In September 2014, Prime Minister Narendra Modi launched the Make in India campaign as a result of which the government received about USD 63 billion in Foreign Direct Investment (FDI), surpassing USA and China.
One of the biggest beneficiaries of this project is the consumer durables sector, an industry otherwise plagued by cheaper variations provided by Chinese manufacturers. Then of course, came the GST bill, changing the taxation system, followed by demonetization.
According to a report by Indian Brand Equity Foundation (IBEF), the Indian consumer durables market is predicted to reach USD 20 billion by the year 2020. With the government investing significantly in rural electrification, the demand for durables and consumer goods is expected to increase in the rural market in the next few years.
To understand the sector’s business and technology plans for 2017, we reached out to Pratap Gharge, Executive VP and CIO of Bajaj Electricals, Dheeraj Kumar, IT Head of Panasonic and Satyendra Tripathi, Corporate IT Head of Videocon.
1. What are the key technology trends in consumer durables in 2017?
Gharge: Analytics and big data are now important requirements for all consumer durables companies and the entire sector should be investing heavily into those, mostly from the consumer side.
Kumar: There is a higher focus on connecting with the customers and channel partners, primarily through mobile and social. For the consumer durables industry, IoT is the next leap, but while it will be very popular in the sector, it will take some time to show.
Tripathi: For consumer durables, adoption of cloud, data security, digital transformation and SAP HANA are the key avenues to focus on this year. When it comes to IoT, while things have been set in motion, there are several concerns that need to be addressed with regards to bandwidth and security. The technology needs to be handled in a more mature way. Our network infrastructure is currently not in a position to take up IoT as we cannot just focus on metro cities. Tier 2 and 3 cities need to be targeted in order for successful implementation of IoT.
2. How are you changing your market focus with the advent of GST bill?
Gharge: The initial transition phase is expected to be a bit of a problem, especially for distributors and there might be a slowdown in sales as well. However, the simplification and reduction of taxes through this bill should prove to be useful in the long run.
Kumar: From a compliance, taxation and strategy point of view, we are looking forward to the implementation of the GST bill. However, it is too soon to gauge the exact impact as the government is yet to lay out the plans but it can be expected to be profitable as a long term strategy.
Tripathi: We still need to analyse to see the whole impact on the business but it should simplify the process. It could start as a burden on the sector’s sales and sourcing initially but across a longer period of time, it will definitely help in several ways.
3. With Make in India in place, what is the effect of Chinese brands on your market and how are you tackling it?
Gharge: Although Prime Minister Modi is trying to promote Make in India, it is surprising to see that the investments are not really happening in the scale that was to be expected. Not many large investors have entered the market and it is clear that the project is yet to really make an impact.
Kumar: Initiatives like Make in India take some time to come to full effect and show any real progress on ground. However, there are some companies that have made some changes and leveraged it in the market. In 2016, a lot of things changed but right now, it’s more of a wait and watch situation. Additionally, this year’s budget will also prove to be vital in gaining a better understanding of the market.
Tripathi: Sadly, Make in India is not really picking up pace as it was estimated to and it is difficult to be really positive about it, at least for now. For the first half of this year, not much is expected to change, but there might be some progress in the second half.
4. What are your biggest challenges this year?
Gharge: For the industry, one of the biggest challenge is a less margin. This often leads to an inability to invest at a higher rate, which also leads to a limited budget.
Kumar: At present, taxation is one of the biggest challenges that need to be tackled. Also, the aftermath of demonetization is another challenge for consumer durables.
Tripathi: Demonetization had its own impact on consumer durables’ sales and the scene hasn’t improved yet. Also, consumer demands are not growing as per our estimation of 20 percent.
5. What is your technology strategy for 2017?
Gharge: For this year, we are starting a project to be a more digital centric business and digitally transform the company. We are going to invest into consumer centric technologies like social media, analytics, and consumer related backend analytics, as well as some IoT projects. While we are already partially on the cloud, there are some core applications which are not ready to go on the cloud just yet and need to be reviewed.
Kumar: This year, leveraging mobile and social to connect with consumers and channel partners will be very important.
Tripathi: We are going to work on partially moving to cloud, ramping up our security and transform ourselves digitally.