Hardware firms target India

29 May 2013

NEW DELHI: The booming demand for consumer electronics in India will be fulfilled by overseas brands, such as Samsung, Panasonic and LG, since local tech manufacturing capacity has failed to develop, according to leading industry figures.

"India got carried away with the success of software," Suresh Khanna, secretary general of India's Consumer Electronics and Appliances Manufacturers Association, told Bloomberg.

"We never developed newer, smarter technologies and largely ignored hardware," he added.

Khanna said that while around a quarter of TVs sold were assembled locally by companies including Samsung and LG Electronics, none of the core components were made in the country.

He pointed to the potential size of the market that local makers were missing out on, estimating that foreign brands would be operating in a market selling 27m flat-screen TVs by 2017, up from the current figure of 7.2m.

He also said that no smartphones were made in India, although Samsung has recently announced plans to start manufacturing locally, citing the advantage of a faster response to the market and customer needs.

"Samsung and LG weren't even here five or six years ago," said Ganesh Ramamoorthy, a Gartner analyst in Mumbai. "Now they've swept the market away."

His colleague Roger Sheng, a research director at Gartner, said: "India's situation reminds me of China 15 years ago. It hasn't taken the necessary steps to develop the technology."

The Indian government is attempting to rectify that, offering a 25% subsidy on capital costs to set up technology plants, with Samsung, LG, Panasonic and Toshiba poised to take advantage.

Panasonic is building new manufacturing facilities for flat-screen TVs and semiconductors and plans to back its push into India with a $250m marketing spend.

"India is growing like most other developing countries where there are a lot of opportunities in consumer electronics and appliances," Panasonic President Kazuhiro Tsuga told reporters during a visit to Mumbai last month.

"Our philosophy has been to not simply import products from other countries," he said, because items "should be specially customized for Indian consumers, keeping local needs in mind."

Data sourced from Livemint, Bloomberg; additional content by Warc staff