Strategic Focus, Bold Policies Needed to Unlock Potential of Component Manufacturing: Vinod Sharma

Having successfully navigated challenges over the past 40 years, Deki Electronics is now poised to expand its presence in power electronics and explore new opportunities in international markets.

At the core of the growth of India’s electronics manufacturing sector lies the components industry, a critical pillar that supports the larger electronics ecosystem. With increasing demand driven by advancements in consumer electronics, industrial automation, and electric vehicles, the components market has grown substantially. However, while India has made remarkable strides in electronics manufacturing, there remains vast untapped potential to strengthen its position in global supply chains and achieve self-reliance in component manufacturing.

At the helm of this dynamic industry is Deki Electronics, which was founded in 1984 and has become synonymous with innovation and quality, producing high value-added components i.e. capacitors that cater to a diverse range of industries.

In an interview with IGNITO, Vinod Sharma, Managing Director, Deki Electronics, shared the current landscape of the Indian components industry, its challenges, and the opportunities that lie ahead.

IGNITO: We have heard a lot about Deki Electronics. It is one of the fewer companies which is into electronics component ecosystem. We appreciate this as electronics components are the core of ESDM. We would like to know about your company’s vision in India’s growth story in electronics domain?

Sharma: Thank you for the compliment! Deki is celebrating its 40th year now. We started at a time when electronics was just emerging in India. Back then, our founders Mr. Jai Kumar and his wife Late Mrs. Shashi Kumar collaborated briefly with a Japanese company called Okaya, who taught us how to make capacitors. The first decade of Deki—what I call “Deki 1.0″—was all about learning in a protected market with high tariffs. Indian buyers had to purchase from local companies, and Deki thrived alongside a handful of other players.

“Deki 2.0” began in 1993, coincided with my joining the business. This was also the era of economic liberalization under Dr. Manmohan Singh, when tariffs were coming down, and the market was opening up. We knew we had to adapt quickly to survive in a competitive, global market. I travelled extensively—26 stops in 27 days—to learn from suppliers, competitors, and industry leaders in Europe, the U.S., Japan, Korea, and China. We expanded our team with professionals and experts. This marked the start of our journey to expand product offerings and shift our mindset from a seller to a buyer market.

Two key shifts happened during this time: First, we became more customer-centric, restructuring our organization and expanding our product range. Second, we scaled up significantly. In our early days, we had a license to produce 10 million capacitors a year; today, we produce 4 million per day. However, with prices dropping drastically—from INR 1.20 per unit in 1993 to just 30 paise now—the challenge has been to stay competitive while maintaining quality.

Our vision is clear: to be a benchmark in component manufacturing and make India proud. Component manufacturing is far more complex than assembly. For example, making a capacitor involves a four-day process, requiring expertise in areas like metallurgy, organic and inorganic chemistry, mechanical processes, and electronics. It’s a high-investment and low-margin business. For every INR 1 crore of sales, we employ five people, and automation remains limited due to high costs. Despite these challenges, we are committed to grow this sector.

Globally, countries like Japan, Korea, Taiwan, and China have succeeded by focusing on component design and manufacturing, not just assembly. Their success has transformed their economies, and we believe India can also achieve the same. At Deki, we aim to contribute not just by scaling our operations but also by supporting other component manufacturers and advocating for industry-friendly policies. For India to succeed, it requires a collective effort—government, industry, and infrastructure working together to create a level playing field. That’s the vision we’re striving toward.

IGNITO: Being an MSME and that too in high value-added component manufacturing, what are the challenges you face? What are your recommendations to the government to support such MSMEs to become a billion-dollar company over next 5-10 years? How do you see the role of large Indian EMS companies and GVCs in the same?

Sharma: Let me start with an often-overlooked point: productivity. For every 100 crores of turnover, we employ around 500 people. Most of this workforce especially casual workers live in poor conditions. This impacts their ability to perform at a high level. Contrast to this in China workers often live in factory-provided hostels with access to good food, recreation, and rest. This directly boosts their productivity, and it’s something we need to replicate if we want to compete in the international market.

Another issue is power infrastructure, our factories rely on expensive machinery which need uninterrupted power supply, yet we face power instability, forcing us to invest in costly UPS systems and backup generators adding to the expenses. These additional expenses have impact on our cost of products. Therefore, reliable power supply, clean air, and safe commutes for the workforce should be assured.

