The consumer electronics industry in India has been in the midst of severe competition ever since 1991, the beginning of the liberalization process. This will only intensify further with the removal of QRs in 2001. At the same time with the steady increase in the purchasing power of people the sector has the amazing potential to grow enormously.
The penetration level of the electronics industry is abysmally low, especially in rural areas, thereby providing a vast untapped market. The electronics industry has responded well to the reforms process during the initial years with robust growth, but it has lost that momentum in recent times. For instance the colour TV (CTV) segment has clocked zero percent growth during the year.
A persistent problem for this sector is with respect to the B&W TV segment, which continues to be exempt from excise duties. This has encouraged the grey market. As far as the CTV segment is concerned one of the factors that has acted as a bottleneck has been the high customs duty of 35% on their input i.e. colour picture tubes (CPT) compared to other countries like Malaysia, Korea and Taiwan. This high customs duty is adversely affecting the manufacturers of CTVs. The MRP abatement of colour TVs is currently 30%, but since the floor rate of sales tax has been increased to 12%, the abatement level is low. VCR/VCP/VCD, not covered under the MRP, do not enjoy the abatement.
THERE has been a steady growth in the production of Electronic Product during April-March 2001-02 compared to the corresponding period in the previous year, according to the latest Ascon survey conducted by the Confederation of Indian Industry (CII). The survey shows that within the sector, the growth figures for different segments varied during the year based on shifting consumer preferences and other external factors.
In the consumer electronic sector, VCRs, VCPs, VCDs and DVDs have registered a growth of 50 per cent in production. Barring black and white televisions which have registered a negative growth of -25 per cent, the other consumer electronic items such as colour television, audio products, clocks and watches have recorded a moderate growth of seven per cent, five per cent and 10 per cent, respectively.
On the export front, however, there has been a marginal increase in export growth from 10 per cent during 2000-01 to 12 per cent during 2001-02, the survey indicates.
Further, the survey shows that the refrigerator sector has been seeing a steady growth in production at four per cent compared to a negative growth of - 5 per cent during the previous year.
However, while the growth in sales of refrigerators has gone up from -4.5 per cent during 2000-01 to four per cent during 2001-02, exports have fallen from a positive growth of 10 per cent last year to -6 per cent this year.
The survey shows that though the air-conditioner segment recorded a 15 per cent growth in production during 2001-02, it was lower than last year's growth of 20 per cent. Similarly, while water coolers recorded a marginal increase from 3.5 to five per cent, the growth in washing machines continued to be a negative -5 per cent.
The outlook for the next six months in terms of production of air-conditioners is 15-20 per cent, while that for sales and exports is in the range of 5-10 per cent and 0-5 per cent, respectively.
Both IT hardware (domestic) and personal computers recorded a high production growth of 15 per cent and 20 per cent, respectively. While the growth for the next six months for hardware has been pegged at 20-30 per
cent, that of personal computers has been estimated at 20-25 per cent, the survey shows.
The production of electronics and electrical appliances in 2000 continued its high growth from the previous year. The output for export outnumbered that for local distribution because domestic demand was weak.
Assistance by foreign strategic partners in expanding the export market and a shift in production bases to Thailand also boosted exports, which increased in value by 23.4% in US dollars from the 1999 level.
Domestic demand for the products was projected to increase slightly this year, given the economic slowdown and high competition.
Even so, exports are likely to continue to expand but at a slower pace because of lower demand, particularly in the United States where economic growth has weakened and the personal computer market has become saturated.
The export value of products in the first quarter of this year totalled US$6.28 billion, up 1.6% from the same period last year.
The increase was good as exports of the same products by other countries in the region, South Korea, Taiwan, Singapore and the Philippines, had dropped by between 1.5% and 5% in the same quarter.
However, given a steady increase in the import content, the industry needs to accelerate restructuring production to reduce its dependence on imported raw materials and to boost its added value
The penetration level of the electronics industry is abysmally low, especially in rural areas, thereby providing a vast untapped market. The electronics industry has responded well to the reforms process during the initial years with robust growth, but it has lost that momentum in recent times. For instance the colour TV (CTV) segment has clocked zero percent growth during the year.
A persistent problem for this sector is with respect to the B&W TV segment, which continues to be exempt from excise duties. This has encouraged the grey market. As far as the CTV segment is concerned one of the factors that has acted as a bottleneck has been the high customs duty of 35% on their input i.e. colour picture tubes (CPT) compared to other countries like Malaysia, Korea and Taiwan. This high customs duty is adversely affecting the manufacturers of CTVs. The MRP abatement of colour TVs is currently 30%, but since the floor rate of sales tax has been increased to 12%, the abatement level is low. VCR/VCP/VCD, not covered under the MRP, do not enjoy the abatement.
THERE has been a steady growth in the production of Electronic Product during April-March 2001-02 compared to the corresponding period in the previous year, according to the latest Ascon survey conducted by the Confederation of Indian Industry (CII). The survey shows that within the sector, the growth figures for different segments varied during the year based on shifting consumer preferences and other external factors.
In the consumer electronic sector, VCRs, VCPs, VCDs and DVDs have registered a growth of 50 per cent in production. Barring black and white televisions which have registered a negative growth of -25 per cent, the other consumer electronic items such as colour television, audio products, clocks and watches have recorded a moderate growth of seven per cent, five per cent and 10 per cent, respectively.
On the export front, however, there has been a marginal increase in export growth from 10 per cent during 2000-01 to 12 per cent during 2001-02, the survey indicates.
Further, the survey shows that the refrigerator sector has been seeing a steady growth in production at four per cent compared to a negative growth of - 5 per cent during the previous year.
However, while the growth in sales of refrigerators has gone up from -4.5 per cent during 2000-01 to four per cent during 2001-02, exports have fallen from a positive growth of 10 per cent last year to -6 per cent this year.
The survey shows that though the air-conditioner segment recorded a 15 per cent growth in production during 2001-02, it was lower than last year's growth of 20 per cent. Similarly, while water coolers recorded a marginal increase from 3.5 to five per cent, the growth in washing machines continued to be a negative -5 per cent.
The outlook for the next six months in terms of production of air-conditioners is 15-20 per cent, while that for sales and exports is in the range of 5-10 per cent and 0-5 per cent, respectively.
Both IT hardware (domestic) and personal computers recorded a high production growth of 15 per cent and 20 per cent, respectively. While the growth for the next six months for hardware has been pegged at 20-30 per
cent, that of personal computers has been estimated at 20-25 per cent, the survey shows.
The production of electronics and electrical appliances in 2000 continued its high growth from the previous year. The output for export outnumbered that for local distribution because domestic demand was weak.
Assistance by foreign strategic partners in expanding the export market and a shift in production bases to Thailand also boosted exports, which increased in value by 23.4% in US dollars from the 1999 level.
Domestic demand for the products was projected to increase slightly this year, given the economic slowdown and high competition.
Even so, exports are likely to continue to expand but at a slower pace because of lower demand, particularly in the United States where economic growth has weakened and the personal computer market has become saturated.
The export value of products in the first quarter of this year totalled US$6.28 billion, up 1.6% from the same period last year.
The increase was good as exports of the same products by other countries in the region, South Korea, Taiwan, Singapore and the Philippines, had dropped by between 1.5% and 5% in the same quarter.
However, given a steady increase in the import content, the industry needs to accelerate restructuring production to reduce its dependence on imported raw materials and to boost its added value