The manufacturing saga is seeing new turns in the consumer electronics space. Global biggies like LG, Haier, Electrolux and Whirlpool are finalising plans to sell ‘Made in India’ labels in mature markets like Europe and the US. At present, sourcing from India is largely limited to Saarc, the Middle East and African nations.
MNCs have already done their groundwork to develop India as one their prime global production hub, either by expanding capacity or through third-party arrangements. The export product basket is also being expanded in segments which have a developed domestic vendor base.
Global firms, no doubt, wish to take advantage of India’s low-cost production capabilities. “Firms are looking at India as an alternative global production hub to China due to similar economies of scale. Several mid-sized firms are exploring a similar option. This will ultimately pay off for India’s economy,” said apex industry body CETMA secretary Suresh Khanna.
Korean major LG already sources optical disc drives and refrigerators for Europe. The company intends to invest an additional Rs 33 crore this year to develop its Pune facility as an export hub.
LG India is eyeing an export growth of 19% in 2007, which will contribute some Rs 950 crore to its turnover. LG Electronics India MD Moon B Shin told ET that exports to Europe would be driven through high-end home appliances. “We want to make India a leading export centre and, hence, will look at regular investment in R&D, quality and manufacturing to ensure we make truly world class products,” he said.
LG’s global rival Samsung too is developing a new unit in Chennai to export all categories of home appliances by 2009. “Samsung will invest $100 million in the Chennai facility between 2007-11 to develop it as an export hub. We are pushing up exports to eastern Europe, Russia and Saarc,” said Samsung India deputy MD Ravinder Zutshi.
Chinese major Haier wants to kick off its India sourcing by December. While the company will initially source from a third-party production arrangement, it has plans to build a greenfield “export-oriented “ facility in India.
“Haier will source only those products from India which have an established domestic vendor base. It will be in categories like frost-free refrigerators and CTV,” said Haier India COO Pranay Dhabhai. Swedish firm AB Electrolux has plans to source products from India under an arrangement with Videocon. “They are already taking some white goods from us but talks are now on to make India one of their prime production hubs,” said Videocon Group chairman Venugopal Dhoot.
Whirlpool has recently set up a global design and development centre in Pondicherry. The company has also started sourcing of the brand for Europe from its domestic unit, with plans to make India its global production hub.
Global consumer durable majors currently source products from India across categories like CTV, refrigerators, washing machines, mobile phones and computer peripherals. However, sourcing is largely limited to the Middle East, CIS, the Saarc nations and Africa.