The demand for electronic devices is expected to rise from 80 billion US$ in 2012 to 400 billion US$ in 2020. Yet, the demand of around 60 to 70% is met mainly by imports, which are rising much faster than the local production. The new government wants to expand the existing support program in order to make the underdeveloped electronics industry more competitive. The main focus is the establishment of production clusters, research and development, in particular, with the collaboration of foreign investors. Commitments amounting to Rs 146 billion have been announced.
The electronics market is one of the largest in the world, and in India, it is anticipated to reach US$ 400 billion in 2022 from US$ 69.6 billion in 2012. The market is projected to grow at a compound annual growth rate (CAGR) of 24.4% during 2012-2020. The electronics sector consists of consumer and industrial electronics, computers, communication and broadcasting equipment, strategic electronics, and electronic components. The consumer electronics and durables industry is currently poised at about Rs 340 billion.
The growth in the demand for telecom products has been breathtaking, and it is expected that 118 million smartphones will be sold in India this year! With telecom penetration of around 10 percent, this growth is expected to continue, at least over the next decade. Penetration levels in other high growth products are equally high and the growth in demand for Computer/ IT products, auto electronics, medical, industrial, as well as consumer electronics is equally brisk. Combined with low penetration levels and the Indian economy growing at an impressive 7% per annum, the projection of a US$ 150 Billion market is quite realistic and offers an excellent opportunity to electronics players worldwide. While the Electronics sector in India is currently establishing its global role, there are several advantages that India offers that can be effectively leveraged to achieve higher growth: Manpower, Market Demand, and Policy and Regulatory Support.
The Major challenges that the Indian electronic manufacturing market is facing are infrastructure, which needs to be improved at the earliest, easing of foreign investment procedures (which is underway), and a restructured government tariff that now makes domestically manufactured goods more expensive than imported goods with zero tariffs.
The increase in generation, distribution, and utilization of electricity has resulted in the increased demand for electrical machinery and equipment in the recent past. The Heavy Electrical Equipment Industry has been delicensed under the New Industrial Policy of the Government of India. Also, under the New Policy, these items qualify for automatic approval with regard to foreign collaborations. Heavy electrical equipment is mainly manufactured by the government-owned factories which have been set up with foreign financial assistance and technical skill. By 2022, the installed power capacity in India is expected to reach 350 gigawatts (GW) from 243 GW in 2014, on the back of increasing industrialization and economic development. The total market size of electrical machinery in India is anticipated to reach US$ 100 billion by 2022 from US$ 24 billion in 2013. The government plans to set up the Electrical Equipment Skill Development Council (EESDC) which would focus on identifying critical manufacturing skills required for the electrical machinery industry. At the end of July 2015, Prime Minister Narendra Modi has launched the ‘Deen Dayal Upadhyaya Gram Jyoti Yojana’ for power sector reforms in rural areas aiming to provide an uninterrupted supply of electricity. This power scheme focuses on feeder separation (rural households and agricultural usage), and strengthening of sub-transmission and distribution infrastructure, including metering at all levels in rural areas. The total outlay for the new scheme is US$ 11.8 billion, out of which the Central Government shall provide a grant of US$ 9.8 billion. A total of US$ 2.2 billion worth projects have already been approved, out of which, projects amounting to US$ 0.92 billion have been approved for Bihar alone.
In general, it is to say that the prospects of the electrical as well as the electronic industry look very bright. The growing customer base and the increased penetration in the consumer durables segment have provided enough scope for the growth of the Indian electronics sector whereas the input by the Indian government will ensure the growth of the electrical machinery industry.
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