Tough Fight

Economic measures against China — where they work, where they don't

- Joe C. Mathew & SuMant BanerJi

Mumbai-based Vu Technologies is a relatively new entrant in India’s fast-growing smart TV space. But it has managed to hold its own against established rivals like Samsung, LG, and Sony as well as a slew of Chinese companies like Xiaomi, Oppo, and One Plus. The ₹1,000 crore company claims to be the largest maker of 4K TVs in India and a segment leader in India’s online marketplace. The company has not been impacted by India’s decision to discourage sourcing of electronic components from its second-biggest bilateral trade partner, China, through higher tariffs, but is not too happy about the frequent changes in tariffs and policies in the country. This, it says, prevents manufacturers from committing funding to build own manufacturing capacities. “From my perspective, the big challenge in government policy is that there is not much consistency. Every day, you read the papers, and suddenly the active duty is 20 per cent, and then 10 per cent. The point is, whether it’s 10 per cent or 20 per cent or whatever, don't change the policy for five years,” says Devita Saraf, Co-founder, and CEO, Vu Technologies. “When you do that, it’s very harmful to entrepreneurs who take a risk and set up manufacturing and then finds that, suddenly, there’s a political meeting and the policy is changed.” Vu has a factory in Bhiwandi, though most of the large TVs it sells in India are assembled in China and have parts sourced from all over the world.

CAUSE AND EFFECT

POLICY: Between 2014 and 2016, India reduced import duties on many electronic items and machinery

EFFECT: Imports from China increased significantly between 2013 and 2018 for electronic goods, solar panels/ modules, and other machinery