With manufacturing models shut and gross sales halted owing to the coronavirus (Covid-19) outbreak, the nation’s main electronics and handset producers are suspending new investments to spice up native manufacturing.
Despite the federal government not too long ago saying two formidable schemes for the sector to draw new funding, not one of the corporations is planning to avail them any time quickly.
For occasion, Samsung had introduced a long-term plan to take a position Rs 5,000 crore in its Noida facility that it aimed to make the most important handset manufacturing unit on this planet. But now, it’s but to take a remaining name on the plan.
Sources mentioned the agency will solely evaluate the brand new funding scheme after demand peaks past the pre-crisis ranges.
However, with its quantity gross sales remaining practically flat in 2019, and it shedding market share to Chinese rivals, plans on the brand new funding have been put within the again burner.
Top smartphone participant by quantity – Xiaomi India — shouldn’t be contemplating investing by way of the brand new scheme regardless of a wholesome surge in gross sales quantity in 2019, mentioned sources.
Currently, Xiaomi sources its handsets from six manufacturing models operated by Foxconn in India.
“The lockdown has brought the market to a halt, and it is difficult to predict when sales will normalise. Further, the growth projections for the economy suggest lower demand in the coming months. Thus, it is hard to expect that manufacturers will invest in boosting production capacity in the near future,” mentioned Kamal Nandi, president of business physique Consumer Electronics and Appliances Manufacturers Association (CEAMA) and government vice-president, Godrej Appliances.
Other main producers like LG, Panasonic, Vivo, Oppo and Realme, are but to gauge the complete influence of the lockdown on their Companies. These corporations should not able to take a name on investing in manufacturing as gross sales have fallen flat. Most are anticipating a spill over of the continued disaster to the July-September quarter.
B Thiagarajan, managing director (MD), Blue Star, mentioned, security of the corporate’s employees would be the key focus as soon as manufacturing begins. “Everything other than life and livelihood is down, below the priority list now,” he mentioned.
The unwillingness of producers in availing an incentive scheme that’s long-awaited is uncommon. Since expiry of the first funding incentivising scheme — the Modified Special Incentive Package Scheme (M-SIPS) final yr, there have been no holistic schemes for producers of digital gadgets within the nation.
The business has been demanding a concrete plan from the federal government that can incentivise any funding to spice up native manufacturing — consistent with its said goal of ‘Make in India’.
After taking business demand into consideration, the federal government got here up with two schemes. The Scheme for Promotion of producing of Electronic Components and Semiconductors or SPECS is aimed toward incentivising any funding above Rs 5 crore in manufacturing of digital elements and semiconductors. The production-linked incentive scheme (PLI) has been launched to draw massive investments within the cellular handsets section.