India’s demand for electronic goods is continuously rising. New technological inventions are created and reach the market every month, and especially young people are keen on buying the newest products. To meet domestic demand, the Electronics output has to increase to $400 billion per year by 2020. In order to fulfill this projection, the Government’s Department of Electronics & IT promotes e.g. infrastructure development, providing of R&D expertise and training, and broadening the markets. 50 mobile manufacturing units were built in India from May 2015 to February 2016. The Government of India supports domestic electrical machinery production through its ‘Make in India’ campaign as more Energy networks need to be built as well as maintained. These efforts are in line with the “Power for All Mission” which is supposed to be realized in 2019. Additionally, India`s consumer demand for Smartphones reassured the fact that the country will climb to the 2nd place of the world’s largest Smartphone markets in 2017. This demand is not satisfied yet, as only a quarter of India’s population currently owns a Smartphone. How can this aspect, together with other innovations in the Electronic sector, shape the industry for further growth?
India’s Government launched the ‘Digital India’ as well as ‘Start-up India’ initiative in 2015 to transform the entire systems of public services through the use of IT (digitalize more processes) and foster entrepreneurship among Indians. Revenues in Consumer Electronics stood at $9.1 billion in 2014-2015, making up for 27% of the total Electronics revenues. Out of all Consumer Electronics, Smartphones are the most-wanted technology in India. The recent year-on-year growth in the Indian Smartphone market is 23%, which is the opposite in global markets, where companies currently face slight troubles. Smartphone popularity is steadily increasing as the world gets more digital for every person. Therefore, within the last year India’s Government has supported to build the capacity to produce 9 Million mobile phones per month.
Within the budget for the FY2016-2017, the Government changed indirect tax structures and eased the basic customs duty on a majority of hardware equipment to promote local manufacturing. These locally manufactured products were made affordable in order to reach the rural population as well, and conclusively widen the spectrum of connectivity. As of now, most of the rural population only uses basic mobile phones without internet access. In February 2016, a company announced to produce a Smartphone that would only cost around 500 Rupees ($7.42). Production has just started, so its success lies in the future.
Regarding internet access, speed is a major point for Indian buyers to decide upon mobile phones. That’s why more and more companies start offering LTE capable devices in India. To make fast internet possible, the providers also have to improve their network systems to adapt 4G-LTE technologies. Currently, the LTE penetration in India is still quite low, with 2-3% of the mobile subscriber base having LTE capability. But this is going to change soon as Indians move towards Smartphones with LTE-capability to get the fastest access to the Internet.
Another trend that has arrived in India is ‘wearables’. Such wristbands started to become popular worldwide with fitness trackers that could measure calories a person has burned, how many steps they’ve walked, or the length of a workout program. During the first quarter of 2016, sales of ‘wearables’ have reached a volume of 400,000 units in India. Their use can go far beyond fitness monitoring. Those trackers became smarter with the time and now can tell a person even how much sleep they need or give guidance on what a person should eat next.
In terms of high sales volume ‘smart wearables’ (smart watches) become more popular in India. Their contribution to sales in the wearable market is prospected to grow further from the current 12.3% share. This is not only based on a relatively low segment penetration but also because more affordable smart watches are going to be launched in India in the second half of 2016. For 2020, it is forecasted that more Services of those watches could become mainstream, which include personal safety and other functions which are so far performed by Smartphones. Today, only a few watches from renowned brands can perform functions, such as replying to messages or showing News.
With these technologies emerging, India’s Electronic Industry will face continuous growth in the coming years. Internet access in private households is emerging. This means more manufacturing, which will create additional jobs. 20,000 jobs have already been created in the last year in the Electronic System Design & Manufacturing sector (ESDM). In conclusion, the Electronic Industry in India shows good potential for the future.
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