:: COMPONEX NEPCON

Significant growth in auto exports in November: SIAM

Delhi


	Post Show Report
	Coming Soon

Knowledge & Exhibition Partner

Endorsed & Supported By

View all our Supporting Associations

Trade Media Partners

View all our Trade Media Partners

Official Travel Partner

Preferred Hotel Partner

Beverage Partner

Exclusive Business News
Channel Partner

Official Airline Partner

Domestic Fares

International Fares

Organised by

India

Indian Electronics Market & Industry

The Indian market for electronics products stands at over US$32 bn and is projected to exceed US$320 bn by 2015, as per an optimistic forecast made in a recent study conducted by ISA-Frost & Sullivan.

In brief, between 2005 and 2015, the report forecasts the total electronics market to grow from US$ 28.2 bn. to US$ 363 bn. – a phenomenal +12X growth in 10 years. This would be divided between hardware equipment & design services which are slated to grow from US$ 25 bn & US$ 3.2 bn respectively in 2005, to US$ 320 bn. and US$ 43 bn in 2015. These projections are rather difficult to believe if we look at the way electronics hardware production has been growing over the last few years, hovering around 10-12% per annum while growth in exports have been erratic. Against demand of US$ 28.2 bn. the supply was a mere US$ 12 bn in 2005-06 with electronic design adding another US$ 3.2 bn.

Taking a macro and historic view of this industry, in the late 1990’s India policy makers decided to make India an IT Superpower and this resulted in phenomenal growth of this sector. Indian government has announced several policy measures to encourage this sector but the unprecedented growth in demand for Electronic products including consumer and ICTE products, has ensured that the import bill for these products will soon surpass our energy import bill! Our growing market offers to us an opportunity to establish world class manufacturing facilities and venture out into the global markets. There is a potential to achieve US$ 150 Bn production by 2015 from the current level of US$ 20 Bn. A tall order indeed, but this is possible and a great opportunity for us.

Three recent developments lend considerable support to the somewhat astonishing growth figures forecast by the ISA-Frost & Sullivan Report.

Steady growth of the Indian economy over the last few years which is keeping steady around 8% and nudging double figures. This is resulting in a growing middle class, which is a very potent market driver.

Secondly, the growth in demand for telecom and IT equipment which is in excess of 30% per annum and India is now adding more cell phones every month than what existed in the entire country 15 years ago

Lastly, the technological advancements in electronics are becoming the heart and core of technology of all products – be they industrial, consumer or service oriented. We cannot think of manufacturing products any more which do not have their share of electronics – and this is growing fast.

The activity in the hardware segment is picking up, and it appears that India is coming out of the shadows of WTO’s Information Technology Agreement (ITA-1), which brought 217 tariff lines of electronic components and IT/Telecom products to zero customs duty. Free Trade Agreements (FTA’s) with our major business partner countries are having the same impact on the rest of the electronic products, particularly consumer electronics. These developments contributed to uncertainty about the future of electronics hardware in India and discouraged investments during the 10 years upto 2005.

The last few years have seen a change in the fortunes of the electronics industry due to a brisk pace of growth in the market. Electronics output is currently worth about $20 Bn against a market of $40 bn. Presently, the largest segment is consumer electronics which is fast losing its primacy to telecom. Today, the market for cell phones alone exceeds $4 bn per annum!

Even with a brisk rate of growth, the electronics industry in India constitutes only about one percent of the global electronics industry and is miniscule by international standards. Much smaller countries like Malaysia, Singapore, and Thailand boast larger electronics industries. By comparison, demand for electronics hardware in India is growing rapidly and this growth rate (25% +) is among the highest in the world. In this situation, if domestic production, which is barely 50% of demand, does not accelerate, India's import bill for electronics may soon exceed its oil import bill.

The Colour Picture Tube industry played a major role in the electronics sector in India and today boasts of a capacity of about 20 million pieces per annum. The demand for colour picture tubes (CPTs) rose steadily during the 1990’s and major investments came in. However, this changed drastically after 2006 and has resulted in falling output and unutilized capacity. CPT manufacturers also encountered difficulties because of competition from imports owing to customs and import liberalization during the past decade and the FTA with Thailand.

The growth in demand for telecom products has been the most impressive, and today India is adding 9-10 million mobile phone users every month! With telecom penetration at around 30%, this growth is expected to continue through the next decade. October 2008 saw addition of 10.2 million new wireless connections in the country. Penetration levels in other high growth products such as Computer/IT products, auto electronics, medical, Internet, and networking, and even consumer electronics are even lower and growth in demand is projected to stay brisk for the next 8-10 years. With the Indian economy growing at an impressive 8% per annum, the projection of a $320 bn plus market though optimistic is quite possible and offers an excellent opportunity to electronics players worldwide.

