Overview

Make in India: Electronics Manufacturing

Growth of Electronics Sector: (Source: MeitY Annual Report 2016-17)

The Electronics sector has several verticals in terms of its main constituents. At present the availability of data on the production from this sector is limited to the information provided by various industry Associations including ELCINA. Based on the same the production profile of the Electronics Sector is as follows:-

Consumer Electronics

As per estimates of CEAMA, the overall production of this segment of electronic industry was Rs. 64752 Crore in 2016-17 compared to Rs. 55,765 crore in 2015-16 and exhibited a growth of 16.1%. A notable feature of growth in Consumer Electronics in the earlier years was the rise in imports over the years in respect of certain items like LCD/ LED TVs. The government stopped duty free import of such items as baggage and imposed a 36.5% duty on the

same in 2013-14. Subsequently, the production of LCD/LED TVs increased to 12.0 million nos valued at Rs. 21 ,000 crore in 2015-16, from 8.75 million Nos valued at Rs.16,200 crore in 2014-15 exhibiting a growth rate of 37% and 30% in quantity and value terms respectively (as per estimates from the industry association (CEAMA). While separate figures for Growth of TVs are not yet available for 2016-17, however, lIP data shows that Group 32 i.e. 'Radio, TV and communication equipment' grew at 12.8 per cent (during Apr-Nov 2016), which suggests, that the production of TV sets may also have been healthy. As far as prices go, the TV segment has witnessed a declining trend over the last few years in terms the wholesale price index. During 2016-17 (Apr-Dec), there was no significant change in whole sale price levels. On the other hand, the consumer price levels as per CPI have been showing a steady upward trend over the 3 years for TV sets in the range of 2-3 per cent per annum perhaps due to market and quality related factors. In contrast to the LCD/ LED segment, conventional TV (with Picture Tube) has continued to register negative growth in production. Similarly, production of DVD players has continued to decline due to growth of DTH sector, digitalization of TV network and use of set Top Boxes.

Industrial Electronics

Industrial electronics sector is closely linked to the investment in industry and infrastructure. Process Control Equipment, industrial control systems, Test & measurement devices, Power Electronics, Automated / automation equipments and Analytical Instruments, agriculture electronic instruments, environment monitoring instruments etc. are some of the key segments of this industry. As per estimates of ELCINA, the overall production of Industrial Electronics was Rs. 45083 crore in 2015-16 and grew to about over Rs. 62214 Crore in 2016-17 (by 38 %).

The emerging trends in Industrial electronics are slated to change the landscape not only in the areas of electronics manufacturing but also the rest of the manufacturing sector. Artificial intelligence and 3D technologies and printing is increasingly helping industry to be more efficient, improve quality control and reduce manual supervision costs. The introduction of newer software for Integration of production and business operations can help companies to integrate their production and business operations to maximize production and reduce overheads. The electronics sector is witnessing a wave of new technologies including internet of things (loT), decision analysis, 3D co ordinate systems, smart Image processing, nanotechnology, nanoscale assemblies, distributed control systems and robotics to manage process and equipments in a range of industries.

Most of the domestic demand is catered to by local manufacturing, whereas, about 10% of the sophisticated products are imported. Power electronics is an important segment of Industrial Electronics which has been dominated by unorganized regional players. However, over the last few years large players in this area have emerged with global tie-ups and have brought in newer technologies into the Indian markets.

Automotive Electronics

With the growth in the Automobile industry and the increasing digitisation of automobile controls, Automotive Electronics has come to occupy an important segment of the industry. Automotive Component Manufacturing Association (ACMA) has provided the projection of Indian Automotive Electronics Sector will be approximately at Rs. 36500 crore till 2020. The global market for automotive electronics is set to account for 230 Billion USD in 2020 from 140 Billion USD in 2010. Name of few of the key technologies to be used in automotive electronics are as Antilock Breaking System (ABS), Body Contorl Module (BCM), Tyre Pressure Monitoring System (TPMS) , Electric Power Steering (EPS) etc. while parking, cam, crank and oxygen sensors are the key sensors to be focused.

Computer Hardware

As per estimates of MAlT, the overall production of this segment of computer hardware was Rs. 19885 crore in 2015-16 and grew to about over Rs. 20879 Crore in 2016-17 (by 5 %). While new mobile and hand held devices are becoming popular, however due to the increasing need for computers in commercial, industrial and personal use, the demand for computers is expected to grow in India at a steady pace.