Apart from this, we have to understand that to truly integrate into global value chains, we need a culture of efficiency and alignment among stakeholders. Whether it’s financial institutions, regulatory bodies, or academia, everyone must work together toward a shared vision of Viksit Bharat.

We also need our research institutions to produce practical output for industries like other countries where academic work supports private sector innovation.

Finally, our incentive structure needs rethinking. We support the large incentives given to mobile phone manufacturers and expect that component makers—who add far more value— should also receive the same.

Though India has made strides in improving the ease of doing business, but it’s still tough compared to global standards. If we truly want to invite foreign investors, we must create an environment that’s welcoming, transparent, and supportive. Investors look at the experiences of companies already operating here—positive or negative—and those impressions matter. It’s time we align our policies and practices to support a thriving electronics ecosystem.

IGNITO: There are various discussions regarding USD 500 billion electronics manufacturing by 2030. How do you think this is going to happen?

Sharma: It’s fascinating to see how visions and roadmaps are set for India’s electronics industry. It was projected that electronics industry in India will grow from $15-20 billion to $240 billion and ICEA supported a vision for $300 billion by 2026. Now, the Prime Minister has set an ambitious goal of $500 billion by 2030. It’s aspirational and not impossible, but achieving it requires building the right platforms.

If we look at global electronics, the market is valued at $2.4-3 trillion. Dividing that by the world’s 7 billion people gives a per capita figure of $300-400. For India’s 1.4 billion people, this translates to $400-500 billion, which aligns with our domestic demand and export potential. However, this journey isn’t straightforward.

So far, we’ve had success with mobile phone assembly, thanks to efforts by many, including ICEA. But this hasn’t fully extended to other sectors like washing machines, consumer electronics, or IT equipment, despite PLI schemes. Progress is being made, but this is a relay race with four critical legs:

• Assembly: This is the starting point. Mobile phones have shown success, and we need to replicate this for other products like wearables, hearables, and appliances. The focus should be on enabling assembly by lowering barriers and simplifying duties.
• Component Manufacturing: Assembly alone isn’t sustainable. With PLI programs having sunset clauses, the next step is building a strong component ecosystem. This requires bold policies with substantial incentives to encourage component production in India. Once components are made here, assembly becomes self-sustaining.
• Product Design: True value addition happens when we start designing products in India – from chipsets to full devices. Designers decide what components are used, and their presence in India is crucial for the ecosystem.
• Global Brands: No country becomes a manufacturing powerhouse without globally recognized brands. Japan has Panasonic and Sony, Korea has Samsung and Hyundai, and China has Xiaomi and Huawei. In India, we have examples like Bajaj and Hero in two-wheelers, or Havells and Blue Star in appliances, but the list is limited. Building globally competitive Indian brands is essential.

Without progress in all these stages, the $500 billion target will remain out of reach. It’s not just about ambitions but ensuring a strategic and phased approach to building a robust electronics ecosystem.

IGNITO: What are the important ingredients of a robust electronics manufacturing ecosystem in India. What we can learn from the success story of countries like China, Vietnam, etc.?

Sharma: Electronics is not just about hitting a $500 billion target or boosting exports—it’s an enabler for every sector, from healthcare to agriculture. That’s why I believe it’s time to declare electronics manufacturing a strategic industry in India. This means prioritizing it across the board with bold measures.

For starters, regulators should offer a sort of “governance holiday” for five to six years to encourage entrepreneurship—no red tape, no unnecessary hurdles, but of course, adhering to safety and labor codes. This will inject the entrepreneurial energy we need in this sector. If the government is hesitant to apply this broadly, electronics manufacturing is the perfect sector to pilot such a move.

We also need a national-level mechanism where entrepreneurs—whether fresh graduates or seasoned players—can easily access resources, guidance, and clear processes to launch manufacturing ventures. A smooth, supportive framework is essential for turning aspirations into actual businesses.

Incentives are crucial, but they alone aren’t enough. Exports need a strong push to achieve scale, and companies must be encouraged—and where necessary, required—to use Indian-made components. It’s shocking that some major players in India still have policies against sourcing locally. That needs to change, as no other country allows such practices.

Looking at countries like China and Vietnam, they didn’t build their industries in a zero-duty environment. Tariffs or non-tariff barriers helped protect and nurture domestic manufacturing. Without such measures, we either need massive incentives—which aren’t sustainable—or a mix of both tariffs and incentives. History shows that no country became a manufacturing powerhouse with zero duties.

