Page 79 - DMGT401Business Environment

Business Environment

Notes
Electronics (Hardware Electronics)
The electronics industry constitutes 7-8 per cent of the manufacturing value added of
India. It is one of the fast growing and labor intensive industries of India. The Indian
electronics industry comprises six categories namely, consumer electronics (34.4% in '97-
98), instrumentation and industrial electronics & communication and broadcasting
equipment (14%), data processing systems and other office equipment (13%), strategic
electronics and electronic components (19.9%).
The electronics industry in India has so far been dominated by small and medium enterprises
that are involved in the manual assembly of low-end consumer electronics with the help
of few tools and instruments. However, the entry of global players in the wake of
globalization and liberalization along with rapid technological developments in
electronics is going to change the product composition and the structure of the industry.
The entry of global players like Thomson, Sony and Gold Star has not only intensified
competition in this already competitive industry but is likely to transform the Indian
electronics industry along the lines of the global structure. These changes have made the
manual assembly of lower end products by the small-scale units no longer feasible. The
survival of the Indian electronic firms in future depends critically on developing or,
acquiring and adopting the latest technologies. Given the high costs of technological
development and short-product cycles, it is required that Indian firms to go in for
collaboration with other firms both for acquiring technology and for marketing their
products. All these demand that the Indian small-scale units effect not a marginal change
but a total transformation such as a shift away from manual assembly to automation.
Automotive

The automotive components industry in India produces the entire range of parts required
by the domestic automobile industry. It caters to nearly 82 per cent of the domestic market
demand while the remaining 18 per cent is served by imports. This is a low volume and
fragmented industry. In terms of turn over, it is only about one-tenth of the size of the
world's largest automotive company namely, Delphi Automotive Systems Corporation
of USA It has nearly 400 firms in the organised sector and more than 5000 firms in the
unorganized small-scale sector. The unorganized small-scale sector is estimated to
contribute nearly 23 per cent to the industry's total production.
The development and structure of the automotive components industry is closely connected
with the development and structure of the vehicle industry. In India, the vehicle industry
till the eighties was characterized by an oligopoly structure, small-scale operations, high
cost of production, technological obsolescence and numerous government regulations. In
this period, there was a tendency for the vehicle manufacturers to produce parts and
components in-house and component manufacturers started mainly to cater the replacement
demand. In the eighties, the entry of Maruti Udyog Limited in the passenger car segment
and with many more entries all with foreign collaborations in the light commercial
vehicle segment such as Allwyn and DCM, dynamism entered the industry. Relaxation of
government regulations especially on foreign collaborations along with the programme
of phased localization caused an upsurge in the components industry. Foreign
collaborations, technological upgradation and closer relations with the buyers marked
the automotive components industry in this time period.

The Indian automotive components industry was so far organized on the lines of a
'dominant firm with a competitive fringe' where, the competitive fringe comprises
numerous small-scale units producing simple components or components that have high

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