LED in­dus­try’s PCB mak­ers de­mand a change in the cus­tom duty struc­ture

Electronics Bazaar - - Contents - By Shruti Mishra

Qual­ity is not a prob­lem but quan­tity is the area in which the In­dian PCB in­dus­try is lag­ging be­hind China. This is mak­ing LED play­ers de­pen­dent on im­ported PCBs. To counter this sit­u­a­tion, the lo­cal PCB in­dus­try is sug­gest­ing so­lu­tions and de­mand­ing some mod­i­fi­ca­tions in the cur­rent cus­tom duty rates.

LEDs have rev­o­lu­tionised the light­ing in­dus­try world­wide, and for good rea­son. One fac­tor, though, that can se­verely dam­age the per­for­mance of these re­li­able sources of light is heat. There­fore, LED man­u­fac­tur­ers use dif­fer­ent ap­proaches to ther­mal man­age­ment, the most im­por­tant be­ing choos­ing the right printed cir­cuit board or PCB.

In LED lu­mi­naires, LED chips are sol­dered on PCBs. The In­dian LED in­dus­try has so far de­pended on the FR4 or CEM3 PCBs be­cause of cost con­cerns. But the down­side of us­ing FR4 boards is that they are not ca­pa­ble of trans­fer­ring heat on their own. Hence, LED man­u­fac­tur­ers have moved to metal core PCBs, pop­u­larly known as MCPCBs. These PCBs can ef­fi­ciently trans­fer ex­cess heat away from the hot spots as they use alu­minium, which is highly ther­mally con­duc­tive. This pre­vents dam­age to the board, as that could re­duce the life cy­cle of the end prod­uct.

A re­cent ELCINA study points out that the do­mes­tic mar­ket for PCBs will reg­is­ter a growth of 20.56 per cent

over the pe­riod 2015-2020 and will reach US$ 6 bil­lion by 2020 due to a mas­sive spike in con­sump­tion of elec­tronic com­po­nents, in­clud­ing LEDs. Gov­ern­ment pro­grammes like ‘Make in In­dia’ have sig­nif­i­cantly im­proved the PCB man­u­fac­tur­ing sce­nario in In­dia, though there are still some fun­da­men­tal loop­holes that need to be ad­dressed quickly.

The con­cerns of PCB mak­ers

While speak­ing to a few In­dian PCB play­ers, we found that lo­cally man­u­fac­tured PCBs can meet or­ders for small vol­umes but the ca­pac­ity for bulk or­ders is yet to be built for mak­ing these boards. Ac­cord­ing to Vinit Lal, di­rec­tor, Vin­tek Cir­cuits In­dia Pvt Ltd, “Cur­rently, China’s top three PCB man­u­fac­tur­ers pro­duce the equiv­a­lent of what In­dia’s en­tire PCB in­dus­try man­u­fac­tures.” He says this has been made pos­si­ble be­cause of the fi­nan­cial sub­si­dies that Chi­nese PCB mak­ers get from their gov­ern­ment, which are ab­sent in In­dia. This lack of state sup­port in In­dia re­stricts new play­ers from set­ting up plants here.

Daya Jain is the di­rec­tor of EPS PCB Tech­nolo­gies, a com­pany that man­u­fac­tures PCBs for LEDs. He has re­cently shut down his LED PCB line be­cause the ma­jor­ity of his cus­tomers now source from China. Cit­ing the rea­son be­hind tak­ing this dras­tic step, he says, “It was be­com­ing dif­fi­cult for us to match the prices that China was of­fer­ing. Cus­tomers were de­mand­ing PCBs at Chi­nese rates, but we can­not lower the prod­uct cost be­yond a cer­tain level, as we need to earn some profit as well.”

Lal, too, states that the price pres­sure from China is ham­per­ing the growth of the In­dian PCB in­dus­try. Ex­plain­ing why there is such a wide price gap be­tween In­dian PCBs and their Chi­nese equiv­a­lents, he says that im­ported PCBs are com­pletely duty free in In­dia. This is the rea­son that Chi­nese PCBs of var­i­ous stan­dards of qual­ity are flood­ing the In­dian mar­ket. “When you are im­port­ing from China, you have zero con­trol over the qual­ity of the prod­uct. The only thing you get is the price of your choice,” he adds.

Lal says that Chi­nese PCB man­u­fac­tur­ers ex­port PCBs to In­dia to get a 12 per cent in­cen­tive from their gov­ern­ment. “The Chi­nese man­u­fac­turer is get­ting a 12 per cent duty draw­back plus there is no cus­tom duty on the im­port of PCBs in In­dia; so, nat­u­rally, this makes their PCBs much cheaper,” he adds.

Jain gives an­other crucial rea­son for why In­dian PCB play­ers can­not match the costs of­fered by China. “None of the raw ma­te­ri­als used in the mak­ing of PCBs are lo­cally sourced, which means In­dian PCB man­u­fac­tur­ers have to de­pend on China for the raw ma­te­ri­als too,” he says. The ba­sic raw ma­te­rial for mak­ing PCBs is the cop­per clad lam­i­nate. Ear­lier, there were a few fac­to­ries that man­u­fac­tured this in In­dia but they had to shut down due to the lack of gov­ern­ment sup­port and in­fra­struc­ture, Jain adds.

Gov­ern­ment sup­port: The need of the hour

Apart from the gov­ern­ment set­ting up raw ma­te­rial in­ven­to­ries for PCB man­u­fac­ture, the con­sen­sus among lo­cal play­ers is that cus­tom duty should be im­posed on im­ported PCBs. The in­dus­try is cer­tain that if the gov­ern­ment takes these steps, it will bring about quick and re­mark­able changes in the In­dian PCB in­dus­try. “The day im­port du­ties come into ex­is­tence, I can con­fi­dently say that the In­dian PCB in­dus­try will grow at ten times the pace at which it is cur­rently grow­ing,” Lal says.

Un­der­lin­ing why gov­ern­ment in­volve­ment is crucial, a se­nior of­fi­cial from Genus Elec­trotech Ltd adds, “If we want our PCB in­dus­try to match the de­mand and stan­dards of the LED light­ing in­dus­try, then the gov­ern­ment should impose im­port du­ties and of­fer a 10 per cent sub­sidy to PCB man­u­fac­tur­ers (not traders).”

The three main rea­sons that are mak­ing Chi­nese PCBs cheaper are their hu­mon­gous pro­duc­tion vol­umes, the duty draw­back they get when they ex­port to In­dia, and zero cus­tom duty on PCBs en­ter­ing In­dia. Lal sug­gests that if the gov­ern­ment takes care of even one of these is­sues and en­cour­ages state gov­ern­ments to come up with PCB clus­ters, the In­dian PCB man­u­fac­tur­ing sce­nario will im­prove con­sid­er­ably in quick time.

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