Studies in Indian Place Names ISSN: 2394-3114

(UGC CARE Journal) Vol.40-Issue.89-March, 2020

A STUDY ON THE IMPACT OF COVID-19 ON ELECTRONICS INDUSTRY IN BENGALURU

Murali Balaraman
B.E., M.Tech., MBA., (Ph.D.), Managing Director, TRANSPACE Technologies Private Limited,
Bangalore, Karnataka State

ABSTRACT
Covid-19 outbreak is affecting all types of industries in India and it is bringing about numerous
liabilities to the electronics industry. This study reveals that the managers of electronics companies are
in agreement when we talk about facing low market demand, experiencing supply chain break ups,
drastic reduction in production, struggling to continue production due to import restrictions on raw
materials, decrease in man power, deciding the salaries of their employees, witnessing shortage of
components and experiencing huge revenue losses. Significant differences in business are being
experienced due to the impact of covid-19 on electronics companies and their profile. Impact of covid-
19 on electronics companies is reflecting negatively on their performance. Thus, lockdown due to covid-
19 is severely impacting the electronics industry and even though these are minor and temporary
setbacks it requires large support from the government and its supply chain partners for companies to
get through this trying time. The forthcoming 6 to 9 months are very crucial for electronics companies.
The covid-19 outbreak also comes with new and big opportunities in the areas of telecommunication,
internet, medical, power, computer and mobile phones, consumer electronics, automobile, satellite and
defense. It is time for electronics companies to utilize these opportunities to overcome current
challenges and enhance their efficiency, profitability and sustainability.
Keywords: Covid-19, Electronics Industry, Impact, New Opportunities

1. INTRODUCTION
Covid-19 outbreak is affecting all type of industries in India and it causes particularly significant
damage to electronics industry. Presently, the supply chain of electronics industry is completely in
break down. Supplies that have already reached India need to be sanitized at advanced levels before
being distributed to different locations and markets within India. The major challenge for electronics
industry in India is its overreliance on imports and India imports various electronic components,
assemblies, equipments, spare parts and raw materials. China is an important import source for
electronic companies operating in India. Many electronics companies have very limited resources and
in general alternative sources are very minimal. Almost 70 to 80 per cent of various components of
electronics industry is manufactured and imported from China and there is a large shortage of
components because Chinese companies have not started their production due to the outbreak of covid-
19.The components they sell, are expensive and it is affecting various operations of many electronics
companies in India. Besides, the degree of impact of covid-19 is varying across different market
segments depending on localization. Covid-19 also has a significant negative impact on the production
of electronics companies, thereby impacting pricing, profitability and overall economy. Despite the
stimulated package of Government of India, electronics companies are experiencing problems of
production, supply chain operations and restriction in engagement of employees in work places and at
the same time. But, simultaneously this global pandemic is also creating new opportunities for
electronics companies in India. Thus, it is important to study impact of covid-19 on electronics industry
2. OBJECTIVES OF THE STUDY
i) To examine impact of covid-19 on electronics companies.
ii) To find difference amidst impact of covid-19 on electronics companies and their profile.
iii) To analyze the relation between impact of covid-19 on electronics companies and their performance.
3. HYPOTHESES OF THE STUDY
i) There is no significant difference between the impact of covid-19 on electronics companies and their
profile.
ii) There is no significant connection between the impact of covid-19 on electronics companies and
their performance.
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Studies in Indian Place Names ISSN: 2394-3114
(UGC CARE Journal) Vol.40-Issue.89-March, 2020

4. METHODOLOGY
The present study is carried out in Bengaluru. Managers of electronics companies are selected randomly
and data are received from 160 managers by means of online survey. Profile of electronics companies
are examined through percentages and impact of covid-19 on electronics companies is studied by using
mean and standard deviation. Difference amidst impact of covid-19 on electronics companies and their
profile is found by carrying out ANOVA and t-tests. Relation amidst impact of covid-19 on electronics
companies and their performance is analyzed by applying and reviewing simple correlation analysis.
5. RESULTS
5.1 PROFILE OF ELECTRONICS COMPANIES
The profile of electronics companies is given in Table-1. Near to three fifth of electronic companies is
in sole proprietorship (57.50 per cent) and nearly two fifth of them are having investment of
Rs.3,00,00,001 – Rs.5,00,00,000 (38.75 per cent). Almost three fifth of them are operating in their own
establishments (59.37 per cent) and just above one third of them are providing employment to 51 – 75
persons (33.75 per cent) and just larger than half of them are attaining annual turnover of below
Rs.50,00,000 (50.63 per cent).
Table-1. Profile of Electronics Companies
Profile Number Percentage
Ownership
Sole Proprietorship 92 57.50
Partnership 68 42.50
Investment
Below Rs. 1,00,00,000 28 17.50
Rs.1,00,00,001 – Rs.3,00,00,000 37 23.13
Rs.3,00,00,001 – Rs.5,00,00,000 62 38.75
Above Rs.5,00,00,000 33 20.62
Establishment
Own 95 59.37
Leased 65 40.63
Employment
Less than 50 25 15.63
51 – 75 54 33.75
76 – 100 42 26.25
Larger than 100 39 24.37
Annual Turnover
Below Rs.50,00,000 81 50.63
Rs.50,00,001 – Rs.1,00,00,000 49 30.62
Above Rs.1,00,00,000 30 18.75
5.2. IMPACT OF COVID-19 ON ELECTRONICS COMPANIES
The impact of covid-19 on electronics companies is given in Table-2.
Table-2. Impact of Covid-19 on Electronics Industry
Impact of Covid-19 on Electronics Industry Mean Standard Deviation
Electronics companies are facing low market demand 3.90 0.92
Electronics companies are experiencing supply chain breaks up 3.93 0.88
Electronics companies are reducing their production 3.87 0.96
Electronics companies are increasing price of their products 3.39 1.12
Electronics companies are struggling to continue their production due
3.84 0.99
to import restrictions on raw materials
Electronics companies are decreasing their man powers 3.80 1.03
Electronics companies are cutting salaries of their employees 3.78 1.06
Electronics companies are witnessing shortage of components 3.95 0.85
Electronics companies are experiencing huge revenue losses 3.75 1.09
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Studies in Indian Place Names ISSN: 2394-3114
(UGC CARE Journal) Vol.40-Issue.89-March, 2020

