PMA policy will lead to increased demand for T&M equipment

As PMA policy aims at boosting electronics manufacturing, it will indirectly lead to increased demand for T&M equipment. The policy will also increase the necessity for more testing labs in the country

By Richa Chakravarty

Friday, 31 May 2013: A big business opportunity is brewing for the test and measurement (T&M) industry in India, due to the boost given to indigenous manufacturing by the recent preferential market access (PMA) policy. This policy encourages domestic manufacturers to either entirely manufacture products in India or to do at least 30 per cent value-addition to every product they make from imported components, if they plan to sell to government departments. In both the cases, testing individual components as well as the finished products has been made mandatory for all manufacturers to qualify under the PMA policy.

In such a scenario, it is obvious that with the growth of the electronics manufacturing sector, the T&M industry will also grow and will witness increased demand. This will happen because the PMA policy will also increase the necessity for more testing labs in the country.

Present capacity of testing devices
According to a senior official of the Department of Electronics and Information Technology (DeitY), the PMA policy requires all manufacturers to test not only the components that they import and use in assembling a product, but also the finished product, in order to either self certify them or test them at government recognised labs. “All components in the bill of material (BOM) require testing. Each input needs to be tested along with the testing of the final product. Testing, being an essential part of the criteria to qualify under the PMA policy, will eventually trigger growth for the T&M industry in India,” he says.

However, the country’s existing capacity for testing electronic devices is inadequate to meet current demands. Consequently, Kapil Sibal, the minister of communications and IT, recently encouraged investment, both FDI and domestic, to set up additional testing lab infrastructure for safety testing of electronic devices. Recently, seven labs have been recognised by Bureau of Indian Standards for the testing of electronics products (see table).

Impact of PMA policy on T&M industry

The T&M industry in India is expected to witness a huge positive change in the coming years due to the government’s aggressive efforts to boost manufacturing. Says Sadaf Arif Siddiqui, education programme manager, Agilent Technologies, “Testing is an integral part of manufacturing and assembling. With the government encouraging the setting up of assembling lines, the T&M industry in India will definitely get a boost. Since the introduction of the PMA policy is very recent, it is difficult to comment on the increase in demand for T&M devices right now. However, we are hopeful that the policy will have a positive effect on the T&M industry.”

“It is needless to say that the right policies and regulations will certainly give a push to the T&M industry. I believe every T&M player focusing on segments like telecom, IT and power electronics will benefit from the PMA policy. It indeed is a small but significant step taken by the government to boost manufacturing in the country,” shares Sumit Sharma, marketing manager, India, Good Will Instrument Co Ltd.

However, the industry feels that the T&M industry will get a boost only if more manufacturing rather than assembling takes place in India. Says Madhukar Tripathi, manager telecom segment indirect channel, Anritsu India Pvt Ltd, “The growth opportunity for the T&M industry seems to be immense. However, the T&M industry will grow more if we have manufacturing units here in India rather than just units assembling the devices. Depending upon the function of the component, there are multiple interfaces one needs to test for these devices.”

Some sources in the T&M industry feel that the PMA policy may have minimal effect on a few players. Informs Sai Venkat, India marcomm, Tektronix India, “In an assembly job, components are tested for their performance output while in manufacturing, there is a lot of board level testing. Tektronix focuses on the R&D vertical where instruments are used for testing PCBs. As our product line caters to a different vertical, the PMA policy will have minimal impact on our business.”

Sharing the same view, Anil G Chowta, director, Falcon Electro Tek Pvt Ltd, says, “Mandating testing of components will definitely drive the growth of T&M devices; however, the amount of testing required also depends on the nature of the products and the level of testing. IT and telecom products require heavy testing that can trigger growth of T&M instruments.”

Another concern is the level of testing. Testing the huge volumes of imported components will be cumbersome. So, will these be tested on a random basis? Explains a senior official of DeitY, “We expect the same level of testing that is required during the production process to be done by the assembling units also. Hence, all components should be thoroughly tested and no random testing and checking is acceptable from the companies.”

According to Tushar Bhavsar, head, IHV sales and strategy, The Motwane Manufacturing Company Pvt Ltd, “Ensuring that the manufacturers are testing the complete set of components and not doing it randomly is a difficult process to evaluate. Testing of hard disk drives requires each component in the drive to be tested in its individual capacity, which is a cumbersome process. Hence, evaluating the level of testing and ascertaining the 30 per cent value-addition in the production process seems difficult.”

T&M devices that will witness more demand
If they rely on individual strengths, T&M companies have good scope for growth as devices ranging from the low, medium to high-end will be in demand. With energy efficient ratings gaining ground, electrical safety testers will be in demand. Basic devices like analysers, oscilloscopes, power supplies, signal analysers and digital multimeters will register growth in demand.

For IT products like laptops and desktops, optical and RF testing along with testing of voltage and current levels will require protocol testers, display testers, and AC-DC power supplies; hence these will all be in demand.

For telecom components, RF and signal testing devices and high -frequency testing devices will be in demand. Instruments like scalar network analysers, spectrum and protocol analysers will be in demand for this purpose. Apart from this, video pattern generators, power meters and power analysers will also witness demand in the future.

Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine