by Balaji Narasimhan

Consumer durables industry: Will India lag behind China in 2016?

Jan 27, 2016
Computer ComponentsFinance and Accounting SystemsGovernment

Indians are known for their intelligence and aptitude in math, which is what makes us so good when it comes to IT. But when it comes to manufacturing, we are nowhere near China.

Here are some reasons:

Economies of scale: While an Indian supplier makes 40 units per minute, his Chinese counterpart makes 4,000 units per minute. This means that China can sell its products at a more appealing price.Critical components missing: Even though many parts of, say, a washing machine are made here, some components–like motors and steel sheets–need to be imported. Similar is the case with ACs–there is no manufacturer of compressors. This means that many components need to be imported and Indians are at best assembling the product locally and selling it here.Financial reforms: Taxes are complicated, and manufacturers have to pay taxes to the State and Central Government. They also have to pay municipalities certain levies. Experts are of the opinion that GST will make things easier, but with the current Parliamentary logjam, this may not get passed anytime soon.Infrastructure: India has a less than desirable road and rail network, so getting a finished consumer durable product from the factory to the consumer is costly. This cost is passed on to the consumer, making the product costlier, indirectly hampering volume sales.