobile phones. That is because the government decided to make it happen. Today, most mobile phone manufacturers have their factories in India. They have also brought their supply chains here. India can also become a global manufacturer of LED bulbs along with China. The main thing is to have a clear cut policy (Phased Manufacturing Programme) and then work towards it in a focused way.
EB: Do you think that, in the coming few years, India can turn into a global electronics giant like China, Vietnam and other Asian countries?
The electronics market in India includes TVs, set-top boxes, washing machines, ACs, etc, in the consumer segment. In lighting, there are LED bulbs, tubelights, streetlights, electronic ballasts, etc. In the industrial segment, products include energy meters, fan regulators, UPS systems, inverters, SMPSs and welding machines. In the conventional auto domain, the electronics required for two-, three- and four-wheelers covers entertainment and safety, while in telecom, it is mobile towers and handsets.
Due to a focused approach, India is today a global hub for mobile phones. Samsung India’s factory in Noida is the largest in the world. Apple, too, is planning to go big in India at the expense of China. In the field of LEDs also, India can become the manufacturing hub, as the price of an Indian LED 9-watt bulb is US$ 0.6 versus the US$ 1 that it costs to make it in China. However, in other areas we may have missed the boat.
EB: How does Deki Electronics overcome the challenges the industry faces?
The biggest challenge here is that there is no level playing field. Indian film capacitors are nearly 20 per cent more costly than those made in China. The main reasons are the high cost of finance and power in India, as well as the export benefits that the Chinese government offers its firms. Today, Chinese capacitors are flooding the Indian market due to the slowdown in the Chinese market and across the world. Here, they are being imported at zero duty.
Deki has been successfully growing over the last 35 years by following a combination of strategies. For one, we have been ramping up our capacity and, today, with a 1.2 billion pieces per annum capacity we are globally competitive. Next, we work closely with our clients and make customised products that are sometimes even copied by the Chinese! We have also expanded our reach in the market by developing capacitors for new applications like welding machines, UPS systems, inverters, SMPSs, etc.
EB: Could you talk about the business model of your organisation and its vision?
Deki has been rated as a company that’s a great place to work in because of its culture of transparency, mutual respect and freedom. Deki aims to be a company that makes India proud. Our vision is to be the global benchmark in electronics manufacturing. Our mission is to maintain our leadership in the Indian lighting industry, whilst increasing our share in the industrial and automotive markets. In 2018-19 our market share in DC film capacitors was 20 per cent, and we are expecting this to touch 22 per cent in 2019-20.
EB: Can you highlight the functionalities of some of your latest products and solutions, which have managed to address the pain points of your customers?
We have developed a number of new products—axial connectors, DC links and snubber capacitors for this market. Customers were either importing these from China or were picking up Chinese products from a local source. While importing from China, Indian customers were not at all happy with the inconsistency in quality. In the case of local sources, they were having supply problems. With Deki introducing its products, we have solved the two main pain points.
EB: How do you stay ahead of the competition?
As stated earlier, our vision is to be the global benchmark in electronic component manufacturing, while our mission is to focus on industrial and automotive, even as we maintain our leadership in lighting—this is the key business strategy. In addition, we work with our customers’ R&D departments and develop new products at the design stage itself.
EB: You have recently launched the all-new IDS powertrain system, which is a ‘one-cell’ electric vehicle powertrain. Tell us more about its functionality.
The IDS powertrain is a unique concept. Most powertrains use cells in series, and to balance this, a battery management system is required. This adversely affects the life of the battery. The IDS powertrain uses cells in parallel, which eliminates the need for a battery management system and ensures a longer battery life.
EB: What are your plans for the coming years?
We will be growing at about 20 per cent in the film capacitors segment by focusing on the domestic industrial and automotive markets, and on exports. In addition, we expect our Sure Solutions brand, which is for the retail market, to grow at about 20 per cent. We also hope that our two new JVs—IPEC and IDS, which are associated with the electric two- and three-wheeler markets – do well.
