Industry Odisha Bureau, Sep 04: Electronics producers are innovating rapidly to manage rising costs. Material substitution and deeper localisation now define industry strategy. Companies are protecting margins without fully burdening consumers. Commodity inflation has forced manufacturers to rethink sourcing decisions. This shift spans air-conditioners, refrigerators, fans and consumer electronics broadly.
Copper prices have surged sharply over the past year. They’re up roughly 45% year-on-year, industry data shows. Over six months alone, copper rose another 17-18%. In response, manufacturers are substituting aluminium, steel and alloys instead. This applies particularly to motors, condenser coils and connecting pipes. Such substitution can save 2-6% of manufacturing costs, executives say.
Localisation has become another critical lever for producers. LG Electronics India recently localised a key plastic-moulding resin. That material was fully imported as recently as March. Companies are increasingly switching between local and imported sourcing. This flexibility helps manage price volatility more effectively.
Value engineering complements these material shifts across the industry. This involves redesigning products to reduce material usage. LG’s manufacturing chief said design optimisation continues weekly. The company monitors raw material and component prices constantly. Voltas and Bajaj Electricals have expanded similar value-engineering efforts. These measures aim to cut costs without sacrificing quality.
Pricing strategy has also adjusted amid these pressures. Air-conditioners, refrigerators and washing machines rose 10-12% since early 2026. That happened across three separate price-increase rounds this year. Companies simultaneously absorbed another 7-10% of rising costs. This balance protects consumer demand while partially offsetting inflation.
AI infrastructure demand has intensified pressure on components. Memory prices have surged two to three times recently. Smartphones, laptops and televisions saw price jumps of 20-40%. Some categories saw increases every one to two months. Capacity for AI data centres and EVs is booking months ahead.
Company-level impacts illustrate this pressure clearly. PG Electroplast says producing 500,000 ACs now costs far more. Last year’s roughly Rs 700 crore has risen to Rs 940 crore. Crompton Greaves lost nearly Rs 200 crore in sales last quarter. Supply disruptions tied to commodities drove that quarterly setback directly.
India’s electronics industry remains significantly import-dependent overall. Roughly 30-40% of inputs are sourced from abroad. Freight costs have risen following the US-Israel war on Iran. Rupee depreciation has compounded this broader input-cost inflation. Blue Star’s B Thiagarajan noted margins fell from double to single digits.
Despite these pressures, companies are adapting through multiple channels. PG Electroplast plans local AC compressor production by December-January. That new line will add capacity for two million units. Electronics producers are thus balancing innovation, sourcing flexibility and pricing. Their approach reflects a broader industry effort toward sustainable cost management.