Electronics companies are facing shortage of skilled workers due to

3.36 1.14
reverse migration
The managers of electronics companies are facing low market demand, they are experiencing supply
chain breaks up, they are reducing their production, they are struggling to continue their production due
to import restrictions on raw materials, they are decreasing their man power, they are cutting salaries of
their employees, they are witnessing shortage of components and they are experiencing huge revenue
losses, while, they are neutral about increasing the price of their products and they also face shortage of
skilled workers due to reverse migration.
5.3. IMPACT OF COVID-19 ON ELECTRONICS COMPANIES AND THEIR PROFILE
The relationship between the impact of covid-19 on electronics companies and their profile is given
below.
5.3.1. Impact of Covid-19 on Electronics Companies and Ownership
The relationship between the impact of covid-19 on electronics companies and ownership is given in
Table-3.
Table-3. Impact of Covid-19 on Electronics Companies and Ownership
Ownership N Mean Standard Deviation t-Value Significance
Sole Proprietorship 92 40.76 4.10 **
4.560 .000
Partnership 68 37.29 4.82
**
Significant in 1% level
Mean value of impact of covid-19 on electronics companies for sole proprietorship and partnership are
40.76 and 37.29 sequentially. This explicates that impact of covid-19 on electronics companies is larger
for sole proprietorship as compared to partnership.
The t-value is 4.560 and it discloses that significant difference is prevailing amidst impact of covid-19
on electronics companies and ownership.
5.3.2. Impact of Covid-19 on Electronics Companies and Investment
The relationship amidst impact of covid-19 on electronics companies and investment is given in Table-4.
Table-4. Impact of Covid-19 on Electronics Companies and Investment
Investment N Mean Standard Deviation F-Value Significance
Below Rs.1,00,00,000 28 35.85 5.16
Rs.1,00,00,001 – Rs.3,00,00,000 37 37.68 4.98
5.614** .000
Rs.3,00,00,001 – Rs.5,00,00,000 62 38.96 4.12
Above Rs.5,00,00,000 33 40.32 3.84
**
Significant in 1% level
Mean value of impact of covid-19 on electronics companies with investment of below Rs.1,00,00,000,
Rs.1,00,00,001 – Rs.3,00,00,000, Rs.3,00,00,001 – Rs.5,00,00,000 and above Rs.5,00,00,000 are 35.85,
37.68, 38.96 and 40.32 sequentially. This explicates that impact of covid-19 on electronics companies is
larger for investment of above Rs.5,00,00,000 as compared to others.
The F-value is 5.614 and it discloses that significant difference is prevailing due to the impact of covid-
19 on electronics companies and investment.
5.3.3. Impact of Covid-19 on Electronics Companies and Establishment
The relationship amidst impact of covid-19 on electronics companies and establishment is given in
Table-5.
Table-5. Impact of Covid-19 on Electronics Companies and Establishment
Establishment N Mean Standard Deviation t-Value Significance
Own 95 37.58 4.09
3.768** .000
Leased 65 40.04 3.32
**
Significant in 1% level

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Studies in Indian Place Names ISSN: 2394-3114
(UGC CARE Journal) Vol.40-Issue.89-March, 2020

