T&M Industry in India : FY 14 can strike Synergy of Components & Instruments !

The fiscal and current account deficit has been steadily increasing over last three quarters.This has been putting pressure to the Indian Currency against the major Economies currency,particularly the US$.Most of our major imports in high technology are pegged to Dollar and so the Indian Rupee is particularly in a tough situation. Imports of Electronic Components- both passive and active devices are expected to touch 350-400B $ in the next few years.Major markets of  high technology components is Industrial,Automotive,Defense,Telecom and Manufacturing across various sectors of the domestic economy.Naturally the requirement of foreign exchange to the Capex and Components will be increasing as the Rupee tends to depreciate. The T&M Capex -majority of which is also Dollar Denominated also gets under budget stress likewise. If the same purchaser is involved, the double whammy happens when both the T&M and components orders are to be placed.

One creative way the saving and rationalising of foreign exhange  can be done is by the proactive planning of procurement of both capital and revenue items.Suppose the Capital items and the revenue items are needed for the same manufactured product,and the different schedules of Components are required at different stages( initial prototyping, phase one, two of productions etc) the orders can be combined and negotiation for pegging exchange rate can be done at a rate acceptable to buyer & supplier. The supplier can ask buyer to fix this for buying a hedge from the bank,and seller can time his deliveries suiting his buyers production schedule. A sort of exchange rate neutrality can happen if the two parties work closely. Off Course there has to be better coordination between different procurement personnel of the big buying organisation too.The idea is arriving mutually at a common agreed rate.

Another side advantage to suppliers is foecasting better the timing of capex purchase as the equipment will normally be used to test the assemblies/systems after they are assembled etc and so both the deliveryskeds and order timing are synchronised for win-win exchange rate. Sounds tough,but tough measures needed for tough times like these.