The global electronics hardware industry is estimated to be US$ 2 trillion. India is one of the largest consumer electronics market in the Asia Pacific, with the domestic demand for electronics hardware 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. The country also has the potential to develop and manufacture electronic hardware for the global markets.
During the period 2013-14 to 2018-19, the domestic production of the electronics industry registered a robust CAGR of 20.47 percent. The domestic production was valued at ₹ 4580 billion in 2018-19, with LED products recording the highest CAGR of 46.27 percent, followed by mobile phones (44.82 percent), industrial electronics (19.19 percent), electronic components (16.09 percent), strategic electronics (15.42 percent), consumer electronics (10.09 percent) and computer hardware (3.90 percent).
The IIP (Index of Industrial Production) of computer, electronics and optical products stood at 149.7 during 2019-20, as compared to 168.7 during the previous year, recording a decline of (-) 11.3 percent during 2019-20, as compared to a growth of 13.5 percent recorded during the previous year.
Production of Electronic System in India
(In ₹ Crores)
|Emitting Diodes (LED) Products||1941||2172||5092||7134||9630||13000||46.27|
|Source: MEITY, Exim Bank Research|
Electronic items accounted for 3.58 percent of the total exports from India in 2019-20. Exports from the sector recorded a y-o-y growth of 33.74 percent during the year. The export of telecom instruments recorded the highest y-o-y growth of 77.55 percent, followed by electronic instruments (21.45 percent), consumer electronics (15.83 percent), electronic components (5.20 percent) and computer hardware, peripherals (0.37).
The exports of electronics registered a CAGR of 11.87 percent during FY 15-20, increasing from US$ 6009.09 million in 2014-15 to US$ 10526.54 million in 2019-20. The growth in exports from the industry could largely be attributed to the growth in exports of telecom instruments, electronic instruments and components which recorded a CAGR of 33.14 percent, 8.54 percent and 4.72 percent respectively, during the period. Consumer electronic witnessed negative CAGR of (-) 9.96 percent, while computer hardware and peripheralsrecorded negative CAGR of (-) 1.19 percent during this period.
Trends in Export of Electronic Items from India
(In US$ Million)
|Electronic Items||2014-15 Value||2015-16 Value||2016-17 Value||2017-18 Value||2018-19 Value||2019-20 Value||
|Computer Hardware, Peripherals||346.44||365.16||262.38||329.68||345.43||326.30||-1.19|
|Source: DGCIS, MoCI, Exim Bank Research|
The government allows 100 percent FDI in the sector under automatic route with no industrial license requirement, payment of technical know-how fee and royalty for technology transfer. Cumulative FDI in the electronics sector amounted to US$ 2.79 billion during the period April 2000 to March 2020, accounting for 0.59 percent of the total FDI inflows into the country.
Going forward, rapid urbanization, rising personal disposable income, adoption of high-end technology devices, high technology obsolescence and product innovation, competitive pricing of products, easy financing schemes, expansion of organized retail and distribution networks, and several government initiatives are going to be the major drivers for the growth of the electronics industry in India.
The mobile phone industry in India expects that the Government of India's boost to production of battery chargers will result in setting up of 365 factories, thereby generating 800,000 jobs by 2025. 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, digitization of cable would lead to increased broadband penetration in the country and open up new avenues for companies in the electronics industry.
The new schemes of PLI, SPECS and EMC 2.0 under National Policy on Electronics 2019 are expected to contribute significantly to achieving a US$ 1 trillion digital economy and a US$ 5 Trillion GDP by 2025. These schemes will also leapfrog India towards a US$ 400 billion ESDM Industry, and encourage higher value addition in the electronics value chain.
Companies selling electrical and electronic goods in the EU must conform to the EU legislation for electrical and electronic equipment (EEE), which includes:
For further details on regulations applicable in various geographies, refer to this link: WEE Responsibilties
China’s “Measures for Administration of the Pollution Control of Electronic Information Product (EIP)”, commonly known as RoHS, is intended to restrict the use of hazardous materials in electrical and electronic equipment. All products manufactured on or after March 1st, 2007 for sale in China must adhere to stage 1 requirement. Products imported into the country for the purpose of re-export or for manufacturing of other export products are excluded. The following requirements need to be adhered to:
For further details on regulations applicable, refer to this link: China ROHS
Several federal agencies in the USA are responsible for regulations pertaining to electrical and electronic products. These include Consumer Product Safety Commission (CPSC), Customs and Border Protection (CBP),Department of Energy (DOE), Environmental Protection Agency (EPA) Toxic substances, Energy Star, Federal Communication Commission (FCC), Food and Drug Administration (FDA), Federal Trade Commission (FTC) and Occupational Safety and Health Administration (OSHA). The regulations require any importer/ manufacturer to conform to ‘19 CFR 134, Country of Origin Marking’ regulations. These regulations require that every article of foreign origin (or its container) imported into the USA be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to an ultimate purchaser in the USA the English name of the country of origin of the article at the time of importation.
For further details on regulations applicable, refer to this link: A guide to United States Electrical and Electronic Equipment Compliance Requirements