Mean value of impact of covid-19 on electronics companies in own and leased establishments are 37.58
and 40.04 sequentially. This explicates that impact of covid-19 on electronics companies is larger for
leased as compared to own establishment.
The t-value is 3.768 and it discloses that significant difference is prevailing amidst impact of covid-19
on electronics companies and establishment.
5.3.4. Impact of Covid-19 on Electronics Companies and Employment
The relationship between impact of covid-19 on electronics companies and employment is given in
Table-6.
Table-6. Impact of Covid-19 on Electronics Companies and Employment
Employment N Mean Standard Deviation F-Value Significance
Less than 50 25 36.37 4.66
51 – 75 54 37.44 4.31
5.862** .000
76 – 100 42 38.97 4.06
Larger than 100 39 40.85 3.95
**
Significant in 1% level
Mean value of impact of covid-19 on electronics companies providing employment to less than 50, 51 –
75, 76 – 100 and larger than 100 are 36.37, 37.44, 38.97 and 40.85 sequentially. This explicates that
impact of covid-19 on electronics companies is larger for companies providing employment to larger
than 100 people as compared to others.
The F-value is 5.862 and it discloses that significant difference is prevailing amidst impact of covid-19
on electronics companies and employment.
5.3.5. Impact of Covid-19 on Electronics Companies and Annual Turnover
The relationship amidst impact of covid-19 on electronics companies and annual turnover is given in
Table-7.
Table-7. Impact of Covid-19 on Electronics Companies and Annual Turnover
Annual Turnover N Mean Standard Deviation F-Value Significance
Below Rs.50,00,000 81 36.03 5.43
Rs.50,00,001 – Rs.1,00,00,000 49 37.78 5.27 6.693** .000
Above Rs.1,00,00,000 30 40.14 4.84
**
Significant in 1% level
Mean value of impact of covid-19 on electronics companies attaining annual turnover of below
Rs.50,00,000, Rs.50,00,001 – Rs.1,00,00,000 and above Rs.1,00,00,000 are 36.03, 37.78 and 40.14
sequentially. This explicates that impact of covid-19 on electronics companies is larger for attaining
annual turnover of above Rs.1,00,00,000 as compared to others.
The F-value is 6.693 and it discloses that significant difference is prevailing amidst impact of covid-19
on electronics companies and annual turnover.
5.4. RELATION AMIDST IMPACT OF COVID-19 ON ELECTRONICS COMPANIES AND
THEIR PERFORMANCE
The correlation analysis is employed to analyze relation between the impact of covid-19 on electronics
companies and their performance and the result is given in Table-8.
Table-8. Relation amidst Impact of Covid-19 on Electronics Companies and their Performance
Particulars Coefficient of Correlation
Impact of Covid-19 on Electronics Companies and Their Performance -0.66**
**
Significant in 1% level
The correlation coefficient due to the impact of covid-19 on electronics companies and their
performance is -0.66 and it shows that they are negatively and highly related with each other.

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Studies in Indian Place Names ISSN: 2394-3114
(UGC CARE Journal) Vol.40-Issue.89-March, 2020

5.5. NEW OPPORTUNITIES FOR ELECTRONICS INDUSTRY IN INDIA

Electronics industry in India requires 6-9 months for recovery after lifting lockdown and growth of
revenue is not going to happen in this year. The problem in supply chain may stimulate start ups in
India to concentrate on product development and efficient production in India itself through start up and
make in India programs. The enormous long term opportunities are emerging for electronic companies
to produce various components that will reduce dependency on imports particularly from China.
Further, electronic companies will have huge chances for adopting innovation in their products and will
have greater scope in production of electronic goods relating to telecommunication, internet, medical,
power, computer and mobiles phones, consumer electronics and automobile and it is anticipated that
there will be greater demand for electronic products in India in the near future. Electronics companies
will have big opportunities in defense and space sectors if the Government of India permits private
companies into them and it will increase revenue generation in long run to them. At present, India is
having 2 to 3% of the market share in world market and it is going to increase by participation of
private electronics companies. Further, the limit of Foreign Direct Investment (FDI) in defense sector is
increased from 49% to 74% to enhance products related to defense in make-in-India programs.
Electronics companies also have a large scope in spacecraft sub-systems manufacturing, satellite launch
and its related applications namely navigation and remote sensing.
6. CONCLUSION
This study reveals that the managers of electronics companies are in agreement with other electronics
companies when faced with facts such as facing low market demand, experiencing supply chain breaks
up, reduction in their production, struggling to continue their production due to import restrictions on
raw materials, decrease in man power, employees facing salary cuts, witnessing shortage of components
and experiencing huge revenue losses. Hence, there is significant difference due to the impact of covid-
19 on electronics companies and their profile. Impact of covid-19 on electronics companies has
negatively affected and has hence reflected largely on their performance. Thus, lockdown due to covid-
19 is severely impacting electronics industry and although this setback is temporary it requires large
support from government and its supply chain partners. The forthcoming 6 to 9 months are very critical
for electronics companies and at the same time, covid-19 outbreak also creates new and big
opportunities in the areas of telecommunication, internet, medical, power, computer and mobiles
phones, consumer electronics, automobile, satellite and defense. It is the time for electronics companies
to utilize those opportunities to overcome current challenges and enhance their efficiency, profitability
and sustainability.
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