Indian market is very affordable and has aspirational middle class, however, manufacturing talent is very poor in the country, said B Thiagarajan, Managing Director of Blue Star Ltd.

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Speaking at the CNBC-TV18 CEO Dialogues, Thiagarajan mentioned that transformation in India’s manufacturing India is very exciting as he pointed out that India still imports machinery from Korea, Japan and China.

“PLI (Production Linked Incentive) scheme has helped the air conditioner industry in India. Companies will dilute the PLI scheme into reducing pricing,” Thiagarajan said.

Thiagarajan expects the AC manufacturing industry production capacity to double in the next 18 months. Although, the AC manufacturing industry encounters many environment related issues ­— power consumption, ozone depletion and global warming.

Thiagarajan also pointed out that the industry with low penetration levels in India was dependent on huge amount of imports and said, “We all pampered sales and marketing guys with the higher salaries, manufacturing guys were not paid at all so we are now trying to poach from here and there and manage the talent that is not there. They all will know manufacturing engineering as a discipline is not there. We all import machinery from Korea, Japan, China, and manage, that ecosystem has not developed.”

Thiagarajan is excited with the transformation taking place in the Indian manufacturing industry. He said, “But still, the Indian spirit is very high, the transformation that is taking place is exciting. So at last we have arrived and therefore it is exciting times.”

PLI is not production linked incentive, it is a sales linked incentive; one will have to show the incremental sales, Thiagarajan said. “So what the companies are going to do is dilute this PLI in the pricing. So the product is going to become affordable, which is good news for the consumer. It is good news for the company because you have created an infrastructure so that scheme is helping,” he further said.

Contrarily, Atul Lall, Vice Chairman and Managing Director of Dixon Technologies (India) Pvt. Ltd said that India must review its stance and be ready to partner with Chinese companies as its market is facing a slowdown.

Lall said, “In the electronics manufacturing industry growth is going to be through the partnership route. You have to tie-up with best companies globally. China is going through a slowdown and they are looking at opportunities everywhere else and that is where we should open up, take advantage by partnering with them and bring the technology into India. So I would strongly recommend reviewing our position and partner with Chinese companies."

Sunjay Kapur, Chairman, Sona Comstar, pointed out that partnerships should be made so that technology can be learnt by the companies. Sona Comstar has been continuously investing in R&D as he reckons that private sector should actively invest in technology, said Kapur.

Kapur said, “At Sona Comstar we spend 3.5 percent of our revenue on R&D. We like to play in maybe 4 or 5 products but we want to do them really well. 75-80 percent of our business is outside of India in terms of exports. So we are continuously investing in R&D.”

According to Kapur, the only way a company can make money is by pricing the a product better than its competitor. He said “The only way you can do that is if your product is actually better than your competitor and to achieve that you need to invest in R&D and innovation.”

Kapur stressed on the need for the Indian auto components industry to step into global market and added, “That is really the mindset that companies in India and the auto components space need to have to go global. The opportunity to create a manufacturing hub for the world exists today in the auto component industry. So we need to leverage that opportunity and we can only leverage that by investing in R&D.”