Indian Electronics Industry: Growth at a healthy pace in Consumer Electronics

/Indian Electronics Industry: Growth at a healthy pace in Consumer Electronics
  • Electronics-Industry-Expertise in India

The Consumer Electronics and Appliances Industry in India is expected to become the fifth largest in the world by 2025. Its projected to grow to US $ 400 billion by 2020 and the production is expected to reach US $ 104 billion by 2016. But what drives the growth and how do initiatives of the Indian Government promote it?

So far India accounts for only 3.5 % of the global Electronic Market which is of about $ 1.8 trillion market size whereas the Indian market counts for $ 65 billion approximately. The overall Indian Electronics Industry is projected to grow up to US $ 400 billion in 2022 at a rate of 24.4 % due to a better performance of economy in total. GDP of India grew more than 7 % in 2015, reasons are to be found for example in higher disposable incomes for middle-class Indians. For the Indian Electronics Industry follows a growth of consumer electronics, especially in urban India which primarily depends on manufacturing and service industries, those markets account for the major share (65 %) of total revenues. But there is also a lot of scope for growth from rural markets with consumption expected to grow in these areas as penetration of brands increases. Also demand for durables like refrigerators as well as consumer electronic goods are likely to witness growing demand in the coming years in the rural markets as the government plans to invest significantly in rural electrification.  Increased sales through internet retailing also supported the growth.  Although electronics and appliance specialist retailers continued to the main channel for sales of consumer electronics, recording an 80 % volume share in 2015, internet retailing grew by 25 % in volume terms to capture a 13 % volume share the same year. Leading e-commerce companies offered a range of discounts that attracted price-sensitive costumers. Key drivers were thus growing awareness, easier access, and changing lifestyles.

The Government is supporting the Indian Electronics Industry by setting up Electronic Hardware Technology Parks, Special Economic Zones and a bought about a favourable climate for foreign direct investment. With relaxed tariffs and an increasing liberalisation in general it is promoting growth in the sector further. In addition, the Government gave its green signal to the Modified Special Incentive Package Scheme (MSIPS) under which the central government will be offering up to US $ 1.7 billion in benefits to the Indian Electronics Industry in next five years. Concerning Consumer Electronics in particular, initiatives like Make in India, Digital India or Swachh Bharat also pushed this sector forward. While the Make in India initiative is leading to growth and investment opportunities leading to job creation, the steps outlined in the budged put India on the journey towards becoming a global manufacturing hub by 2022. Also, simplification in the tax regime helped in creating an investor-friendly environment and in line with the Make in India vision, the reduction of customs duty on certain inputs, raw materials, intermediates and components compliments the road map of realizing the need of improving the business environment leading to a transparent tax system.

The Government of India has allowed 100 per cent Foreign Direct Investment in the Electronics Hardware-Manufacturing Sector through the automatic route. Further it enabled 51 per cent FDI in Multi-Brand Retail and 100 per cent in Single-Brand Retail so as to attract more Foreign Investment into the country. With the demand for skilled labour growing among Indian industries, the Government plans to train 500 million people by 2022 and is also encouraging private players and entrepreneurs to invest in the venture. Many government, corporate and educational organisations are working towards providing training and education to create a skilled workforce.

The growing customer base and the increased penetration in Consumer Durables Segment have provided enough scope for the growth of the Indian Electronics Sector. Also, digitisation of cable could lead to increased broadband penetration in the country and open up new avenues for companies in the Indian Electronics Industry.

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