Competition and Government Incentives Drive Growth

It wasn’t easy to write about the 40th anniversary of the global imaging industry in India. I’m just 32!

While I have spent 14 years in this industry, I am also well connected to those who have been in this industry since 1979. Can I call them seniors? They may not see it that way, but they provided me with the historical landmarks:

1. The first copiers used zinc oxide (ZnO) paper, then plates. Liquid toner machines arrived in the early 1970s. By 1979, shops and engineers found they could profitably sell aftermarket, compatible ZnO papers, inks and dispersants to reduce the costs of the parts to service the expensive machines;
2. In the early 1980s re-inked recycled ribbons became widely available—firstly for typewriters and then dot-matrix ribbons. Shops in the large cities offered local solutions as imports were restricted, licensed and had 310% customs duty whacked on top;
3. In 1984 the government had a policy of giving bank loans to unemployed youth to set up photocopy shops. This led to a boom with at least 600,000 copy job shops across every town and village in India which led to tens of thousands of independent service engineers and a thriving aftermarket consumables market for all imaging products;
4. By 1985 the first laser printers were launched and dozens of entrepreneurs with techie experience were soon refilling the very expensive original CX and SX toner cartridges with black toner powders and drums and making 800% markups;
5. India’s economic reforms led to a welcome decline in customs tariff rates. From the “peak” rate of 310% in 1984, it became 150% by 1992, 40% by 1998 and 10% since 2007;
6. Today, imports account for over 90% of the imaging industry and all printers and copiers are 100% imported thanks to the government policy under ITA 2000 of zero percent customs duty;
7. The early foreign players in the industry were American leaders such as Katun and Static Control who saw the lucrative high growth and huge market potential. Then the Chinese factories created and catered to the demand of India’s thousands of very small importers;
8. In recent times, the government is attempting to establish “Aatmanirbhar Bharat” to boost local manufacturing and is offering many industries between 4% and 8% incentives on incremental revenues where goods are manufactured locally in India. The “Made in India” policy is directed as a public procurement preference to promote patriotism with tax breaks;

Lessons learned from many struggling and failed company examples reveal it’s very difficult to sustain a business in this industry in India. While it is a very large and fast-growing market, it is also hyper-competitive and highly price-sensitive. A focus on quality, profitability, enduring value, brand goodwill and user experience come second, or are, in some cases, entirely absent when it comes to brand and loyalty. Winning business by offering the lowest price alone is still the only way to get a foot in the door of your target customers.

Established brands are sustainable and will deliver good profits and growth for your business. Funnily enough, if there are those who try to copy your brand, or try to sell the same product as you, or claim to buy from the same Chinese supplier, it means you have arrived. ■