“Govt is doing enough to support domestic manufacturing; it is now time for the industry to take action”

Friday, July 18, 2014:  In January 2014, Trust Research Advisory named South Korean electronics major Samsung as India’s most trusted brand. When a brand gains the trust of consumers, it also gains market share and product acceptance. Samsung has been one of the first companies to invest under the government’s initiative to boost electronics manufacturing in India.

Srabani Sen of Electronics Bazaar caught up with Ravinder Zutshi, deputy managing director, Samsung India Electronics, to understand how Samsung is contributing to the electronics manufacturing ecosystem in India.

EB: What has Samsung achieved under your guidance?

I have been part of Samsung Electronics’ journey to success in India from the very beginning. One of my early efforts was to set up a strong distribution system in the consumer durables space, which has been the foundation of the company. Over the last several years in Samsung, I think my biggest contribution has been to make Samsung one of the most aspirational brands in India and to establish it as a ‘top-of-mind consumer product’ company, across product categories. We have been successful in creating a robust ecosystem consisting of partners and consumers and we have grown severalfold during my tenure.

EB: How is Samsung contributing to the electronics manufacturing ecosystem in India?

Our manufacturing is based on localisation. A large number of local vendors work with us in Noida and Chennai, where we have two large manufacturing units for consumer electronics and mobile phones. While the Chennai facility manufactures only consumer electronics products, at Noida, we manufacture both consumer electronics and mobile phones. Wherever possible, we procure electronics components and other raw materials for our products from local vendors situated around our facilities. However, due to the high end nature of our business, a large part of the components are still imported.

EB: Any plans of Samsung participating in semiconductor manufacturing in India?

No, we have not been involved in any such discussions.

EB: What is your take on the two upcoming fabs in India?

Well, that is a good beginning. I think the government has done a great job in terms of inviting corporate houses to invest in fabs. I am sure this will go a long way in developing a very robust ecosystem for components that are not available in India at the moment. We are looking forward to such facilities in India with the hope that they will help in reducing the import burden of some components.

EB: What is Samsung’s investment under the Modified Special Incentive Package Scheme (MSIPS)?

Under MSIPS, Samsung has invested Rs. 8000 million to enhance the production line for its Galaxy series of smartphones and tablets and, eventually, to increase productivity at the Noida plant. We made the investment last year in February, and the work related to this investment finished by October.

EB: Are the mobile phones manufactured in Noida sold in the domestic market?

By and large, India-manufactured mobile phones are sold in the domestic market. However, some are also exported. This is a big initiative by Samsung as local manufacturing helps to create and expand the market in India and helps us to cater to the strong domestic demand. We want to showcase the manufacturing capability we have in India.

EB: The government is currently supporting electronics manufacturing. Do you think it is on the right track?

The government has initiated several measures to improve the industrial climate and manufacturing ecosystem within the country. This will certainly help in building the confidence of the industry and Samsung fully supports these initiatives. The most important initiative taken by the government in this regard is the announcement of the National Manufacturing Policy (NMP) under which the implementation of MSIPS was a very bold step.

The action plan of the government seems pretty clear—revive the investment cycle, sustain reforms, create skilled jobs and increase exports. Earlier, it did seem that India had missed the bus but now it appears to be on the right track. The government has an ambitious plan up its sleeve, but will need to be really pushed forward.

EB: But despite government support, we still do not see much of manufacturing happening in India…

The government reacted rather late, but whatever it has done in the last two years is commendable. I am sure more and more companies will come forward with investment proposals. I believe there are lots of applications pending with the Department of Electronics and IT (DeitY).

EB: Domestic companies complain that components that are being imported are cheaper than what they are producing in India…

Cost is not the issue. The issue is that there has to be demand in order to build up that capacity. And capacity build-up will only happen when people start investing in local production. So, once you start having local production, the components industry will surely thrive. Anybody who puts up a components factory has to look at scale, which is very important. And scale will only come when local manufacturing happens. So you see it is an interlinked story. But I am sure that with these new government initiatives, people will definitely invest in local manufacturing of electronics hardware.

The central government and the state governments are doing enough to support domestic manufacturing; it is now time for the industry to take action. So, everybody needs to think and start investing in India.

EB: What is your current strategy in India?

Our strategy is to grow our business significantly across categories by introducing several innovative products with differentiated features in India, including for the entry-level segment. We provide the most innovative products with the best possible technology to our consumers.

At Samsung, our constant endeavor is to meet the requirements of the consumers. We understand the importance of timely and relevant communication, and we use all the available media in a creative and innovative manner—be it television commercials, digital and social media, or interacting with our consumers extensively through our vast dealer and distributor network.

EB: What is your focus this year?

Our focus this year is to strengthen our existing businesses by adding new, innovative and technologically advanced products, yet at an affordable price. We will also focus on developing a bigger consumer base for our products. Besides, our aim is to attain the leadership position in consumer electronics and smartphones. We will also focus on expanding our distribution network and create more exclusive stores throughout the country to provide our consumers with better product experience.

Innovation and technology have always been our differentiators, and we will work on these strengths much more as we move forward with our business plans.