Dixon to make electronic components; Tata Electronics may invest Rs 2K cr

Electronics manufacturing services company Dixon Technologies will foray into the electronics component manufacturing space and use them for captive requirements before looking at exports, a senior company official said.

According to sources, Tata Electronics is likely to invest Rs 2,000 crore for electronics components manufacturing under the Rs 23,000 crore incentive scheme launched by the government.

Tata Electronics declined to comment on the query sent in this regard.

Talking about the electronics component manufacturing scheme (ECMS) Dixon CEO Atul Lal said electronics component is the next phase of growth for the company.

"We have already rolled out a project for display modules. We are evaluating various other component categories like camera modules, mechanical enclosures and also lithium ion batteries. So we are seriously evaluating and we will be deeply participating in ECMS," Lal said.

He said initially the components will be produced for captive usage and will be expanded later to cater to external market requirements.

"We are going to go beyond captive and in some components India and Dixon is going to be globally competitive. So we are going to become a part of global value chain," Lal said.

Dixon makes smartphones for number of brands, including Motorola, Xiaomi, etc. It has also entered in an agreement with Vivo for expanding manufacturing facility. 

The company has also started manufacturing laptops for HP.

The government last month approved a scheme for passive or non-semiconductor electronics components with an outlay of Rs 22,919 crore.

The scheme is expected create direct employment for 91,600 people and attract investment of about Rs 59,350 crore.

Union Minister Ashwini Vaishnaw on Saturday said that the government will consider only those companies for the scheme that have set up design house and maintain six Sigma process to achieve high quality in their product.

Lal, who is also President of Electronic Components makers body ELCINA, said the directive to the industry for having quality at the six Sigma level and also setting up design teams is most welcome.

"We are going to be internally discussing this," Lal said.

India Electronics and Semiconductor Association and Semi India President Ashok Chandak said there is nothing wrong in getting design house set up by electronics components makers.

He, however, said the requirement of six sigma quality is going to be a bit difficult for electronics component maker as most players in the segment are micro, small and medium enterprises.

India Cellular and Electronics Association, Chairman Pankaj Mohindroo said electronics components manufacturing scheme will enhance value addition from the country and financial analysts should stop seeing as a low return factor.

He said in the long term it is going to be value accretive and will make manufacturing sustainable.