The domestic demand for electronics hardware is being fuelled by the relatively high growth rate of the Indian economy, aspirations of the younger generation, and the large middle class in India with increasing disposable income. Thus, there is significant opportunity for stepping up the production of electronics hardware in the country. India has the potential to develop and manufacture electronic hardware for the global markets and gain higher global share besides meeting the country’s future requirement in the converging areas of information, communication and entertainment.
Total production of electronics hardware goods in India is estimated to reach US$ 104 billion by 2020. The electronics sector has several verticals in terms of its main constituents. At present the availability of data on the production from this sector is limited to the information provided by various industry Associations.
The performance of the Indian electronic goods sector has been frail over the past few years. In spite of dismal growth rates in the last year, overall CAGR of exports during 2011-12 and 2015-16 remained strong at 42.5 percent while imports have grown at almost double the rate to touch 87.9 percent.
During April 2016-June 2016, India’s exports of electronics registered a y-o-y increase of 6.4 percent to aggregate to US$ 1.4 billion, accounting for 2.2 percent of the country’s total exports. Imports of electronics during the same period were valued at US$ 8.8 billion, witnessing a y-o-y negative growth of 4.2 percent, constituting a 10.5 share in imports.
During 2015-16, major export destinations for Indian electronic goods were USA (14.5 percent share), UAE (9.3 percent), Germany (4.9 percent), China (3.6 percent), and France (3.3 percent). In the case of imports, China was the predominant source, accounting for 54.9 percent of India’s total imports of electronics goods. Other major source countries were South Korea (7.8 percent), USA (7 percent), Germany (3.5percent), Malaysia (3.3 percent), and Singapore (3.2 percent).
Foreign Direct Investments
The government allows 100% foreign direct investment (FDI) under automatic route, no Industrial license requirement, payment of technical know-how fee and royalty for technology transfer under automatic route. During April 2000 to September 2015, nearly US$ 1,636.0 mn of FDI came into the electronics sector of India, accounting for 0.6 percent of the total FDI coming into the country.
The Indian electronics and hardware industry is expected to reach US$ 112-130 billion by 2018 as electronics and hardware manufacturers are looking to increase their manufacturing base in India to cater to the domestic market as well as the Middle East, Africa and SAARC countries#.
The Indian Electronic System Design and Manufacturing (ESDM) market is estimated to grow from US$ 94 billion in 2015 to US$ 400 billion by 2020## Consumption of semiconductors, in the meantime, has also steadily climbed. The semiconductor industry is estimated to grow from US$ 10.02 billion in 2013 to US$ 52.58 billion in 2020 at a Compound Annual Growth Rate (CAGR) of 26.72 per cent$$.
The growing customer base and the increased penetration in consumer durables segment has provided enough scope for the growth of the Indian electronics sector. Also, digitisation of cable would lead to increased broadband penetration in the country and open up new avenues for companies in the electronics industry.
[#. - According to a study by The Associated Chambers of Commerce of India (ASSOCHAM) and EY, ##.- According to a study ‘Indian Electronic System Design and Manufacturing (ESDM) Disability Identification Study’ by the India Electronics & Semiconductor Association (IESA) and EY, $$ .- According to a report by NOVONOUS ‘Semiconductor Market in India 2014 – 2020’]