After battling the steep price hikes and shortage in supply of components, the country’s consumer durable makers are getting a strong sense of deja vu. As supply of key components begin to dry up, with freight containers stuck at important port like the one in Shanghai (China), manufacturers are staring at another round of shortages in the near-term.
According to Avneet Singh Marwah, Chief Executive Officer of Superplastronics, which manufacturers and markets smart TVs under brands like Kodak, Thomson and Blaupunkt, superior demand and lack of enough supply has led to shortage of larger TV sets already. “For example, we are out of 65-inch models already”, he told Business Today.
Kamal Nandi, business head and executive vice-president at Godrej Appliances, that markets air conditioners and refrigerators, similarly explains that with shipment containers stuck at ports in China, key components are in short supply here. Nandi pins the reason to supply bottlenecks arising out of the severe lockdown in the neighbouring country. China supplies over 70 per cent of the compressors to India that are used extensively in cooling products like in ACs and refrigerators.
According to industry experts, with temperatures surging early this year, demand for cooling products are already higher – by about 10-30 per cent, depending on markets. The shortage of components like compressors and chipsets could lead to another round of price hikes to the tune of 5-10 per cent. The industry had already issued a 7-10 per cent hike by April due to rising cost of materials.
“Prices of metals like copper and aluminium have shot up. Additionally, plastics have become costlier. And with currency exchange rates skewed against Indian importers, costs have gone up significantly”, points out Arjun Bajaj, CEO of TV maker Videotronics that makes Daiwa brand of smart TVs.
The recent obstacle is not new to Indian manufacturers though. In the past two years — since the COVID pandemic began in early-2020 — makers of consumer durables and electronics have faced similar challenges multiple times. Last year, when India and China were at loggerheads due the border dispute in Ladakh and Arunachal Pradesh, importers had alleged foul play against Chinese authorities, who had deliberately delayed shipment of containers from its ports.
India’s heavy dependence on China-made components has only made the matter much more complex. In spite several initiatives like Make in India, Phased Manufacturing Program and Modified Special Incentive Package Scheme (M-SIPS), share of local manufacturing in important components like compressors continues to be low – at 15 per cent of the local demand. Experts argue that unless this dependency is sorted out, supply chain bottlenecks could persist over the long term. Business Today