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India must improve air logistics for electronics and telecom manufacturing, says Ajai Chowdhry

India aims to emerge as an electronics and semiconductor manufacturing nation but the country needs to work and fix its inward and outward logistics says Ajai Chowdhry, Founder of Electronics Products Innovation Consortium and Co-Founder, HCL. While the Government of India’s Gati Shakti – the national master plan for multimodal connectivity – can be helpful, there is a lot more desired.

“India does not have inward outward logistics done well and still lacks ease of doing business,” Chowdhry told Business Today. “If you want to manufacture anything locally, all components are not available in India. You need to import components from 5-6 different countries. So these components should reach India fast and in a frictionless way.”

Sharing Taiwan and Vietnam’s example, Chowdhry explained: “The components arrive in the morning, afternoon they are put into a product, and the very next morning they are shipped out. When Dell used to talk about many years ago, just in-time manufacturing, that’s what it was all about. They had all their warehouses next to them. And what they would tell each of these warehouses the ship me the component that I need today. So that I can make the PC today and ship it out tomorrow morning. Electronics needs that kind of pace, which is totally different from any other industry.”

Chowdhry, who is part of NITI Aayog’s program for electronics, telecom and auto and has been sitting in meetings with the industry, said NITI Aayog is working on how to get India into the global value chain (GVCs)of a world right.

As India’s logistics in electronics needs a lot of work – both inward and outwards, this has been a discussion point with India’s Department for Promotion of Industry and International Trade (DPIIT) and others, where Chowdhry along with the industry leaders have highlighted that logistics has to be the key priority area.

Also, unlike other industries where components are heavy, weight is not an issue when it comes to electronics components. “Majority, about 80 to 90% of component logistics is not based on ships but on air. So, therefore where are the large Air Cargo planes available? This is a big issue and that’s been discussed in NITI Aayog’s meetings and I have pointed out that we must look at air logistics to improve electronics and telecom manufacturing in India. And tomorrow when we start to look at EVs, even 70% of EVs are electronics,” added Chowdhry.

There are other areas along with logistics that needs government’s attention. The cost and time of the inward logistics can be reduced dramatically by getting a large number of component warehouses to get set up in India. “Today, a large component distributors don’t have warehouses in India – they have them in Singapore and Hong Kong. When the manufacturing is happening here, in India, this is where we need the warehouse to be,” Chowdhry said.

Till India can make progress on the inward outward logistics, India must pursue building warehouses in 5-6 key locations where electronics manufacturing is happening the country – such as Noida, Chennai, Bengaluru, and Hyderabad – to start with.

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