India to be the next big Electronics Manufacturing Hub

/India to be the next big Electronics Manufacturing Hub
India: Next electronics manufacturing hub
Shavikesh Goel 2019 article Picture

Shavikesh Goel | Vice President | Maier+Vidorno

August 2019

The National Policy on Electronics 2019 (NPE 2019), launched by the Indian Government in February 2019, targets $400 billion turnovers by 2025 from domestic manufacturing, setting up clusters for the entire value chain, and employing over 10 million people directly or otherwise to achieve a growth rate of 32 percent. The global electronics industry is pegged at approximately $2 trillion.

The policy targets production of one billion mobile handsets by 2025, valued at $190 billion, including export of 600 million mobile handsets valued at $110 billion. There are ~270 mobile and component factories in India, employing ~500,000 people directly or indirectly. Additionally, there is also a significant demand for high-end consumer electronics. The consumer electronics and appliances sector is predicted to grow at a CAGR of 13.4% to touch USD 20.6 Billion by 2020.

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The electronics production growth rate was 5.5 percent in 2015. In 2017-18, it rose to 26.7 percent. In 2012-13, India’s share in global electronics production was 1.31 percent and has gone up to 3 percent. Consumer Electronics and Appliances Manufacturers Association (CEAMA) and consulting firm, Frost & Sullivan has brought out a report suggesting that the consumer electronics industry is expected to grow at a 9.5 percent CAGR till 2021.

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The NPE 2019 also aims at promoting ease-of-doing-business for the Electronic System Design and Manufacturing (ESDM) sector, and also encouraging industry-led research and development and innovation in all sub-sectors of electronics. With a spike in demand for electronic products, the ESDM sector in India is predicted to reach ~USD 230 Billion by 2020, growing at 16-23% annually. The Electronics Manufacturing Clusters (EMC) Scheme intends to promote the establishment of Greenfield and Brownfield Electronic Manufacturing Clusters to promote innovation and steer growth in the ESDM sector. In the case of Greenfield EMCs, assistance will be provided with a restriction of 50% of the cost of the project, subject to a ceiling of USD 7.6 Million for every 100 acres of land. For Brownfield projects, assistance will be provided with a restriction of 75% of the project with a ceiling of USD 7.6 Million.

To make India a global hub for electronics manufacturing, incentive schemes like Modified Incentive Special Package Scheme (M-SIPS) and Electronic Development Fund (EDF) have been introduced. The Fund provides risk capital to both industry and academia for the development of new technologies in the area of electronics.

Being export-led, it will also help develop core competencies in all the sub-sectors of electronics, including electronic components and semiconductors, telecommunication equipment, medical electronics, defence electronics, automotive electronics, industrial electronics, strategic electronics, and chip design.

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Another factor going in favor of India is the rising manpower and infrastructure costs in China. When China loses the cost advantage, some of the local electronics manufacturing from there will move out to other countries and India would be at an advantage. With the projected growth rates of the Indian economy, our contribution to global consumption of electronics in value terms is likely to double to 7% by 2026—amounting to a domestic consumption of about $200 billion, with 60% value of imported components. Even in such a scenario, the total net foreign exchange earnings of India will be about $280 billion.

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Increasing domestic demand, rising disposable incomes, the Digital India initiative, rising manufacturing costs in other manufacturing economies and growing consumption in the Middle East, and emerging countries driving global demand, are contributing towards the growth of the Electronics Sector in India.

In the last 20 years, Maier+Vidorno has supported international companies with setting up turnkey Greenfield and Brownfield manufacturing facilities in India. We have in-house experts as well as an ecosystem of various external agencies to realize the manufacturing projects to international standards.  Feel free to contact us!

Read more news about the Electronic & Electrical Industry in India.

2019-09-03T18:34:08+05:30