Another lesson is the unwavering government support seen in countries like Korea. For example, when Samsung was growing, the Korean government backed it fully. In India, support for businesses can be inconsistent, but a strategic and sustained effort to stand by enterprises—especially in the initial stages—should be part of our national policy.

In short, to truly unlock the potential of electronics manufacturing, we need strategic focus, bold policies, and a supportive ecosystem. Without this, achieving the $500 billion target will remain a tough challenge.

IGNITO: India is almost absent in the component manufacturing space, whether it is passives or semiconductors. We would like to know your thoughts views regarding filling this space by domestic manufacturing?

Sharma: These businesses are incredibly capital-intensive. Take MLCCs (multi-layer ceramic chip capacitors), for example. They’re tiny components, often costing just 20–25 paise each, but a single smartphone can have 150 of them. Despite this demand, we don’t manufacture any in India.

The top players in this space—Samsung, TDK, Murata, Panasonic, Vishay, and others—are multi-billion-dollar companies. Their average investment in MLCC manufacturing exceeds $500 million. Compare that to an Indian company starting small with a $10–20 million investment—it’s impossible to compete with such giants in a zero-duty environment.

To level the playing field, we need one of three things:

• Tariff protection to make imports less competitive (though it could raise ecosystem costs).
• Incentives to offset the high cost of starting production here.
• Mandatory joint ventures, where global companies are required to partner with Indian firms and transfer technology if they want to access our market.

India’s biggest leverage is its demand. Global companies are drawn here because of our massive consumer base. But if they can continue meeting this demand through imports without setting up local operations, they will. Without tariffs or incentives, trading will thrive, but manufacturing won’t. To change this, we need bold policies to ensure companies produce locally to access India’s market. We are clearly not leveraging our twin advantages of large & growing demand and demographic dividend, fully.

IGNITO: How does Deki Electronics approach innovation and R&D in capacitor technology, and what recent advancements or products are you particularly proud of? Additionally, what technologies or applications do you believe will shape future demand for capacitors, and how is Deki Electronics preparing to meet these evolving needs?

Sharma: Thank you for asking! At Deki, our survival for 40 years in a challenging, zero-duty environment—competing directly with China—comes down to a strong sense of purpose and a culture of innovation. Despite tough competition, we’ve built a mission-driven organization where every team member understands the importance of staying globally competitive. For instance, we start each day with a prayer, the national anthem, and a shared commitment to quality, customer delight, environmental protection, and competitiveness.

We’ve made it our personal and company mission to challenge the norm of relying on imports. I often remind my team, “If importing our Lakshmi and Ganesh idols from China makes us uncomfortable, why not feel the same about importing capacitors?” This mindset fuels our drive to innovate and excel.

Innovation at Deki isn’t limited to R&D, though we’ve invested heavily in our in-house R&D center, recognized for over 12 years. We tap into the creativity of every worker through a suggestion scheme. Employees submit ideas daily—detailing current processes, proposed improvements, and potential benefits. A workers’ committee reviews these suggestions weekly, and those deemed useful and viable are rewarded with a cash prize and implemented. To date, we’ve implemented over 70,300 ideas, and these small innovations collectively drive our success.

We also maintain strong relationships with international peers and suppliers, particularly in Korea, Japan, and China. By exchanging knowledge and visiting each other’s facilities, we continually learn and improve. Interestingly, some of these partners now claim they learn more from us, which is a testament to the value of collaboration.

Looking ahead, the future of capacitors lies in addressing global challenges like energy transition. India’s energy demand is set to double in just seven years, largely driven by renewables, as fossil fuels can no longer meet the growing need. Capacitors play a minor role in traditional energy production but are critical in renewable energy systems. Whether it’s solar inverters, energy storage, DC-DC converters, electric vehicles, or off-grid solar pumps, capacitors are integral.

At Deki, we’re gearing up for this shift, focusing on what we call “power electronics capacitors.” We anticipate this segment will surpass the conventional capacitor market in the next 3–4 years, and we’re excited to lead the way in this transformative space.

IGNITO: With the global electronics industry evolving rapidly, how does Deki Electronics plan to expand its market presence, both domestically and internationally?

