Indian competitors in the export of electronic goods

India and the New Asian Economic Tigers: Although Indian electronic goods are being exported to advanced countries like USA, Britain, France, Germany, Holland, Japan, etc.

India has still to go a long way to assert itself strongly in international markets. Brand India is yet unknown and Indian items are largely bundled with non-branded products in markets abroad. 

There is a cut-throat competition against the already strong and established competitors from developed as well as New Industrialised Countries (NICs).

India’s main competitors are, in fact, the Asian NICs. They are not only giving a run for money to Indian goods in the global markets, but are also attracting large scale MNC investment in consumer electronics.

Excepting China, which till now relied mostly on its huge domestic market, the other NICs (South Korea, Taiwan, Singapore, Malaysia and Thailand) heavily rely on massive exports to sustain their consumer electronics industry and economic growth of the nation.

Since 1980s exports has become the mainstay of their economy. So much so that the economic experts are calling these countries as Asian Economic Tigers.

There economic prosperity even forced China to do some rethinking about its policies.

As a result even China shifted its focus on the export market in late 1990s and started encouraging joint ventures with multinational companies to increase its export operations.

Several factors are responsible for the dramatic breakthrough the NICs have achieved in the international electronics market.

The first and foremost factor is development of a strong component base providing cheap yet high quality inputs.

The second factor is heavy Foreign Direct Investment (FDI) by MNCs due to attractive and liberal economic policies. 

The third factor is the free use of reputed foreign brands. This critical decision has helped these nations to expand their global market share and increase export revenues in the highly priced branded segments worldwide.

As opposed to the Asian Tigers, the entire Indian consumer electronics industry displays very little enthusiasm for exports.

All these years, exports have not been a major concern for Indian companies. Sometimes, some hectic activity had been seen but that too only for short-term profitability considerations.

Mainly, this has been for getting benefits from the export incentives declared by the government from time-to-time.

What is urgently required is a proactive government policy on consumer electronics as adopted by the Asian NICs.

Within the framework of such policy, a proper strategy can then be formulated to boost the exports. Also, we must keep track of present and future competitors and do away with our deficiencies to improve the industry working.

Table : shows how India and the Asian NICs differ in operational features of their electronic industry. The Table clearly reveals that India is far behind the Asian NICs in competing on the global scale. IBO 03 Free Solved Assignment

Table: Comparing Operational Features of Electronics Industry in India and the Asian NICs

India	NICS
. Low production volumes	. Large volumes of production
. Fragmented capacities (mostly uneconomic) with many units selling in the domestic market,which was protected in the past.	. The average operational volume of companies is nearly 2.5 times of the Indian companies. Manufacturing capacities are well consolidated. Large units have capacities of international standards.
. Production factories are scattered and are often far away from components suppliers.	. Production is often integrated with component manufacturing facilities. Locations are well planned.
. Diffusion of latest products and technology has been sluggish in the past	. Special export zones parks offer improved location advantages, Conscious efforts to diffuse latest products and technology.
. Backward integration by companies has been lethargic Weak relationships with components suppliers.	. All leading export companies have opted for backward integration. They, thus, have better control over operations while ensuring good quality and low costs.
. Technology imports in bits and pieces, which led to assembly-oriented units and killed innovation.	. The presence of domestic component suppliers is a major factor for success in exports markets and attracting MNCs.
. Low labour cost is still the main advantage. It is, however, outweighed by many other factors including production scale, finance cost and infrastructure.	. Low labour cost was a major advantage in the early years of developing the industry.
. High selling prices due to low volume of production, high infrastructure expenses and finance costs.	. Competitive prices, mainly because of high volume production.

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