Consumer Electronics – New FDI Destination

Despite several obstacles the consumer durables marketĀ  Google TV is on the way to achieve a steady and phenomenal growth rate which is the result of the rising purchasing power of the Indian middle class. Indians are adopting the latest technology products very rapidly and that is why the technology-oriented products are doing better in the market.

The demand and imports of the electronic products, along with the components is increasing 20-25% annually. Not only the hunger of adaptation of the new products but the increasing consumer awareness is also prompting the quality-consciousness.

Majority of consumer durables supplier groups in India are Multi Nationals which are here to tap the world’s fastest growing consumer electronics market. The growth of this segment during the year 2007-08 is estimated to be 12.5 over the previous year of 2006-07. The estimated production of the consumer electronics segment during 2007-08 was Rs. 22,500 crore. As far as exports are concerned, the total estimated exports growth of the electronics & IT products was 14.5 over the previous year.

Potential FDI Avenue

Being stimulated with the consumer durables market’s growth, the foreign giants are firming up their investments in India. Among their considerations is the willingness to establish India as their manufacturing hub for operations spread across the world. This is the reason why the electronics and electrical sectors have been attracting the highest FDI in India. Also, due to the strengthening rupee and its impact on the input costs for these import-intensive industries, this segment has potential to attract even greater FDI.

Other facts that act as shot-in-the-arm for the multinationals are conducive policy measures, availability of skilled manpower and lower input cost and logistics.

Investments getting shape

One of the leading electronics giants Samsung India, is set to develop its vendor base in Chennai for its global operations. LG Electronics is investing at its Noida and Pune centres to boost its export potential.

Reports indicate that investment plans of Haier and TCL are also in the pipeline. Especially, TCL, a leading giant of China, is planning to establish a manufacturing facility in India for its domestic as well as global market.

According to Mr M A Dhandapani, who is the member of Consumer Electronics and Appliances Manufacturers Association, the consumer electronics segment has been successful in attracting huge investments in R&D as well as capacity augmentation.

At the same time, the Director (sales & marketing), LG India, is upbeat about reaching Rs 1,000 crore annul export target in view of the promising markets of Europe, West Asia and Asia.

Another forerunner in the segment, Haier India, has recently acquired a manufacturing facility in Pune for refrigerators, colour television and washing machines.