Like-for-like measures by the port and Customs authorities in India and China may derail electronics manufacturers’ plans for recovery before the festive season starts.
With consignments stuck at various ports in the two countries, manufacturers now fear a severe impact on their festive season plans if the issue is not resolved by mid-July.
As the authorities hold back consignments from China at Indian ports, leading manufacturers are now in limbo. After disruption in supplies from China between March and May, shipments began to revive only in June. Most manufactures were expecting shipments of key electronic components in larger quantities as their inventories were nil. However, with consignments blocked, they are fearing a further delay in scaling up production levels to pre-Covid times.
“The plan is to scale up production to normal levels by the middle of July. Over 60 per cent of our product models are not available any more because pent-up demand after the lockdown consumed whatever little we were left with. It was expected that supplies from China would be back to normal by the end of June because their factories are now operating at nearly 90 per cent of capacity. But the recent issue with shipments has placed an obstacle that manufacturers like us can’t bypass,” said a top executive of a leading smartphone company. According to Navkendar Singh, research director at IDC, it may further delay recovery for electronics manufacturers in India.
“The physical checking of all consignments, especially for electronics goods, is unfeasible. We are dependent on China for components like printed circuit boards and display panels. Given the delicate nature of these components, unboxing them for a physical check may damage the items,” he said.
The display panel, which accounts for over 60 per cent of the cost of a flat-panel television and over 15 per cent for a smartphone, is manufactured in a controlled environment and bringing it out in a normal environment may make it unusable.