Electronics Manufacturing in India – The Future Road

The current electronics market in India is close to US$100 billion and is estimated to reach US$400 billion by 2020. Recent trends suggest that it is growing at a rate of over 25% and is all set to expand going forward. In 2009, domestic manufacturing in electronics amounted to only US$$20 billion, but has seen huge growth since. Two major emerging areas were found to be chip design and the embedded software industry. Exports are also set to play a major role going forward. With global OEM’s de-risking China, has given rise to a trend of shifting mass manufacturing bases to Asia.

The period between 1984 and 1990 was considered the golden age of Indian electronics. The Indian electronics manufacturing industry took off from 1965 with 1982 and 1988 witnessing major milestones in the growth of the industry with the advent of the color television and digital exchanges. The electronics manufacturing sector has been growing in India witnessing a CAGR of 31% between 2004-2005 and 2009-2010. Over the years, the rise of SEZ’s have also contributed to growth in the electronics manufacturing sector along with government policies playing an increasing role with new proposals including investor-friendly measures among others. Consumer electronics, computers, and controls have played a major role in the growth over the years.

The majority of the value addition in electronic products in India comes from R&D, IPR creation, hardware, software, and product design, along with marketing, branding, and sales activities. Foreign investment into the electronics manufacturing sector in India is dependent on government policy to a major extent with foreign technology induction being encouraged both through FDI and through foreign technology collaboration agreements. In general, all Electronics and IT products are freely importable with the exception of some defense-related items.

The success of the Indian Electronics Manufacturing sector will, however, depend on government policies and initiatives that would encourage investments in the global market scenario. Many areas of development in the equipment industry are being envisaged. Going forward, it is important that some measures to boost investor confidence are required. The other major area of challenge for India is constantly updating all its resources to meet and mitigate the challenges of manpower shortage together with exploring new business areas to increase its customer base. It is also anticipated that manufacturing bases of many firms will be shifted to India from neighboring countries, which is an encouraging sign.