Sharma: Over the past 40 years, we’ve built strong relationships within the domestic market. Barring one company with a specific procurement policy, most customers in India know us and source something from us, even if it’s not the full range of products. For instance, as new companies start producing solar inverters, they naturally become our customers. Our robust marketing team ensures we’re well-known in the market, so discovery isn’t a major challenge. However, we’re constantly working to expand our product range and secure the necessary approvals to meet industry demands.

In recent years, we’ve successfully entered the automotive sector, which is a growing market for capacitors as vehicles become “electronics on wheels.” We’ve also diversified into related fields. For example, we’ve invested in IPEC in Bangalore, which manufactures electric vehicle chargers, and we’ve ventured into IoT and retail electronics through our Sure Solutions division.

On the capacitor front, we’re scaling up in power electronics and see tremendous export opportunities, especially with the global shift toward a China-plus-one strategy. To capitalize on this, we’re actively participating in international exhibitions, appointing channel partners in Europe, and exploring markets in America, the Middle East, and parts of ASEAN. These regions, particularly with initiatives like “Make in America,” offer significant potential, and we’re pursuing them with a clear focus.

IGNITO: What are Deki Electronics’ key goals and aspirations for the next decade, and what role do you see the company playing in shaping the global capacitor industry?

Sharma: Fortunately, the capacitor industry in India is one area where the supply chain is nearly self-sufficient. We now have two companies producing polypropylene films (BOPP) of reasonable quality, several companies metallizing those films, and many more manufacturing and using capacitors. While some parts of the value chain are still missing, I’m confident they’ll be filled within the next two to three years.

This puts us in a great position to make India a globally competitive hub for capacitors, whether it’s motor-run capacitors, power electronic capacitors, power factor correction capacitors, or DC capacitors. At Deki, we’re committed to playing a key role in this transformation and becoming a global leader in the industry.

Looking back on our four decades of challenges and growth, I believe the future holds immense potential. With the Indian electronics industry projected to grow from $100 billion to $500 billion, we’re determined to grow even faster. If the industry is moving at 5x, we’re aiming for nothing less than 10x growth. Anything less would be a missed opportunity.

IGNITO: There are various discussions with respect to onsite housing for workers. Do you think this may be a key driver in ensuring a manufacturing conducive environment for domestic and multi-national players in this domain?

Sharma: Absolutely. India has a diverse industrial landscape, and the approach to worker hostels varies based on the type of company. For example, companies like Foxconn, with large tracts of land, have done a commendable job by setting up facilities like women’s hostels and full industrial worker hostels. Similarly, some companies in Chennai and Shree City are following this model, which works well for large-scale operations.

However, component manufacturing is typically dominated by SMEs, which usually employ 500-1,000 people and don’t have the extra land to build hostels for their workers. This challenge can be addressed in a few ways:

• Cluster-Based Hostels: For instance, at the Elcina Electronic Manufacturing Cluster in Bhiwadi, where I’m a founder director, we’ve set aside space to build a hostel for 2,500 employees. This will serve workers from the 25 companies in the cluster and is partially supported by a government grant. This model could be replicated across other clusters.
• Utilizing Vacant Land in Existing Clusters: In areas like Noida, where land is limited and companies are already established, many vacant plots could be converted into employee hostels. These hostels could operate under a proper code of conduct, and employers could offer workers vouchers or subsidies to choose their preferred hostel. This would ensure flexibility and avoid concentrating all workers from one company in a single place, which might not be ideal given the dynamics of the Indian labor climate.
• Government-Supported Initiatives: The government’s programs, such as the SAFE (Site Adjacent Facility for Employees) initiative, focus on creating hostels for large new factories or greenfield clusters. For brownfield clusters, however, innovative solutions like utilizing vacant plots for hostels need to be implemented.

In summary, while large companies can manage their hostels on-site, SMEs require creative, shared, or government-supported solutions to ensure workers have access to safe and comfortable accommodations.

IGNITO: Is there any other message or insight you would like to share with various stakeholders for contributing for the success of Indian electronics manufacturing industry?

Sharma: Yes, we should use the electronics manufacturing industry as a platform to prove to ourselves that even in a zero-duty environment, without a level playing field, we have what it takes to become global suppliers. Instead of resisting or trying to change the global value chain, we should focus on integrating into it. By doing so, we can achieve success and bring pride to everyone involved.