Mismanaged demand and supply for electronics and IT peripherals: The road ahead
By Arnav Mutneja
Despite the Covid-19 outbreak, the Consumer Electronics and IT peripherals industry saw a significant increase in demand. The nationwide lockdown gave rise to a “new normal” work culture – work from home (WFH). Companies, as well as consumers, hoarded IT products like never before. IT peripherals, including laptops, Wi-Fi hotspot dongle, printers, and data cards were hot-selling, resulting in a sharp spike in demand for all such items. However, the industry suffered in maintaining the demand-supply equilibrium as supply was severely limited and demand was overgrowing.
The second wave of Covid-19 again brought back the burgeoning demand in IT peripherals. The extended lockdown has added woes to the industry. From children to millennials, IT infrastructure became a necessity for everyone. Continuance of work from home culture and lectures/classes being conducted online is further supporting the demand for goods that enhance conveniences at homes, such as refrigerators, electric cooking appliances, washing machines, and ACs. Companies are securing laptops or even refurbished laptops for their employers. Hence, the industry is looking for interventions to fill the mismatch in the demand-supply chain.
Factors such as disconnected transportation and logistics, liquidity crunch, lack of supply, dependency on China for domestic IT products, etc have further added the woes. Unlike the on-demand online segment, the electronics and IT peripherals segment depends on the tangibility of the product, leading to further difficulties for businesses in meeting the subsequent demand. Various industry leaders anticipated this year to be a turning point but with lockdown restrictions imposed again, this year is already filled with challenges that threaten to significantly stem the flow of electronics and IT products. As the sector fight for returning to normal, this downturn can also be seen as an opportunity.
PLI scheme to reap benefits
Given the momentum India has and the Government’s dedicated initiatives towards “Atmanirbhar Bharat., PLI on consumer electronic products will drive more players to set up operations in India. Localizing electronic products in India will not only drive true local value addition but also will lead to more jobs in the country. PLI will develop a strong supply chain in India alongside the increase in exports. In order to integrate with global value chains, the PLI scheme will cement India as a leading destination for electronics as well as IT products.
Increase in sales amidst challenges
Even though the industry suffered major challenges in maintaining the demand chain, various IT companies witnessed a huge spike in demand. With Technology taking center in the lockdown and business and professionals working from home, IT companies saw an increasing demand for seamless connectivity solutions and collaboration products. Going forward, the industry is betting big on Covid control and economy-boosting measures to be taken quickly from the government’s end to rebound strong demand.
The mismanaged supply chain
Uninterrupted connection, coupled with adequate IT infrastructure and resources is the key in today’s scenario. Therefore, the role of technology is very crucial in maintaining the seamless flow of internet connectivity as well as the performance of the electronic product. Technology should be integrated into the supply chain system in order to smoothen the process as well as track the gaps when arrived. Government’s initiatives like National Policy on Electronics (NPE) are further promoting domestic manufacturing in the entire value-chain of the electronic system design and manufacturing. Subsequently, the movement of electronic products and peripherals will also begin once the restrictions are eased, leading to a fairly large off-take to be seen across the country.
Hence, there does exist a demand-supply mismatch in this segment, which needs to be filled fast. Special focus should be given to the electronics and IT industry as it is an important pillar in supporting the Digital India and Smart City initiatives of the Government.