Consumer durables industry: Will ‘Make in India’ succeed in 2016?

Some of the imported components include:

Air conditionersCompressors for ACsWashing machines (predominantly front loading ones)Refrigerators (high-end ones and compressors)

 India primarily imports from China. The Government’s Make in India faces some hurdles when it comes to challenging China largely because of China’s decade-long dominance in the manufacturing space. China has perfected the art of delivering low-cost, high-volume products and components and now has a network of suppliers and component manufacturers.

Thanks to the fact that India is an underpenetrated market, companies that choose to make in India have a large local population to which they can sell their products.

 But India has advantages too–labor here is also cheap and India has core competencies in making electrical equipment, plastics, and metal fabrication. Also, thanks to the fact that India is an underpenetrated market, companies that choose to make in India have a large local population to which they can sell their products.

 In Budget 2015-16, in order to encourage companies to make products in India, the Government eliminated duties on certain components. These include round copper wire and tin alloys used in photovoltaic solar cells, black light module for use in manufacture of LCD/LED TV panels and organic LED TV panels. Additionally, excise on wafers for use in manufacture of IC modules for smart cards has been reduced from 12 percent to 6 percent.

Government’s Make in India faces some hurdles when it comes to challenging China largely because of China’s decade-long dominance in the manufacturing space.

 And these efforts are slowly bearing fruit–for instance, in December 2015, Micromax decided to invest Rs. 300 crore to kick start three new manufacturing units in India. The company is planning to reduce its dependence on China. In the same month, Hitech Mobiles decided to setup a production unit in Howrah, making it the first in Eastern India. The unit can make 2.5 million handsets per annum, besides 3 lakh batteries. It has been setup with technical collaboration from Shenzhen Yiheyuan Technology, China. Highlighting the importance of batteries, Ranjit Satyanath, Head – IT, Croma Retail, says, “In 2016, there will be a lot of research on battery life. We will also be seeing foldable ultra-thin displays.”