How the electronics sector can be the next big thing for Indian MSMEs
The Indian Electronics Market is forecast to grow 6-7% for the next six years. The industry, which is currently at $100 billion, has great potential for growth. As the sector is on a growth path, micro, small and medium enterprises (MSMEs) can benefit a lot due to the shift in paradigm.
The best lesson that the industry learned from the pandemic was the need to have in-house manufacturing units. Due to the pandemic and trade being shut, several manufacturers and retailers found it hard to keep up with demand. For instance, semiconductors and panels were so scarce in India that the television industry had months of backlog as parts were not available. Hence, if MSMEs can up their game and be quick to grab the opportunities, electronics could become their next big thing.
Factors determining the change
The ongoing Russia-Ukraine war, border dispute, export tariffs, and the pandemic combined together have made the entire world realise that dependency should never be on one country for the supply of electronics, and in fact, all the other items as well. Hence, countries that were earlier dependent only on China for the supply of raw and finished goods have started seeking alternatives. Hence, India has a lot of scope if it can cater to the current global demands.
The veterans in the electronic industry have already started coming together to have in-house manufacturing to address the shortage of chips, panels, and semiconductors. We need more such steps that will give the much-needed boost to manufacturing as well as the export segment.
Entry of international brands into India
Consumer products in the electronic segment are a category wherein people want to go only with certain brands. Having said that, these were the same top names that were available in this space till now. However, seeing the boom in the segment, several international brands are now eyeing the Indian market on partnership mode. Hence, MSMEs have a great opportunity to partner with these brands for manufacturing, distributing, as well as retail.
Better informed consumers
Consumers today are well travelled, well read, tech-friendly, and more aware of their needs and demands. Brand value is definitely important to them, but more important factors are quality, features, and usage. If MSMEs can cater to these requirements and fulfil the demands, they can surely have a great running product in the market. Seeing the way D2C brands are rising in a quick span of time, launching new products, this is no more a huge marketing budget game. It’s about quality, features, and value.
As Indian consumers are one of the early adopters of technology, the transition is seamless. For example, in the last two decades, consumers have moved from landline to feature phones by Nokia to smartphones. The penetration is above 70% now. Amazon Alexa, Google maps, and Google Assistant are examples of how AI-enabled applications are ruling our everyday lives. With 5G reaching the masses in the next few years, a lot of IoT-enabled devices and appliances will replace the tradition ones. Every appliance from the kitchen and the bedroom to the living room and the bathroom would be enabled with latest technology to make lives simpler.
While the consumer is adopting latest technologies, the government is working as an enabler by helping create the required ecosystem. It is focusing on future technologies along with renewal energy, sustainable manufacturing using local products, reduced or even exempted taxes, in certain segments, for the initial few years. A lot of big manufacturers are looking at India as a great option to invest. The conducive environment will lead to increase in manufacturing.
Changing consumer behaviour and purchasing pattern
Consumers today are not only early adopters, but they also spend considerable time understanding the latest technologies. In the age of globalisation, they are no longer in oblivion. Sellers are able to attract more people with convenient purchasing options such as no cost EMI and buy now pay later. Consumers have options in abundance, and with the rise in ecommerce, they’re not only able to analyse before making a purchase but they also do not hesitate to try out new products and brands.
It is important to have quality and depth in manufacturing apart from emphasis on design to get a trustworthy and premium product in the electronic industry. We need to understand that, in the last decade, there were brands like Micromax and Videocon that were once at their peak, but they vanished from the market as they were not able to compete with the quality that international brands brought to the consumer.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)