Demand Drivers for the Electronics and IT Hardware industry

The Indian Electronics and IT Hardware sector has 6 key segments, namely Consumer Electronics, Industrial Electronics, IT Hardware, Telecommunication Equipment, Electronic Components, and Strategic Electronics. Consumer Electronics and Telecom Equipments are the largest segments with about 27% share each in total production. Consumer Electronics has traditionally been the largest segment, Computers and Telecommunication Equipment have increased their share in the industry in recent times.

The major demand drivers for the Electronics and IT Hardware industry are outlined below:

Consumer Electronics would be predominantly driven by growth in household spending, especially in areas such as Education (growth of 9%), Communication (12%), Housing and utilities (4.7%) between 2005 and 202512 13. This would have spin off effects in Telecommunications and IT Hardware as well and is evidenced by the current growth trends in Private Final Consumption Expenditure (PFCE) in these areas.

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Telecommunication Equipment would be mainly driven by increasing mobile penetration to B and C circles with mobile connections expected to touch 500 million by 2010. Further, increasing number of wire line and wireless broadband (Broadband Wireless Access WIMAX) as well as demand for customer premises equipment and fiber to home are likely to drive demand in long run.

IT hardware would be driven by increasing household spend on IT, education as well as domestic IT demand by Indian companies, e-governance initiatives, IT based education in schools and the growth in IT and ITES segment.

Strategic electronics would be driven by sustained GDP growth & increasing defense spending.

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