MT in conversation with Arjun Bajaaj, CEO and Founder of Daiwa, sheds light on the TV manufacturing industry and how the ongoing Russa-Ukraine crisis affects it. “The recent Chinese shutdown, as well as the Russia-Ukraine crisis, have had an influence on the semiconductor chip scarcity. Because India relies on China for semiconductors and Russia is one of the world’s leading manufacturers of rare metals required in semiconductor manufacturing, this, along with the existing COVID-afflicted semiconductor scarcity, has had a negative impact on the sector,” said Arjun Bajaaj, CEO and Founder of Daiwa.
How did sales go in the previous fiscal year? Which size TV is the most popular choice among the consumers?
Given that television was the primary source of entertainment during the lockdown, the year 2020 was a success. However, compared to 2020 sales in 2021 were low owing to weak market sentiments and factors such as lockdown due to the second covid wave, significant price volatility, fluctuating freight rates, and so on. From April to June 2021, production was at just 20% of capacity, making those three months extremely difficult, yet we still met our objective despite the drop in demand. During these years, the most popular size TV in India was 32″ since consumers were also price concerned due to market pessimism. However, the 43″ and 55″ UHD screens have recently gained popularity among customers due to their promising viewing experience.
Is ‘semiconductor chip shortage’ still a problem for Indian tech manufacturers?
The recent Chinese shutdown, as well as the Russia-Ukraine crisis, have had an influence on the semiconductor chip scarcity. Because India relies on China for semiconductors and Russia is one of the world’s leading manufacturers of rare metals required in semiconductor manufacturing, this, along with the existing Covid-afflicted semiconductor scarcity, has had a negative impact on the sector. As a result, many firms have seen lower output, longer delivery times, reduced discounts, and increased costs. This has not only impacted Indian manufacturing but has also exacerbated global conditions, with no relief in sight for at least a year or two. The only possible alternative for the industry to move forward would be a more nimble approach by the commercial and public sectors.
Why is it critical to focus on R&D in India and Make for India rather than Made in India? (need inputs here, there is not sufficient data on the internet)
It is pertinent for companies in India to focus on R&D and develop our very own designs rather than relying on other countries for innovative designs. It gives us a huge cost benefit when we make our own products; it boosts our growth and independence from international economic dependence and also helps manage India’s specific needs. It furthers the idea of constructing a synergetic production-consumption cycle in India itself. Currently, we rely on many global brands from other countries for designs, for example in the mobile phone sector, most designs come from China or US. So this is the reason why not many Indian mobile brands are shining in the global market or even in India. It is crucial for India to create global brands by listening to customers and adding original features and innovating to create our own brand of original products that can be exported as well. This Make for India concept will give us a competitive edge in the global market.
What do you hope that the government should do to support Indian technology manufacturers?
Indian consumer electronics and consumer durable firms are rapidly expanding and attracting the attention of global organizations as profitable investment options. To make India an attractive location for manufacturing, the government must foster the industry by establishing a favourable policy framework, beginning with the implementation of PLI schemes for the Indian TV manufacturing segment to combat the spike in raw material costs and help balance the high input costs. Also, because smart TVs are no longer a luxury item but rather a basic necessity in families, the GST on TVs larger than 32″ must be decreased to 12-18%, as the present 28 per cent GST is suffocating the sector and hindering growth. Finally, because there is no display fab in India yet, the open cell duty should be reduced to zero per cent in order to bring relief to the Indian TV manufacturing industry and stimulate growth.
How the current crisis (Russia – Ukraine war and the fresh lockdown in China) has affected the Indian TV manufacturing industry?
The Russia-Ukraine conflict has further exacerbated the chip scarcity crisis, as both countries are the main producers of various important resources & raw materials in chip fabrication, which were already in short supply. The new Chinese shutdown has severely undermined business and pushed corporations to reconsider their future plans. Shipments are constantly being delayed owing to a series of lockdowns in China, resulting in little to no activity on Chinese marine ports, complicating the planning process. And if this trend continues, manufacturing will suffer because the sector is already suffering from a lack of raw materials as a result of the COVID-19 situation. If the lockdown is extended longer, the sector will face the repercussions, with supply chain disruption causing the output to stall, all due to India’s reliance on China for raw materials.
Furthermore, the Indian rupee has depreciated to new lows in the last two months, further burdening enterprises’ operating cash and resulting in the inability to pay consumer promises on time. Following this, the industry anticipates that TV prices will climb further as the cost of raw materials such as copper, plastic, and so on have risen and are predicted to rise continuously. Manufacturing Today