India has a growing electronics system design manufacturing (ESDM) industry and a design base with over 120 units. According to the Department of Electronics and Information Technology (DeitY), nearly 2,000 chips are being designed every year and more than 20,000 engineers are working on various aspects of chip design and verification. The ESDM industry will benefit from the government’s ‘Make in India’ campaign and is projected to see investment proposals worth Rs 10,000 crore (USD 1.5 billion) over the next two years.

“The Government has a strong focus in developing the ESDM ecosystem in India. Several subsidies and other incentives are on offer for setting up electronics manufacturing units in India. For the growth rate of the ESDM market, we have predicted that it will grow from USD 76 billion in 2013 to USD 400 billion by 2020. Further, the consumption of semiconductors will continue to increase,” Ashwini Aggarwal, chairman, India Electronics and Semiconductor Association (IESA) told Telangana Today.

IESA is the trade body representing the Indian ESDM industry, comprising of over 280 members both domestic and multinational enterprises.

The government, in consultation with semiconductor industry, has increased focus on the ESDM sector in last few years. Some of the initiatives outlined in the National Electronics policy and the National Telecom policy are already in the process of implementation, such as Preferential Market Access (PMA), Electronics Manufacturing Clusters (EMC) and Modified Special Incentive Package Scheme (M-SIPS). With the implementation of fabrication capabilities in India, the country could achieve a higher degree of self-sufficiency in electronics, Aggarwal pointed out.

The Indian government has allowed 100 per cent Foreign Direct Investment (FDI) under the automatic route in ESDM sector. The FDI in electronic manufacturing has reached an all-time high of Rs 1,23,000 crore (USD 18.34 billion) in 2016 from around Rs 11,000 crore (USD 1.64 billion) in 2014. With this, several large organisations started to invest heavily in manufacturing from India. For instance, Panasonic Corporation plans to set up a new plant in Haryana, which will manufacture refrigerators and set up a research and development (R&D) centre for appliances for the Indian market.

Further, India has signed a MoU with Singapore Semiconductor Industry Association (SSIA) to establish and develop trade and technical cooperation between the electronics and semiconductor industries of both the countries.

Import dependency

India’s total electronics hardware production in 2014-15 was estimated at USD 32.46 billion. With a domestic consumption of USD 63.6 billion, 58 per cent of the feeding was fulfilled with imports. According to a report by Assocham-NEC 2017, the increasing demand for electronics is likely to leave the domestic production standing, leading to an import requirement of about USD 300 billion by 2020.

The demand for electronic products in India is expected to reach USD 400 billion, growing at a CAGR of 41 per cent by the year 2020; while the domestic production is growing at a CAGR of 27 percent.

India imports most of its electronics equipment from China, with an overall estimate of 65 per cent to fulfill the demands. As per the Commerce Ministry data, import of phones and accessories also grew from USD 665.47 million in 2003-04 to USD 14.3 billion in 11 months of 2016-17 till February. Import of phones from China grew from a trifling USD 64.61 million to USD 10.1 billion during the same period. Chinese-based smartphone makers have now captured more than half (51.4 per cent) of the Indian smartphone market, according to the latest quarterly mobile phone tracker by International Data Corporation (IDC). – Telangana Today