Mait sees electronics production coming up in big way in India

It has been a challenging time for the Manufacturers’ Association for Information Technology (Mait), by far the biggest domestic-market-focused IT industry association.

Despite its best efforts, electronics and semiconductor manufacturing in India has remained a dream for decades.

The association recently helped bring out an alarming report that predicted that India would miss the electronic manufacturing bus unless it took immediate action to encourage international giants to invest here.

Mait, too, has recently undergone a dramatic leadership change. After more than a decade at the helm, Vinnie Mehta stepped down as executive director in favour of HP-veteran Ashwini
Aggarwal, even as Sandeep Nair, president of Emerson Network Power, took over as Mait’s president.

DNA caught up with the duo, three months after the shake-up, to find out about the organisation. Excerpts from the interview:

Where are we on the manufacturing agenda?
Aggarwal: There is optimism, but there is also an underlying feeling of fragility of the revival. There is a lot that needs to be done. By and large it has weathered the recessionary time well.

The thinking in the industry and the government is that India can take centrestage and kickstart its electronic manufacturing agenda and build a very vibrant manufacturing ecosystem. That is where we are at this moment. I think the next decade will see electronic manufacturing coming up in a big way in India.

You have been talking about this for a long time. What has changed now?
Aggarwal: All the indicators are very well placed in India right now. You have anchor brands — which are already there in India. Nokia has established a manufacturing presence in India and now we have Dell is putting up 45-acre plant in India.

At this point of time, it makes sense for them (international companies) to put up their manufacturing plant, not out there, but in India - to let future investments also percolate to this market. It is premature to say that we have lost the race to our friends in other countries.

We are at a stage where we can build up a hockey-stick curve up if we get our act together in the next one year.

But why will companies not try to build on the economies of scale that they have achieved in their Chinese operations?
Nair: To see why, you need to see what is going around in the world. One of the big points is, why people choose a particular location. It is because of the benefits around that and the structure around that. That structure (of China) is under threat.

There have already been a lot of media reports on a company facing several issues in the south of the country. People are migrating from that location. The tax structures are getting equalised, the benefits that used to accrue to domestic and manufacturing is going, gradually. Every year it is bridging off. The benefits that existed on the currency are also short-term — the currency is appreciating. Companies are thinking of de-risking that model.

How important is geo-politics in this, for example Japan looking at India to counter-balance China?
Aggarwal: It’s going to be an India version of the execution that we will have, not necessarily similar to what has happened in China. It will be different, because with the kind of demand that we are having, it is inevitable. It is not possible that we will always remain an import and trade economy.

Which are the areas you think can turn into electronic manufacturing hubs, besides Chennai?
Aggarwal: We have written to nine states on proposal to set up electronic manufacturing hubs. The first to shoot off a reply was Gujarat.

They pointed out why they were well-placed to set it up — 24 hours power, land 80 km from Ahmedabad, look at Nano etc.Next, we went to Tamil Nadu. The person made a brilliant pitch and said, ‘we will give you two (power) lines. We’ve got all these anchor accounts, a seaport and an international airport.’ There’s aggression in the country. People are looking at building up.

So is it all up to the states now?
Aggarwal: I think the Centre needs to do a lot more things. It needs to have the right policy intervention. The state is controlling the policy execution, but it has to be under the directive of a greater policy directive.

There should be recognition of the importance of electronic manufacturing and it should be given a status of a mission mode project. That is one of the key challenges and the need of the hour.