In the fast changing electronics market dynamics of India, the India based electronics companies still not consistently successful in designing, manufacturing, and selling electronics devices and equipments in their own brand name. Though they lag behind US, Europe and other Asian emerging regions in electronics product biz, they are running fast to catch up. India is facing the problem of comparatively less-robust and overloaded infrastructure, which is least matching for production of semiconductor chips and such high precision electronics devices. However the things are changing faster to safeguard itself from fast-approaching severely imbalanced import burden of 100s of billion of $ worth of electronic devices. India's electronics manufacturing and design industry has to safeguard itself from the fast growing imports-burden by producing needy electronic devices in India.
In our series of interaction with India based companies, we are providing their views and strategies as part of the Indian electronics industry. I talked to Pratul Shroff, Founder and CEO of eInfochips, a high-quality electronics and semiconductor design services company based out of Ahmedabad, Gujarat. Below are the Pratul's views and comments on the issues and trends related to India's electronics industry:
Lack of Indian companies success in electronics products market:
Pratul Shroff: Everything evolves over a period of time. If we look at India, we became independent 66 years ago. First 30 years were wasted in license-raj, nobody has any incentive to do any R&D and that's why product innovation has never happened. But things started changing in 1993, so in 20 years -- India has come a long way in terms of new product innovation and now it is above to happen. So like everything else it takes time. I predict in next 10 years you see a Billion$ software product or electronic product company in India. Good examples would be the companies like mobile companies such as Micromax, Karbonn and Spice. They are not innovating today, may be they will start innovating.
Opportunities for the companies like eInfochips in product domain:
Pratul Shroff:It will happen (local design-services companies entering product-domain). India's electronics imports are going to be $400 Billion, we don't have that kind of foreign exchange to pay just for electronics, forget about oil and other things. So, the policies are changing, I think it is a question of time before Indian electronic product companies come on their own. I am very positive & bullish.
On the latest model of design services offered by eInfochips in next 2/3 years:
Pratul Shroff:Firstly they (Customer) want to test you, they start with the testing, so you test their product -- validate their product, you do the sustenance and maintenance work and all of them, gradually they get more confidence, they start giving the upstream work, which is design and development. Over a period of fifteen years, we have come to a point where we are able to design a complete product for a customer from the concept, what we call "concept to revenue", which includes transfer to the production and shipping to the customer. It is not only turnkey design, customer will also not pay upfront NRE expenses. There is also a new business model, where you are being paid for number of products being shipped. We see now 5% of our revenue coming from that model and I easily say that expanding to 25-30% in next three years.
Example of design used for multiple markets:
Pratul Shroff:I will give an example where a customer in USA would like to develop a surveillance system in school bus, same scenario is applicable in India for buses on road. Having four cameras, having video recorder and having very specifically suited for the buses, in terms of very specific conditions like start recording when doors open/close, start/stop recording when bus accelerates or suddenly comes to a stop, that is a specialized firm- ware that goes into these kind of solutions. So for a customer in USA, we have provided all of that. The same design can be used for Indian buses.
Competition from China and Taiwan:
Pratul Shroff:China is very strong in manufacturing and India has been strong in services. If we look at automobiles, 10 years ago India was not so strong in automobiles, both design and manufacturing. India's strength is in flexibility and adaptability which we call Jugad. We somehow manage to get things done. So the sweet spot for us is that, if American customer want to customize, China and Taiwan are not very good at that, they can design a camera then they will have half-a-million of that camera manufactured and sold to you. What is our value addition is, we can design specific camera for you, which has all the software nobody else in the market has.
Then you have a differentiator in the market with the features your camera have, nobody else' camera will have. So, that creates a pull for American customers to come to us instead of going to Taiwan. As a matter of fact this particular American customer (above example) I am talking about was working with Taiwanese manufacturer and moved to us.
Expansion plans of eInfochips:
Pratul Shroff:In Bangalore we have started our office in Mar 2012 and expanding now. In one year we have grown from 2 engineers to 43 engineers. We have moved into newer facility in this financial year. From 43, probably we may reach 100.
Picture: Pratul Shroff having a chat with Dr. Sam Pitroda, a well known technocrat at the opening of eInfochips' new design center.