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How India Can Reduce its Dependencies on Exports of Chinese Components

Virtual Forest Omer Basith

Omer Basith, Co-Founder & CEO, Virtual Forest

When I think of India, an upwardly mobile young population that is increasingly investing in home appliances to enhance their quality of life comes to mind. We have access to easy POS credit an increasing number of retail touchpoints and ubiquitous access to information.

We’re are getting wealthier, it’s getting hotter outside and we have less time than we did before for household chores. It stands to reason that the penetration of home appliances in India is in the process of exploding, the future looks very bright for Indian home appliance manufacturers.

There is just one problem; Indian companies don’t know how to make appliances. Only 42% of the value of appliances sold in 2019 were manufactured domestically and this 42% has an import component ranging from 25% -75%.

Electronics are now our 3rd largest import; addressing this is a matter of national importance. The govt. has put in place measures like the recently announced Production Linked Incentive (PLI) scheme for Air Conditioners to help develop the local component ecosystem, this is an extremely positive move that may somehow align all the complex moving parts needed to kickstart local R&D and manufacturing.

I am unfortunately not completely convinced that it can!
Most Indian companies will be starting their R&D programs from scratch. It’s too late for them to create R&D infrastructure and manufacturing capacity using traditional methods. We will need a new research and development experience. Companies need hand holding in the absence of design requirements and in house domain experts. A new development methodology that will walk customers through their journey from imports to R&D all the way to mass manufacture in the shortest amount of time and at the lowest possible cost.

The key words will need to be collaboration, product platforms and a willingness to buy local.

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