The increasing prevalence of the internet along with the growing number of connected devices has given a boost to the power of electronics and the electronics market in India. Additionally, the elimination of 500 and 1,000 rupee notes in the demonetization move by the Government in November 2016 brought an increased push for digital currency. People are now becoming more open to using digital payment methods leading to a higher demand for smartphones and digital payment technologies & equipment. In 2016, 1.13 billion mobile phones were in use in India and by 2018, smartphones are expected to account for 62% of all mobile phones sales in India.
The Indian mobile phone market is still dominated by foreign brands especially from Korea and China. In particular, the Chinese Tech-Giant Xiaomi has reached $1 billion annual revenue in the Indian market in the last year and has increased its sales by 232%. Domestic mobile manufacturers, on the contrary, are struggling to survive on the mobile market. The Indian Government has taken steps to improve the situation by introducing the new goods and services tax (GST) and by planning to impose customs duty on imported mobile phones. The introduction of the new customs duty could increase the prices of imported mobile phones by 5 to 10% which will benefit the locally manufactured phones market. By taking this step, the Government also wants to encourage foreign companies like Apple Inc. to start manufacturing and assembling in India.
To strengthen the Indian economy, the Government has already rolled out schemes like ‘Make in India’ and ‘Digital India’ which are designed to boost the potential of the Indian economy. Several smartphone companies have previously set up assembling units in the country on the back of the ‘Make in India’ scheme. In the last two years, the value of mobile phones manufactured in India has increased by 3.7 folds from $2.97 billion in 2014-15 to over $14.1 billion in 2016-17. The Government wants to build a mobile ecosystem in India to achieve the target of producing 500 million phones by 2019 and exporting 120 million mobile phones by FY 2019-20.
The Union Budget 2017-18 has given a major boost to the Electronics Industry. With the plan to create an ecosystem to make the country a global hub for electronics manufacturing, the Indian Government has announced a significant increase in allocations towards incentive schemes like Modified Special Incentive Package Scheme (M-SIPS) and Electronic Development Fund (EDF) to $116.4 million in 2017-18 from $7.81 million in 2016-17. These schemes provide special incentives for locally manufactured electronics. Finance Minister Arun Jaitley said in his Budget speech, that “over 250 investment proposals for electronics manufacturing has been received in the last 2 years, totaling an investment of $19.68 billion.”
The domestic demand for electronics in India is steadily rising and is estimated to reach $400 billion by 2020. To keep up with the pace, the country is expecting $56 billion worth of investments in the Electronics Industry in the next four years. With 20%-25% subsidy under the M-SIPS scheme and by allowing 100% FDI in the sector, foreign companies and investors have already entered or showing active interest to invest in the Indian market.
Not only the Indian Government but also the local State Governments in India are now taking active measures to attract further investments. The Telangana Government for instance is making efforts to support electronics companies set up a base and flourish in the State. As a first step, the Government has agreed to build training centers to coach the staff working in the electronics manufacturing facilities. Creating such an ecosystem will attract more foreign and domestic companies to invest in the State.
The Malaysian Industry-Government Group for High Technology (MIGHT) and the Andhra Pradesh Economic Development Board (APEDB) have agreed to set up a fourth generation technology park in Andhra Pradesh. The 4G Technology Park will focus on new technologies through the application of industry best practices involving clean-tech, biotechnology, connected digital platforms, big data, robotics and additive manufacturing. This park is expected to attract investments of around $101.6 million in the first phase where 75 SMEs will be involved.
The Electronics and IT Ministry has approved setting up an electronics manufacturing cluster in Aurangabad, Maharashtra. The cluster, which is built under the Electronic Manufacturing Clusters (EMCs) scheme, will have a common facility centre including an Electronics Manufacturing Centre, electronics design and test lab, Modular Cabinet Manufacturing Centre and Skill development and training centres. The project is divided into two phases wherein the first phase is estimated to be completed within a year and attract $4.5 million investment. The Electronics and IT Ministry aims to set up 200 EMCs in India to support making the country’s infrastructure world-class and attract investments in the Electronics Systems Design and Manufacturing (ESDM) Sector.
The on-going ‘Digital revolution’ and the Government’s thrust on using technology to improve delivery of its public services have opened up huge opportunities to change the economic landscape in the Indian Electronics Industry. In 2015-2016, India imported electronic and communication items worth $37.2 billion. The Government is focused on promoting domestic electronics manufacturing and a Digital India to achieve ‘Net Zero Import’ of electronics by 2020. With several incentives and projects by the Indian Government and the individual states, the country is on the right track to accomplish its goals, become less dependent on electronic imports and develop into a global electronics manufacturing hub.
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