Mobile Phones

India has the second largest wireless network in the world. The country has witnessed a rise in manufacture of mobile handsets during the past decade. Today, the value share of mobile handset industry over the total ESDM (Electronics System Design and Manufacturing) segment in India is estimated at about 30%, which makes mobile handsets' industry as the largest ESDM vertical.

Several initiatives have been taken during the year leading to significant investments in new manufacturing operations. Some of the important initiatives like enhancing of the differential excise duty benefit on mobile handsets have played a key role to transform the manufacturing space. As per ICA, the total production of mobile handsets in India jumped to Rs. 54,000 crore by value during 2015-16, registering a growth of about 185%.ln volume terms manufacturing of mobile handsets reached 110 million units thereby registering a growth of approximately 90%. Around 40 new manufacturing plants to manufacture mobile handsets have been set up during the past about 18 months generating direct and indirect employment opportunities for 1,20,000 persons. Manufacturing of mobile handsets is further estimated to grow by about 74% during 2016-17 to reach the manufacturing value of about Rs. 94,000 crore.

Apart from mobile handsets, manufacturing of various components of mobile handsets like battery packs, chargers / adapters and wired headsets have also kick started in India during the past about 8 months. As per Indian Cellular Association, approximately 30 new manufacturing plants for these components have already been established during this period generating direct employment for approximately 20,000 persons. Institution of the differential excise duty structure on battery packs, chargers / adapters and wired headsets vide Budget 2016-17 has led to manufacturing transformation in the components eco-system as mentioned above.

Strategic Electronics

The strategic electronics segment consists of Military Communication systems, Radars and Sonars, Network Centric systems, Electronic Warfare systems, Weapon systems, Satellite based Communication, Navigation and Surveillance systems, Navigational aids, underwater electronic systems, infra-red based detection and ranging system, disaster management system, internal security system etc. Electronics is a key area of defence technologies and become a vital component of nearly all the weapon systems, platforms and equipment designed and developed for Defence purpose.

The production of Strategic Electronics was Rs.20,760 Crore during 2016-17 as compared to Rs.18055 Crore in 2015-16. India's defence, aerospace and nuclear sectors are poised for substantial growth on the back of economic growth and the need to maintain national and energy security. The role of IT in defence is expanding with the new focus on cyber security.

The Indian strategic electronic industry has been dominated by BEL and also has defence PSU's such as HAL, ECIL and BDL into manufacturing. Mere recently a few domestic small and medium scale companies have emerged with the capability to absorb technology and meet stringent requirements of strategic equipment. Some of these companies provide EMS services and meet critical supply requirements of MNC's as well as DPSU's. Larger Indian business groups are also foraying into Defence Sector and these companies have resources to take up big offset projects and collaborate with global leaders.

Indian defence electronics industry has been growing at an average rate of about 13.4% per year. The role of IT in defence is expanding with the new focus on cyber security. The next decade is likely to see advancement in technological programs Including Tactical Communication System (TCS), Network-Centric Warfare (NCW) Systems, Electronic Warfare (EW) Systems, Future Infantry Soldier as a System (FINSAS), tank electronics, defence systems etc.

Medical Electronics

Medical devices play a crucial role from the diagnosis to the after-care phase of medical treatment and significantly impact affordability of and access to healthcare. As per Deloitte report on Medical Devices, the global medical devices and technology market is expected to grow to USD 520 billion by 2020 from an estimated USD 3.7 billion in 2014 due to rising prevalence of chronic diseases; ageing population; increasing income and affordability, resulting in higher demand & utilization of healthcare services. The Indian market is among the top twenty in the world by market size, and fourth in Asia after Japan, China and South Korea. Indian market is import dependent which is around 75%. The Government has also taken various steps in this sector that include the following:-

  • 100% FDI in medical devices under automatic route
  • Introducing Draft Medical Device Rule 2017
  • Make in India initiative for promoting indigenous manufacturing
  • The development of a quality standardization framework in India that is based on international standards and certifies the quality, safety and performance of medical devices several policy measures to address the challenges of medical devices industry.

