Why Indian electronics manufacturing is not yet there on the global scene

Many in the west know that India is a great place for low cost manufacturing of garments and other goods, and indeed some of the export markets continue to grow (taking into account the correction from the current world financial crisis). But the electronics manufacturing industry is one that doesn’t yet seem to have followed the path of textiles and novelty goods.

Why is this? It’s probably down to supply chain issues and infrastructure, which is also one of the key reasons for the snail’s pace growth of Indian semiconductor manufacturing.

According to Jack Chua, Siemens’ vice president for south east Asia, who spoke at the recent electronicIndia conference in Bangalore, the manufacturing industry can only bloom when the supply chain is in place.  He had commented that the Indian market is dominated by foreign investors who are basically bringing all the material to India to produce either for the domestic market or for export.

He said that to date the manufacturing sector is dominated by the telecoms industry but automotive also has a great potential in the future. 

But there are always mixed messages in India – if you listen to Ravi Pagar, director for Farnell India, he says that they are planning a same-day or next day for supplying electronic components to designers – which seems to indicate that there is some existing infrastructure that can be used to good effect at least for the distribution side. 

The challenges at these different ends of the ecosystem is borne out by a recent Frost and Sullivan report.  It says that the most significant challenge to becoming the next big electronics manufacturing destination in India is the lack of infrastructure- especially transport and communications.

It says that sound infrastructure is essential to establish and sustain an environment to encourage manufacturing. Previously, India was slack in providing requisite infrastructure especially related to domestic transport, power, and telecommunications.

What is most significant though is this: “Though this factor has not deflected the growth of electronic manufacturing in India, it has certainly prevented the country from exploring all opportunities, thereby allowing the sector to grow at a rate below its true potential.”

While the Indian Government is said to be investing in improvements throughout the country, with initiatives already initiated to improve infrastructure in sectors such as telecommunications, ports, airports, and energy, India still lacks the requisite levels of high level infrastructure to make it more attractive for manufacturers.

One of the major disadvantages of the Indian electronics industry is the lack of a sufficient supply base. Although the Indian electronics industry predominantly manufactures passive components, the lack of readily available supply has been a major deterrent in attracting manufacturing opportunities.

Ultimately, India’s potential in electronics manufacturing needs a kick-start; and while government initiatives may improve the playing field in the near future, it needs players on the field to start building their plans to take advantage of the opportunities in electronics manufacturing in the country.

Ultimately, India’s potential in electronics manufacturing needs a kick-start; and while government initiatives may improve the playing field in the near future, it needs players on the field to start building their plans to take advantage of the opportunities in electronics manufacturing in the country.