The solution for this is to have an export-led growth for the success of 'Make in India'. This would require a tax structure that protects the domestic industry, but at the same time has an export-linked strategy.
Electronic equipment repair services, a fast growing business globally, can generate revenues of $1 billion annually in India, and has potential to create one million direct jobs in five years. Sensing its untapped potential, industry association MAIT has formed a task force to create a road map for developing it as a separate vertical and to approach the government to provide incentives for its growth.
“You will be surprised that most manufacturing jobs (mainly assembling components) are low paying, but electronic repair services are high paying as diagnostic skill is in high demand. It is knowledge-based work as opposed to assembling. For a country like India, which created a niche for itself in BPOs and KPOs, such service cannot just create skilled jobs, but also brings in FDI. It can give a strong push to ‘Make in India’,” MAIT president Nitin Kunkolienker told FE.
Analyst peg the global market for electronic repair services to surpass $155 billion in 5 years due to cost benefits of repairing old or costly equipment as opposed to disposing of. Besides, the demand for refurbished products is rising globally, primarily led by aspirational buyers from developing countries who want better experience at affordable prices.
In India, the organised market for such services is very small at present and is generally used by companies as a support feature through service centres.
“Our initial research suggests that it can easily generate one million direct jobs in five years. We foresee that it can earn revenues of $1 billion annually to start with. More study is required, though. But it does not require a value chain like manufacturing or a state-of-the-art infrastructure. It has a high revenue churn off,” he noted.
Kunkolienker explained that large electronic companies, which are mostly multinationals, have their major manufacturing bases in globally competitive areas, where cost of doing business is very low, besides having an efficient warehousing and logistics sector. “It’s largely an import dependent system in India. If you look at volume that our domestic demand gives to them, it is hardly one-three week of global production. So, it does not make a compelling case to relocate manufacturing, even for Asia-Pacific, here.”
The solution for this is to have an export-led growth for the success of ‘Make in India’. This would require a tax structure that protects the domestic industry, but at the same time has an export-linked strategy. But, such growth is not easy to achieve and would require, among other things, efficient infrastructure and good ports. This is a medium- to long-term agenda.
“Also, do not forget that countries like China have huge spare capacity and are way ahead. So, what can be the alternative? We are working on electronics service repair export hub model. Its outsourcing can be an alternative. Our import bill is huge (around $55 billion annually) with 20% products going through repairs. Plus, in India, the product usage cycle is long. With demand for electronics increasing every year, the cost of repair will also go up,” Kunkolienker explained.
Sensing the opportunity, MAIT has created a 7-member task force, headed by Sudipto Ghosh (executive director, Lenovo). It will draft the road ahead for electronics repair services.
“How do we move ahead, should we take on board more associations, etc? Second is to explore the policy outline that we would want the government to look at. I will be personally overseeing this. The task force will take around three months,” Kunkolienker said.