Factors Driving Growth of Electronic Manufacturing Services (EMS)

A growth area in electronics manufacturing for India is the EMS (Electronics Manufacturing Services) segment which has been growing rapidly since last 3 years and most global leaders have set up base in India. This expansion of EMS activity is due to the rapid growth in all segments of the market for electronic hardware products mentioned above, as well as other growth drivers listed below:

Strong and growing domestic demand for mobile phones, personal computers, consumer, medical, strategic and automotive electronics

Highly talented workforce, especially for design and engineering services with good communication skills

Rising labor costs in western countries and now also in Asia

Presence of global EMS majors in India and their plans for increased investments in India to diversify risks and access the Indian market

More outsourcing of manufacturing by both Indian and global OEMs

Apart from the above factors, the robust and consistent growth in the electronic hardware market is due to a buoyant economy growing at 8% per annum, a large and aspiring middle class of 350 million and spread of telecom services to rural areas.

Recent trends show that an increasing number of engineering and design activities are also being outsourced to EMS companies and they are becoming ODMs (Original Design manufacturers) and provide final system integration and logistical support. This is a favourable trend given India’s strengths in electronic design.

U.S. technology researcher iSuppli Inc. estimates that the value of Indian electronic contract manufacturing (EMS) output will increase by 21% per annum to touch $2.03 billion in 2009 from an estimated $935 million in 2005. iSuppli, predicts that “many more EMS providers and OEMs will be heading to India over the next five years because of India's low cost workforce and to gain access to India's lucrative market. India has the potential to become the next China".

A more optimistic forecast for EMS reconfirms that many more EMS companies will move to India and by 2010 electronics contract manufacturers will handle about 30% of India's electronics manufacturing. On a projected manufacturing base of US$ 40 billion, this could mean that EMS may account for an output over US$10 billion.

Industry Growth Projections

Electronic Equipment Mkt : Unit forecast and end-user products :
(Units in '000 Nos)

End- User Products	2003	2004	2005	2006	2007	2010	2015
Television	9200	10350	11500	13300	15200	20100	32100
DVD Players	700	1500	3300	5000	6500	10000	16000
Microwave Ovens	475	590	770	930	1108	1732	5196
Set Top Boxes	780	1081	3918	6057	9000	20594	47495
VCD Players	6250	7500	8250	7838	6660	5663	2510
Wireless Handsets	13125	22080	35508	53191	87872	199237	530463
Desktops	2800	3630	4250	5310	6880	14170	38510
Monitors	3800	5000	6500	8150	9620	17500	43500
Laptops	180	220	300	517.5	804	1608	4020

Source : ISA- Frost & Sullivan Report 2006

Electronics Hardware Production (Financial Year)
(Rs. Crore)

Item	2002-03	2003-04	2004-05	2005-06	2006-07	2007-08*
Consumer Electronics	13,800	15,200	16,800	18,000	20,000	22,500
Industrial Electronics	5,550	6,100	8,300	8,800	10,400	11,950
Computers	4,250	6,800	8,800	10,800	12,800	16,400
Communication & Broadcast Eqpt.	4,800	5,350	4,800	7,000	9,500	14,350
Strategic Electronics	2,500	2,750	3,000	3,200	4,500	6,100
Components	6,600	7,600	8,800	8,800	8,800	9,500
Total	37,500	43,800	50,500	56,600	66,000	80,800

Dept of Information Tech; Govt of India

There is phenomenal growth happening in the Indian market for electronic equipment in India and the numbers projected for products like, Mobile Phones, DVD Players, Set Top Boxes and Computers are almost unbelievable. This market is fuelled by the growing middle class, rising incomes, spread of communication/internet technology and expansion of telecom network in the country.

Indian Electronic Industry (2007-08)
Total $ 20* Billion

The challenge for India is to convert this burgeoning market into a economic opportunity by expanding manufacturing facilities and creating employment for blue collar workers. The key to success for India lies in creating a supportive fiscal environment and infrastructure that would encourage investments in high value added electronics manufacturing. At present this opportunity has been availed to a very limited extent due to high dependence on imported products which are attractive for the local market due to their lower prices and absence of import duties. Growth in manufacturing is being fuelled by expanding EMS activity which is catering to local and MNC OEM brands which have a strong presence in the local market.

Role of exhibitions to promote the industry

Exhibitions help in strengthening relationships with existing customers and in uncovering new business opportunities through partnerships and collaborations. In addition this platform also provides industry knowledge of emerging market trends, innovations and developments.

These networking platforms are a solution that opens up new avenues for buyers and sellers to come together, all at without having to incur any additional costs like advertising or sales promotion events etc. Rather it is the message for the industry that exhibition is the excellent platform where you can actually measure true efficacy.

COMPONEX is a highly reputed show since a long time and ELCINA has associated with COMPONEX earlier as well. We want to achieve a better representation of the local manufacturing industry by joining hands with Reed exhibitions. ELCINA has been well known as an interactive forum for electronics and IT manufacturers while Reed is the world’s leading exhibitions organizer that brought together over six million industry professionals from around the world generating billions of dollars in business in 2007 alone. This unique tie up is a consolidated effort towards the promotion of the electronic manufacturing in India through the B2B networking platform throughout the country. Companies from the electronic industry, semiconductors, power electronics, electronic display, printed circuit boards, test & measurement instruments etc. will come and display their products in the exhibition. People from across different sectors like information technology, communications technology, medical technology, electrical & electronics technology and engineering institutions will come together in the exhibitions.

ELCINA ELECTRONIC INDUSTRIES ASSOCIATION OF INDIA

www.elcina.com

email elcina@vsnl.com

New Delhi, Nov 2008