The growing sales figure for the consumer electronic goods, a flourishing telecom/networking market and noteworthy growth in the use of portable/wireless products are some of the significant trends observed in India at present and they are providing stimulus to the growth of the electronics design industry to a greater scale.
India has a well-developed electronics design industry, with 120 design units and is ranked the second among the US, the UK, Germany, Sweden, China, Taiwan and Israel in terms of design revenues.
Electronics is essential for setting up technology infrastructure, and semiconductors are the main component of electronics products. Electronics sales in India, which totalled US$ 40.7 billion in 2009, will touch US$ 400 billion by 2020. At present, local manufacturing accounts for about 40 per cent of consumption and it could increase to 80 per cent by 2020.
The key drivers for the electronics market in India include telecom infrastructure equipment, wireless handsets, notebooks and other IT and office automation products, set-top boxes and smart cards. Growth sectors including health care equipment, automotive, consumer goods and industrial goodsall of which increasingly use electronicsare also expected to boost electronics consumption in India and open up more investments opportunities for non-resident Indians (NRI).
Investment options in electronics industry of India
In India, after Bangalore, Noida has become a hub for electronics design industry with many major players setting up their offices and research and development (R&D) centres in the city. Global MNCs such as Freescale, Mentor Graphics and Interra Systems are some of the major companies in Noida.
The Government of India is continuously making efforts to boost Indian electronics industry and is attracting foreign and local players to invest in electronics sector of the country. For the purpose, the Government has set up an Empowered Committee that would invite a preliminary Expression of Interest (EoI) from potential technology providers and investors.
100 per cent FDI in India under the automatic route is allowed in semiconductor fabrication to promote electronics manufacturing in India.
The Union Cabinet has approved a proposal to offer financial assistance for the development of electronics manufacturing clusters (EMCs), to aid the growth of the Electronic System Design and Manufacturing (ESDM) sector in India. The scheme is expected to help flow of investment for development of the ESDM sector.
The Government is also formulating a special incentive package to encourage local manufacturing of electronic goods. The package includes reimbursement of indirect taxes, and a subsidy of 20 per cent on capital expenditure made by high-tech manufacturers in special economic zone (SEZ) units.
Future of Indian electronics sector
The growing tablet market; increasing notebook penetration coupled with widespread demand for flash memory and desktops from e-Governance programmes will drive the growth of the Indian semiconductor market.
“Semiconductors and electronics are at the heart of technology driven products that will drive the US$ 400 billion Indian electronics market by 2020. ISA is committed to working with all the stake-holders from industry, academia and government to enable the eco-system that will convert this opportunity into reality, as per Dr Pradip K Dutta, Chairman ISA and Corporate Vice-President & Managing Director, Synopsys India.
FDI in India in the electronics sector is very crucial for the development of the IT and the ITES sector in India.
The robust growth in the Indian semiconductor design industry has opened up a lot of opportunities to invest in electronics sector of India.