The presence of the unorganised electronics market in Delhi is affecting the business of organised market players
Delhi, home to one of the biggest electronics markets in Asia—Lala Lajpat Rai market—is popular as a trading hub for electronics. On the other hand, the national capital region (NCR), which comprises Gurgaon, Noida, Faridabad and Ghaziabad, is emerging as a manufacturing base for the electronics industry, though at a very slow pace compared to other regions in India.
While the NCR has the manufacturing facilities of companies like LG, Samsung, Intex, etc, Delhi has a few manufacturers of capacitors, TV tubes, LED lighting, etc. These include Phoenix Contact (India), Continental Device India Ltd, Deki Electronics Ltd, Samtel Color Ltd, Havells India Ltd, Surya Roshni Ltd, C&S Electric Ltd, etc.
Says Manish Kwatra, CEO, Metro Electronic Products, a distributor of electronic components, “Even though some manufacturing has started taking place in the NCR, Delhi is still the main distribution centre of electronics for north and east India.”
According to Pankaj Gulati, executive vice president and COO, Continental Device India Limited (CDIL), a manufacturer of electronic components, some companies have their manufacturing bases in the NCR and not in Delhi, because of the difference in operating costs between Delhi and other regions of the NCR. For example, the cost of labour is very high in Delhi compared to Gurgaon and Noida. “This is because of the minimum wages set by the Delhi government,” he says.
Strengths and weaknesses of the city
Delhi has a number of trading markets like the Lala Lajpat Rai market, Bhagirath Palace and Nehru Place for electronics and IT products. The main advantage manufacturers and traders of Delhi and NCR have is their close proximity to the corporate and government decision making bodies. Traders’ associations like All India Radio and Electronics Association (AIREA) and Central Radio and Electronics Merchants Association (CREMA) play important roles in voicing the concerns of the traders to the state governments. Adds Pankaj Gulati, “Delhi and NCR enjoy the advantage of being located close to manufacturing hubs like Baddi in Himachal Pradesh, which makes it easier for the manufacturers in Delhi to approach the factories located there.”
Unfortunately, Delhi also has a huge unorganised market, which is flooded with cheap electronic goods from China. Informs Pankaj Gulati, “This unorganised market is dependent on cheap components imported from China, which are usually used in electronic devices like mobile chargers, etc. Since these unorganised players don’t pay any taxes, they can’t buy from the organised Indian players. Hence, it is the domestic organised manufacturers who have to bear the brunt, in terms of low sales.”
On the infrastructure front, the shortage of power is a problem, which is common to both Delhi and the NCR region. While Delhi has a shortage of land, the manufacturing units in NCR have developed mainly due to the huge availability of land. Manish Kwatra, however, believes that Delhi and the NCR can be promoted as a major hub for electronics manufacturing units if a combined approach and joint initiatives are taken up by the government, manufacturer associations and trade bodies.
With the union government trying to boost electronics manufacturing in India, state governments are also coming up with their own policies for their local electronics industries. The Delhi government has recently announced some initiatives with the aim of helping the capital become a manufacturing destination, which in turn, could attract investments in electronics manufacturing.
Delhi government plans to set up a knowledge based industries (KBI) park in Baprola, west Delhi, and a multi-level manufacturing/services hub in Ranikhera, north Delhi, which it hopes will attract investments worth Rs 700 billion by 2015, and generate employment opportunities for nearly 300,000 people.
For the KBI park at Baprola, the Delhi State Industrial and Infrastructure Development Corporation (DSIIDC) is developing 3,11,608 sq m (77 acres) at the cost of Rs 12 billion. The project will cater to the specific needs of the information technology, ITES and R&D sectors. The Municipal Corporation of Delhi has allocated land for the development work to start in the Baprola project while approval from the Delhi Development Authority is awaited. The project, with metro connectivity, is in tune with the industrial policy for 2010-2021 and will be operational by 2015, providing direct employment to 100,000 workers and indirect employment to another 170,000 people.