The recovery of Indian rupee against the USD over the last couple of weeks has been a clear indication of the confidence building up in the economy. No wonder, the industry has been expecting a reduction in the repo rate by the RBI that could have signalled that the growth would be back on track. As the Wholesale Price Index (WPI) inflation figures have been trending upwards during the last three months, RBIs priority has been containing inflationary pressures, and as per experts this must have prompted RBI to hike the repo rate. But industry will have to take the brunt of this rate hike, especially the infrastructure sector which is quite stressed at the moment. The industry is truly concerned about the policy rate hikes and their adverse impact on the investment sentiment. At a juncture when India needs huge investments in infrastructure and half of that is expected to come from the private sector, it has become difficult to foresee how private sector will be able to mobilise resources from domestic sources.
The depreciation of Indian rupee has had its adverse impact on the manufacturing sector, especially OEMs who import various components. It straight away increases material cost by over eight to ten per cent, and ultimately increases the cost of the equipment. It is near impossible in the capital equipment industry to realise this increase from the customer, especially when the economy is in such a state, where the projects are getting delayed. Because of the prevailing conditions like unstable political situation, economic downslide, uncertainty in mining and construction industry, the market is witnessing acute slowdown, and there is a drop in projected market volumes since the last six months. To the extent possible, OEMs are trying to 'localise' the production, but that is just a part of it. What the industry is looking forward is for concrete measures that can bring life back into the economy and trigger the growth in a sustainable way.
In spite of the present slowdown and resultant sluggishness in the CE market, the long term growth prospects are still intact; and experts view the huge infrastructure deficit as a major growth driver and prudent steps from the government can bring India back on the growth trajectory. Trade fairs such as Excon can act as a catalyst, and no wonder, the 7th edition of Excon with 220,000 sq m of exhibition area, 900 expected exhibitors inclusive of 300 companies from abroad, seven country pavilions, an expected 35,000 visitors, and over a hundred new product launches, Excon 2013 edition is expected to bring the positive sentiment back. Excon has been successful in bringing together the entire spectrum of the CE industry such as manufacturers, assemblers, component suppliers, financiers and after-sales service providers to assess the current status of Indian CE industry and the underlying opportunities and challenges.