NEW DELHI, INDIA: The electronics industry reported at $1.75 Trillion is the largest and fastest growing manufacturing industry in the world. It is expected to reach $2.4 trillion by 2020. The demand in the Indian market was $45 billion in 2008-09 and is expected to reach $400 billion by 2020. Domestic demand is expected to be driven by growth in income levels leading to higher off-take of electronics products, automation demands of corporate sector and the government’s focus on e-governance.
The domestic production in 2008-09 was about $20 billion. However, the actual value-addition in the domestically produced electronic product is very low, ranging between 5 to 10 percent in most cases. At the current rate of growth, the domestic production can cater to a demand of $ 100 billion in 2020 as against a demand of $ 400 billion and the rest would have to be met by imports. This aggregates to a demand supply gap of nearly $ 300 billion by 2020.
Unless the situation is corrected, it is likely that by 2020, the electronics import may far exceed oil imports. This fact goes unnoticed because electronics, as a “meta resource” forms a significant part of all machines and equipment imported, which are classified in their final sectoral forms, for example, automobiles, aviation, health equipment, media and broadcasting, defence armaments, etc.
It is also pertinent to note that Indian electronics hardware production constitutes only around 1.31 percent of the global production. On the other hand, the share of global electronic equipment production of the largest contributing nation has increased from 17 percent in 2004 to 33 percent in 2009. Conversely, the country’s imports are expected to rise from 50 percent to 75 percent even as demand is rocketing.
India is a recognised global player in software and software services sector. It lags behind in electronics hardware manufacturing capabilities, though it is increasingly becoming a destination for chip design and embedded software. The vision is to transform India into a global hub for electronics system design and manufacturing (ESDM) so as to meet the growing domestic and global demand. There are many challenges to advance the same – infrastructure gap, tax structure, supply chain and logistics, inflexible labour laws, limited R&D focus, inadequate funding and limited value addition.
Recognising the importance and potential of the electronics sector, several economies in the Asia-Pacific region have repositioned themselves through infrastructural investments and proactive policies to emerge as a global power-house in this field.
Electronics is characterized by high velocity of technological change. Consequently, the life cycle of products is declining. As a result, the value of design and development in the product has increased quite significantly. Given India’s growing strength in chip design and embedded software, the increasing importance of design in product development has potential to make India a favoured destination for ESDM.
ESDM is of strategic importance as well. Not only in internal security and defence, the pervasive deployment of electronics in civilian domains such as telecom, power, railways, civil aviation, etc. can have serious consequences of disruption of service. This renders tremendous strategic importance to the sector. We cannot be totally dependent on imported electronic components and products for such a sector.
The electronic components, which are basis of an electronic product, are low volume, low weight, cheap and easy to transport across the globe. Moreover, under Information Technology Agreement-1 (ITA-1) of the World Trade Organization, which came into force in 1997, a large number of electronic components and products are bound with zero tariffs making trade unrestricted across international borders. Also, the electronics manufacturing is characterized by high volume and low margins.
All these have resulted in the electronics hardware industry being globally integrated with few large global players catering to a large part of the world.
India is one of the fastest growing markets of electronics in the world. There is potential to develop the ESDM sector to meet our domestic demand as well as to use the capabilities so created to successfully exports ESDM products from the country. The National Policy on Electronics aims to address the issue with the explicit goal of transforming India into a premier ESDM hub.
To create a globally competitive electronics design and manufacturing industry to meet the country's needs and serve the international market.
* To promote indigenous manufacturing in the entire value-chain of ESDM for economic development.
* To develop capacities for manufacture of strategic electronics within the country.
* To promote a vibrant and sustainable ecosystem of R&D, design and engineering and innovation in electronics.
* To develop high-quality electronic products at affordable prices for inclusive adoption and deployment to improve productivity, efficiency and ease of operations in other sectors.
* To promote environmentally friendly global best practices in the use and disposal of electronic products.
1. To create an eco-system for a globally competitive ESDM sector in the country to achieve a turnover of about $400 billion by 2020 involving investment of about $100 billion and employment to around 28 million people at various levels.
2. To build on the emerging chip design and embedded software industry to achieve global leadership in VLSI, chip design and other frontier technical areas and to achieve turnover of $55 billion by 2020.
3. To increase the export in ESDM sector from $5.5 billion to $80 billion by 2020.
4. To significantly enhance availability of skilled manpower in the ESDM sector. Special focus for augmenting post graduate education and to produce about 2500 PhDs annually by 2020.
5. To create an institutional mechanism for developing and mandating standards and certification for electronic products and services to strengthen Quality Assessment infrastructure nationwide.
6. To develop an appropriate security ecosystem in ESDM for its strategic use.
7. To create long-term partnerships between EDSM industry and strategic sectors like defence, space, and atomic energy, etc.
8. To become a global leader in creating Intellectual Property (IP) in the ESDM sector by increasing fund flow for R&D, seed capital and venture capital for start-ups in the ESDM and nanoelectronics sectors.
9. To develop core competencies in sectors like automotive, avionics, industrial, medical, solar, Information and Broadcasting etc through use of ESDM in these sectors.
10. To use technology to develop electronic products catering to domestic needs and conditions at affordable price points.
11. To expedite adoption of best practices in e-waste management
12. To create specialized governance structures within Government to cater to specific needs of the ESDM sector including high velocity of technological and business model changes.
13. To facilitate loans for setting up ESDM units in identified areas.