India: Investment, production and export going up

A wide variety of connectors are manufactured in India. These include rack and panel, terminal, PCB, flat cable, circular, heavy duty, LAN, D-subminiature, coaxial and audio-vicdeo connectors.



There are more than 10 MNC connector makers in India. Of the Indian makers, some are large, but most the small-scale. Says K.S. Mathur, technical manager at Radius Industries, “Around 15 domestic makers have complete manufacturing facilities in India. Manufacturers in the small-scale sector do not have complete manufacturing facilities. They make products on demand from some reputed manufacturers or they make connectors for some brands.”



The industry seems to be in a state of flux with domestic makers leaving and joining every year. However, MNCs seem to be steadily growing and increasing their capacity. Says Kumar Kishor, sales manager of Molex (India) Ltd, “New makers are entering the field but not exclusively for connectors; they are making other types of products too.”



The investment in the industry increased by 16.73 percent in 2004, to IRs. 3,979.83 million (US$88.30 million at IRs45.07:US$1) from IRs. 3,313.87 million (US$73.52 million at IRs45.07:US$1) in 2003. However, the production showed a 20.78 percent fall in 2004, to

372.28 million units in 2004 from 449.65 million units in 2003.





The growth of the telecoms industry in India and China is said to boost connector production. It is estimated that the production increased increased significantly in 2005. Says Kishor, “Production has increased around 25 percent in 2005.” Adds Anil Gupta of Gupta Electronics, “The production has increased in 2005 by 20 percent and we hope that the demand will also increase. We are increasing our production by 50 percent by next year.”



According to industry sources, other makers are also planning to increase their production.



Imported connectors available in the Indian market are mainly from China, Taiwan, Hong Kong, Singapore, Japan, Korea, and the U.S. Domestic makers are finding it difficult to compete in price with imports from Asian countries. Says Gupta, “Connectors from China, Taiwan and Hong Kong are between 25 and 30 percent cheaper than local ones.” Yogesh G. Adalatwale, technical executive, Electronic Industries Association of India (ELCINA), agrees. “Imports from China and Taiwan are cheaper, and domestic makers are unable to compete with imports or gray market products,” he says.







Imports from the U.S. and European countries are costlier by 35 to 40 percent over Taiwanese or Chinese products, but the quality is much superior. According to Kishor, “There is good demand for quality products. For many customers cheaper price is no substitute for good quality.”



The demand drivers for connectors are the telecoms, consumer, computer and automobile industries. India has one of the fastest growing telecoms industries. Demand is projected to increase by 30 to 40 percent in the next one year for connectors. Says Adalatwale, “Telecoms and consumer industries have great potential for connectors. If makers target these industries and provide quality products at competitive prices they can win over share from the gray market and import market.”



Demand is projected to grow. Says George Varghese, managing director of FCI OEN Connectors, “The overall demand is expected to rise by between 30 and 35 percent in the next one year.” Most makers anticipate a good demand growth of 25 to 40 percent. Makers in India are using domestic as well as imported raw materials—brass, plastic, steel, copper, PVC, etc. Says Mathur of Radius, “Raw material costs have increased by 30 percent during the last six to eight months.” Makers also point out that imported raw materials are cheaper than domestic raw materials by 10 percent, so they prefer imported raw material.



Vikas Gupta, deputy director, Electronics and Computer Software Export Promotion Council (ESC), says, “Indian manufacturers are exporting 40 percent of their production to the U.S., the UK, France, Netherlands, Singapore, Italy, Germany, China, Japan and Hong Kong.” MNCs making connectors in India export their products all over the world.” Adds Verghese of FCI OEN, “Exports this year are expected to contribute between 65 and 70 percent of our sales.” Molex is exporting around 45 percent of its production mainly to the U.S., Singapore, Europe and China. Radius exports more than 50 percent of its production to the U.S., Europe, Middle East, Africa and South America.



Makers are trying to increase their share in export market. Says Mathur, “We have increased our export by 20 percent since last year and this increment will be continuing into the next year.”