The ‘Make in India’, ‘Start Up India’ and ‘Skill India’ initiatives are three important areas for Indian ESDM ecosystem players, including the manufacturing equipment suppliers. In order to understand the strategic importance of these initiatives in the overall growth plans of NMTronics, a leading provider of machines, solutions and services, Sudeshna Das, senior executive editor at EFY Group spoke to Soni Saran Singh, the executive director of the firm.
EB: What are the opportunities in the electronics manufacturing equipment market related to ‘Make in India’?
The ‘Make in India’ initiative has started having a positive effect for sure, but the full-fledged results are yet to come. I’d like to mention a small change or initiative by the government that will help this sector. Let us say that, at this stage, populated PCBs are attracting zero duties and the final assembly of the phones is taking place, which has generated a lot of employment. The ecosystem is at a very early stage of development, so a small change like imposing a duty on populated PCBs completely imported from China will give a big boost to electronics manufacturing in the country.
I am in touch with all the mobile phone manufacturers and they have told me that in two to three years’ time, approximately 150 assembly lines will come up. Some of these may just get transferred from China, while some may be new setups in India. It’s not only the SMT lines that are going to fulfil the purpose—there’s a whole ecosystem that has to be developed. I am in touch with the companies making display panels and camera modules – the latter are the current buzz, actually. For all mobile phones, the USP is the camera; so the kind of filters being used and the camera technology integrated in the mobile phone are both important. The other mobile phone linked products are batteries.
So these are the additional supply chains that are likely to get developed in India. And this is not a false call I’m making, because many companies are in very advanced and serious stages of discussions with respect to local manufacturing. SMT lines would be the first to be started but, along with that, the supply chain for the other sub-components of the mobile phone will also get developed, followed by the manufacture of passive components and, probably, active components, which may happen maybe 10 years from now. So I can say that we are moving in the right direction.
According to my database, mobile phone production in China caters to 13 per cent of the Indian market’s needs. So if mobile phone manufacturing actually takes off in India, China has no option but to co-operate with Indian companies, which will be good for us and our economy. Electronics manufacturing is not rocket science. Many of us who’re in it, have been in this industry for so many years. So, sooner or later, manufacturing for the mobile phone has to happen. Then, it will not be only about the mobile phone, but the relative infrastructure of, say, the base of the 4G networks; it’s good that all the leading mobile companies already have a manufacturing base in India. Nokia has a big factory in Chennai, while Ericsson has a big factory in Jaipur and is building a new campus in Pune. We know other big EMS companies in Chennai, Pune, etc. So the whole ecosystem is ready at this stage. It’s just the matter of how government policies are going to support electronics manufacturing. This in turn, will definitely create a huge opportunity for the manufacturing equipment industry, including SMT machines.
EB: Currently, the government is not encouraging the purchase of second hand manufacturing equipment. So is that a problem for SME manufacturers as well as manufacturing equipment suppliers?
This is a very good question because NMtronics has played a very major role in developing the second hand electronics manufacturing equipment market in India. And I have sold the maximum second hand machines from the US and from Europe, especially 16 years back in the year 2000, when the US economy started going into a recession. At that time, the assets of a lot of companies were available and I encouraged people from many Indian companies to travel with me to the US, select the best equipment out of what was available and bring it to India.
But now the scenario has changed. I will give you a few examples. The price of laptops of standard configuration has been constant at ₹ 50,000 for almost three or four years. The difference is that the specifications are going up—the RAM is moving up from 1GB to 8GB or 16GB. The hard disk that was earlier 100GB is now 1TB. So the specifications have gone up, but the price has remained the same. Most technology products are in a similar mode. Let’s look at Fuji for example, a flagship company for NMtronics, accounting for 40 per cent of the investment in an SMT line. If you look at Fuji technology back in 2005, a single machine of the same physical dimensions as a current model would have had a capacity to deliver 8000 components per hour. Now, the same machine delivers close to 37,000 components per hour, and Fuji is not stopping here. The company is further enhancing manufacturing capacity and speed. Similarly, if we talk about a mobile phone’s cost – the features offered by a ₹ 10,000 phone today would be much, much more than what a similar-priced phone offered five years back. So second hand manufacturing equipment may not be the best option in the current scenario.
EB: How should the manufacturers look at ROI when investing in first hand equipment?
There is a huge difference. When you consider ROI, used machines will not give any advantage because you are buying technology that is probably three to five, or maybe even seven years old, at a certain price. This will call for a lot of maintenance compared to a new machine, which will come with a two-year warranty and the latest technologies. The developments in electronics are very fast—the product cycles are getting shorter and shorter, and are yet more complex. So my answer is that a used machine is not a solution at all, though there are a lot of financial options available. Industrialists should invest in the latest technology; otherwise, they will fall behind the competition.
EB: In the last amendment made in the MSIPS policy, white goods were also incorporated in the list of eligible products. Have you seen any additional demand for SMT machinery from white goods manufacturing companies?
This is a great move made by the government. White goods include medical electronics, ceiling fans with remotes, complex refrigerators and intelligent ACs. Remotes require a PCB, with or without SMT, or in a mix mode. So electronics manufacturing will be involved in everything and there will be additional demand for SMT machines. This is not only about white goods, but everyday life. Today we can’t live without electronics—we have become so dependent on it.
EB: How does NMTronics plan to help startups in electronics manufacturing?
Startups are mostly in the field of customer relationship management, software, and so on. In our industry, startups are very rare. But we will encourage any company that wants to get into electronics manufacturing. We will share our insights with them. Whatever support is required from our side, we will give them. If the company seems financially stable, we might even talk to them about long-term payment plans and encourage them to get into the business.
EB: How do you plan to facilitate prototype building in electronics manufacturing with your new initiative, the Centre for Materials for Information Technology or MINT?
The MINT Centre is very active. More than 150 customers have already visited us over the last one year. Many have never seen this kind of manufacturing activity before, and there are customers who are interested not only in the machinery but also in how we have done the roofing, flooring and the ESD protection. MINT is a highly successful concept and if you interview some of the customers who have visited us, they can give you the most positive feedback.
Moving forward, we are also planning to start a training academy and this is going to be a trend-setter – it will show how a commercial organisation like ours can give a positive direction to the industry. Graduates of Tier-2 engineering colleges find it very difficult to get the right job and they are not very well paid either. Some of them get into banking or BPO jobs. This hurts me personally and professionally, because there could soon be a big shortage of qualified engineers. So I plan to set up this training academy in Noida, which will be a part of the MINT exercise, and I really encourage your magazine to publicise this. My team will visit Tier-2 colleges in Noida. We will encourage final year students to join our academy for only two or three days in a week, in the evenings. We will train these students on different modules. We are still in the process of building a curriculum. We will start with a three-month programme, and if it interests students, we will build a six-month programme or a nine-month programme, which will be very comprehensive. This can involve visits overseas, visits to industries, to exhibitions and one- or two-month internships with companies. I am also in touch with CEOs of all the companies that are our customers in this regard, so that interns can get employed by these firms. My aim is to build up a pool of quality talent and, as far as possible, offer guaranteed job placements.
EB: How do you plan to contribute to the Skill India programme in electronics manufacturing?
Even premier institutes (like the IITs) do not have SMT lines. So how can an M. Tech student in an IIT, who is writing a thesis on developing a PCB, develop something only on the computer if he actually cannot build the product? So I have invited all the IITs to use our MINT Centre as an offline lab, with no charges. Any hardware engineer who is designing a PCB on a computer can convert the concept into a real product.
We don’t have the best hardware engineers in India, yet. If you look at Taiwan and China, even the small academies have SMT lines, which facilitate the development of skilled hardware engineers.
