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Indo-china collaboration holds the key to global electronic manufacturing

 


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Sunil Kilaru, Director of Kalpin Enterprises Pvt. Ltd. (www.kalping.in)

Although it is quite impossible for India to succeed china in a sudden turn of events but it also hold a great advantage on its part whilst coming along with low labor costs. This way, both India and China can get along together with mutual cooperation and rule the global electronics manufacturing markets in a combined effort.

We can further correlate the establishment of Samsung’s manufacturing unit in the electronics sector to that of Maruti in the auto industry in the 1990s. Even though the collaboration brought the industry to a standstill for a while, it eventually brought a big upsurge in the auto industry while bringing all the scientific manufacturing techniques to Indian Territory.

Moreover, India’s cost of labor in the manufacturing sector stood at $1.72/hour in 2015 in comparison of $37.96/hour in the USA at that point of time. Even a highly populated China got double the manufacturing labor cost of that in India. Secondly, the manufacturing programme phased by the government is bringing in all the efforts to shift semi knocked down (SKD) to completely knock down (CKD) kits. This would further result in the import of more components than just the semi-assembled parts and help in generating more jobs in the process for the local people. Still, just shifting from SKD to CKD only isn’t enough and the scale of manufacturing in the country also needs to be increased alongside.

Also, we can’t achieve the same by just controlling the domestic markets and government along with the local trade giants must look forward to the global markets, which should be carrying strong policies in order to accommodate better incentives in return of export of electronics goods. This would then create a more conducive environment for more FDI into the country from global electronics component manufacturers and would help in tackling with the demons of unemployment. This was the same thing which happened at the Maruti’s auto manufacturing collaboration with Suzuki in the 90s.

As of now, total cost incurred for transporting 1tonne of freight over 1km stands at Rs 2.28 by road, Rs 1.41by rail and Rs 1.19 for waterways respectively and thus we can say that transportation through waterways is far more cheaper than other modes.

This is why India need’s to build more Commercial Ports and its geographical location can come as a supportive factor in same regards. Moreover, the overall logistics costs can be minimized to a great extent while the add on incentives for the exports would serve as an icing on the cake.

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