Consumer electronic majors warm up to Make in India

Sony and Samsung may not be the only consumer durable companies to announce local production plans as the chorus around 'Make in India' gets louder by the day. Firms such as Panasonic and Hitachi are also keen to expand their local manufacturing bases in an attempt to supply not only to the domestic market, but also neighbouring countries. However, the constraint is the lack of an enabling environment  that prevents players from making firm commitments, industry executives say.

Panasonic, according to industry sources, already exports air conditioners, washing machines and kitchen appliances to countries in South Asia, Africa and the Middle East. This list, however, can become bigger if the environment is conducive, persons in the know say.

While the recent budget did take the first few steps in this direction by rationalising customs duty on a few key components, more needs to be done, industry executives say. "The impact of customs duty reduction on magnetrons (used in microwave ovens) up to 1 kilowatt is not more than Rs 50-60 per unit. This is because customs duty on this component was 5 per cent, which has been brought down to zero. While the move is welcome, it is unlikely to compel manufacturers to shift assembly lines here. That will take time and after a series of measures, which involves duty cuts on other components that go into a microwave," says Kamal Nandi, business head and  executive vice-president, Godrej Appliances.

Around 70 per cent of microwave ovens sold in India are imported, mainly from Chinese manufacturers who make them cheap, since they have the scale to do so. Also, India's duty structure makes microwaves 15-20 per cent cheaper to import than to make here, appliance majors say.

Hitachi, on the other hand, according to its managing director for India, Ichiro Ino, is looking to step into the refrigerator segment with a premium line this year. The Japanese major is the country's third largest air conditioner maker.

Ino did not elaborate whether the new refrigerator line would be imported, but industry sources say it is most likely expected to be the case since companies here do not have the wherewithal to either manufacture or assemble high-end consumer durables and electronics.

According to the Consumer Electronic and Appliance Manufacturers' Association (CEAMA), almost 30-40 per cent of all goods sold in the consumer durables and electronics markets in India are imported. Those that are made here are basically assembled using parts that are imported.

CEAMA's secretary general Amit Chadha says the industry has been lobbying for more benefits when setting up manufacturing units.  "We had lobbied for including categories such as washing machines, refrigerators and small appliances in the Modified Special Incentive Package Scheme (M-SIPS), which is a programme that aims to attract investments into manufacturing in 29 product categories, including LEDs, LCDs, consumer electronics and semiconductor chips. While the government agreed do it last year, the notification is still not out. These bottlenecks must be eased," he says.