INSIDE VIEW. There is immense potential for growth

India’s consumer durables industry is growing at a consistent rate, but most of the demand is met through imports. India’s contribution to the GDP from its manufacturing sector is lower than the value added even by its neighbouring countries that have seen a decline in the last few years. China stands as a shining example of a country that has risen from a manufacturing contribution of a mere 2.7 per cent in 1990 to as much as 32 per cent in the past year. The government is determined and working on a collective approach to resolve key issues. These include demand generation, profitability and sustainability, improving the efficiency of the global supply chain and creation of more employment opportunities. The government launched its most ambitious initiative — Make in India — stressing on increasing domestic manufacturing in electronics, as this sector has been contributing to the Current Account Deficit. Recently, the first 20 city names of the Smart Cities programme were announced and initiatives taken to attract FDI in the manufacturing sector. The extension of the Modified Special Incentive Package Scheme (M-SIPS) by five years will also act as a catalyst and its broadened scope, which covers 15 new product categories, will trigger significant growth of the sector. Industry players are also supporting the government’s move to propose 17-18 per cent GST in Budget 2016-17 for bringing uniformity in the import duty for all goods. These and other initiatives have been taken to improve the ease of doing business in India.

But India still remains a highly underpenetrated market, with sub-par levels as compared to the global average. The need of the hour is to contemplate on the challenges which hamper the growth of the economy. The overall urban penetration has been pretty high for the consumer durables sector.

The rural and semi-urban areas are where the biggest potential for growth lies, and they will fuel industry growth through first-time sales. Currently, rural areas contribute to 10 per cent of overall sales and hence there is a strong need to undertake demand generation. The government should provide incentives to manufacturers for exports to identified markets. There is also a need to improve the procedural, regulatory and custom approvals, refunds, and clearances. India has the potential to develop and manufacture electronics hardware for the global markets and meet its future requirements. The way forward is to nurture a healthy relationship between the government and the industry to put India in a strong position on the global electronics map.

The writer is President, Consumer Electronics and Appliances Manufacturers Association and Managing Director, Panasonic India and South Asia

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