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With the electronics sector expected to grow rapidly in the coming years, electronics and hardware manufacturers are reportedly planning to invest in manufacturing set up in India to cater to the domestic and overseas demand. Companies are looking at increasing their manufacturing base in India to serve domestic markets and also the Middle East, Africa and SAARC countries, according to an Assocham-EY study titled ‘Turning the Make in India dream into a reality for electronics and hardware industry’. However, to ensure that this momentum keeps pace, the industry and the Government need to work together, to make the Indian electronics industry highly competitive, noted the report.
As per the report, the Indian electronics and hardware industry is expected to grow at a CAGR of 13-16 percent during 2013-18 to reach $ 112-130 billion by 2018 from current level of $ 75 billion. The growth is expected on the back of rising consumer demand, growing disposable incomes, declining prices of electronics, and numerous government initiatives such as wider broadband connectivity, e-governance programs and others.
Highlighting the key demand and supply side challenges faced by companies in this sector, the Assocham-EY study has presented some of the policy recommendations to strengthen electronics manufacturing in the country. Growing reliance on imports for electronic components and rapidly increasing demand for electronic products makes it crucial to enhance India’s electronics manufacturing capabilities. Around 50-60 percent of the demand for electronic products and the demand for nearly 70-80 percent of the electronic components market is fulfilled through imports.
Milan Sheth, partner and leader - technology, EY, commented, “The Make in India initiative, combined with global manufacturers looking to relocate their manufacturing base from China to alternate locations such as India, Vietnam and Indonesia due to mounting labour costs provides a strong impetus to the Indian electronics and hardware industry. It presents an opportunity to become a manufacturing-led sector in India from being predominantly consumption-driven.”
That said, there exist certain challenges around ease of doing business, taxation-related issues, and lack of end-to-end manufacturing value chain including component ecosystem, skilled labour unavailability and infrastructure bottlenecks in the country. Although the Government has undertaken steps to promote India as a manufacturing hub in the last two budgets, certain areas are yet to be addressed.
