'Manufacturing firms need to shift to designing in India': Ajai Chowdhry

'Manufacturing firms need to shift to designing in India': Ajai Chowdhry
1 Dec, 2021

While the government’s push to make India a mainstay in electronics manufacturing has mostly been harnessed by global firms, there are still those who believe Indian firms stand a chance. Ajai Chowdhry, co-founder of Hindustan Computers Ltd, is one. In an interview, Chowdhry, who serves as chairman of the Electronics Sector Skills Council of India, discussed the country’s run in electronics manufacturing, its faults and what it needs to do to make an impact. Edited excerpts:

How long do you think it will be before we see wider application of emerging technologies like virtual reality (VR) and augmented reality (AR) in India?

VR/AR are now emerging quite strongly, even in India. I actually work with a startup that has done phenomenal work using the technologies for architectural design. They have also created a metaverse-like solution using VR/AR for doing collaborative work globally on anything involving architecture and buildings.
The problem right now is that these head-mounted displays etc. have been pretty expensive. I think that is where the change has to come, with people starting to make them in India. This company I mentioned is now starting to make it in India and is even starting to use it for skilling, and planning to work with Common Services Centres in villages.

How will making in India make these devices more cost-effective?

What we have done in the last 3-4 years is a phenomenal amount of work on getting manufacturing to India. But what’s really happened is that the width in manufacturing has happened in electronics, but the depth is still not good enough, which is what is required. Depth happens if you start designing in India. When you start designing here, then you can use components that are available in India. Some will be imported, but some are available. If we start making products in India, then we will be defining the components that we will use for it.

Are you saying that we need to move to more original design manufacturing (ODM) models?

Definitely. Today, everybody is an electronics manufacturing services company. Dixon, Sahasra, Foxconn, all these are mainly EMS manufacturing companies. But there’s a major change happening. For example, Foxconn has now set up a research and development centre in IIT Madras. So, they are now planning to design products in India. As we design in India, you will see more depth happening and we will be creating a market for our future semiconductor plants.

What would designing for India mean?

You need to firstly look at Indian conditions, and design products which are, for instance, repairable. A lot of products from abroad are not repairable, which is a major requirement in India because you don’t throw away products in India. Designing in India is very important, and all the manufacturing that’s come to India today is from global companies. They are all designing in China, South Korea, US, etc. and tend to buy components from those countries.

Do we need Indian firms to step in in this direction?

Yes. Today, they have got incentive for manufacturing. The production-linked incentive (PLI) has come into every part of the industry today. But if you want to think five years hence, what happens? Your PLI is over and there’s no value addition that you have done in the country. So, it’s very good for them to move from original equipment manufacturers to ODMs. That’s the path Taiwan and China followed as well.

What do we need to get depth into manufacturing?

Other than PLI, there’s a scheme called SPECS (Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors), which is fundamentally to get components to be made in India. That is where the real depth will start to happen.

I think the government has to make SPECS much broader. Today it is inviting large companies, but I think electronics is all about small and medium enterprises, and they were big in India before 2005 when WTO kicked in (the IT agreement of the World Trade Organization brought customs duties down to zero for many products in 2005, allowing global firms to enter). SMEs bore the brunt because they couldn’t compete with the cost in China.