To promote scientific and technological research in Medical Electronics sectors in India, MeitY in association with Biotechnology Industry Research Assistance Council (BIRAC) is implementing Industry Innovation Program on Medical Electronics (IIPME). The Project aims to fund a portfolio of Indian led pilot Projects that target innovations in the multi-disciplinary areas comprising of electronics, engineering, medical devices, healthcare, software, algorithms and information technology MeitY will provide a funding support of Rs.10.5 crore over a period of 3 years. Under this program support is provided at Seed, Early transition and transitions to scale stages. Currently, 14 projects are being funded under this program and 5 more have been selected for funding.

Electronic Components

As per estimates of ELCINA, the overall production of this segment of electronic industry was Rs. 5,383 crore in 2015-16 and grew to about over Rs.52,099 Crore in 2016-17 (by 14.8 %).

It is however noteworthy that a significant share (-70%) of component production is exported leaving only about 25% for domestic consumption, which is used in local equipment production. Rapid growth in domestic manufacturing of electronic components is vital and the only way in which overall electronics manufacturing will grow. The emerging high growth areas for domestic manufacturing are LED Lighting, Automotive electronics, energy meters, solar energy and IT products such as Tablets. These products are now driving the growth of electronic component manufacturing. These products are an addition to existing segments such as telecommunications, consumer electronics and industrial electronics. The Indian electronic component market is dominated by electro-mechanical components (like printed circuit boards, connectors, etc.,) with 29% share, passive components (like wound components, capacitors, resistors, etc.) have about 24% share. Further Active components (like ICs, Diodes, Transistors, Picture Tubes, etc.) and the Associate Components (like optical disc, magnets, RF Tuners etc.) constituted 18% and 29% share of the components respectively.

Light Emitting Diodes (LEDs)

One of the driving forces for growth in electronics manufacturing is the Indian Lighting market. The demand for energy efficiency has brought forward an immediate' need for more energy efficient products and also has pushed market towards more efficient products such as Light Emitting Diodes (LEDs). LEDs are the choice for energy efficient lighting and as per ELCOMA, LED manufacturing in India has grown by about 59% to reach Rs. 5092 Crore in 2015-16 and is estimated to reach a production value of about V134 crore in 2016-17.

The opportunities for Light Emitting Diodes (LEDs) in Indian lighting markets have increased in automobiles, communications, signage, signaling, architecture and entertainment sectors. The opportunity for LEDs in the general space illumination segment of residential and commercial buildings has also emerged and expanding very rapidly.

Imports 2014-15

Total import of Electronics into India in 2014-15 was USD 36,857 million. The overall import of electronics exceeds domestic production thus making India dependent on imports. Import of electronics accounts for over 8 % of total imports by India.

Import of electronics showed strong growth of 13.8 per cent in 2014-15 driven largely by growth in telecom instruments followed by computer hardware & peripherals. A breakup given below shows that telecom instruments accounts for a large share in total electronics imports (39.9 per cent) followed by computer hardware (19.7 per cent).

Imports 2015-16 (April-December) grew by 11.5 per cent compared to 12.1 per cent during the corresponding period of the previous year. Telecom instruments which grew at 13.4 per cent, compared to 30.6 per cent last year, continued to be the largest item in the basket of electronic imports. Growth in import of electronic components turned strongly positive compared to the negative rate experienced in 2014-15 (Apr.-Dec.). On the other hand, consumer electronics imports declined by 2.6 per cent during Apr.-Dec. of 2015-16.

Exports (2014-15)

The total export of electronics from India in 2014-15 was of the order to USD 6009 million. Electronics exports account for a very small proportion of total exports from India accounting for just about 1.94 per cent. Electronic exports showed a sharp decline in 2014-15 with a growth rate of (-) 21 per cent with the sharpest decline being in telecom instruments.

In terms of composition, export of electronics comprises of electronics instruments and electronic components having a share of around 31 per cent each with the balance accounted for by consumer electronics and computer hardware.

Exports 2015-16 (April-December) continued to decline by 9.8 per cent on top of the declining trend witnessed in the previous year. Growth in export of computer hardware turned positive compared to negative rate experienced in 2014-15 (Apr.-Dec.). On the other hand, growth of electronic components turned sharply negative during Apr.-Dec. of 2015-16. Growth in telecom instruments which was negative during 2014-15 continued to remain so during Apr.-Dec. of 2015-16.

(Source: MeitY Annual Report 2015-16)