05252018Headline:

Electronics Manufacturing Industry Overview

The global electronics manufacturing industry, valued at US$1.75 trillion, is the largest and fastest growing manufacturing industry in the world, according to the Indian Ministry of Communications and Information Technology, and the industry is expected to reach US$2.4 trillion by 2020.

The global electronics manufacturing business, consisting of electronics manufacturing services (EMS) and original design manufacturing (ODM) firms, generated $359.8 billion in revenue in 2011, a testament to the degree to which global electronics brands increasingly rely on them for outsourced production. In 2006, these firms generated total sales of $264 billion. While revenue for EMS and ODM firms is expected to dip in 2012, it is forecast to grow to $400 billion in 2020. The firm estimates that contract manufacturing now accounts for 20 percent of all manufacturing.

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Yet, while India is a recognized global player in software and software services sector and is increasingly becoming a destination for chip design and embedded software, it lags behind in electronic manufacturing capabilities. The Indian electronics share in GDP constitutes around 1.71 percent.

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In recent years, India has had to import electronic products from China, Taiwan, South Korea, etc. But, as the value of India’s electronic imports is expected to overtake the value of its oil import bill by 2020, the Indian government is working to strengthen domestic electronics manufacturing.

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Indian Government to enhance the viability of electronics manufacturing has set up National Electronics Mission which would act as a nodal agency for the electronics industry.

The major objectives of the National Policy 2012 on Electronics Manufacturing are to:

  • Create an eco-system for a globally competitive electronics manufacturing sector in the country to achieve a turnover of about US$400 billion by 2020, involving investment of about US$100 billion and employment to around 28 million people at various levels.
  • Build on the emerging chip design and embedded software industry to achieve global leadership in VLSI, chip design and other frontier technical areas and to achieve turnover of US$55 billion by 2020.
  • Increase the export in the electronics manufacturing sector from US$5.5 million to US$80 billion by 2020.
  • Create an institutional mechanism for developing and mandating standards and certification for electronic products and services to strengthen quality assessment infrastructure nationwide.
  • Develop an appropriate security ecosystem in electronics manufacturing for its strategic use.
  • Create long-term partnerships between electronics manufacturing industry and strategic sectors like defense, space, and atomic energy, etc.
  • Become a global leader in creating intellectual property in the ESDM sector by increasing fund flow for R&D, seed capital and venture capital for startups in the ESDM and nanoelectronics sectors.
  • Develop core competencies in sectors like automotive, avionics, industrial, medical, solar, information and broadcasting etc through use of electronics manufacturing in these sectors.
  • Use technology to develop electronic products catering to domestic needs and conditions at affordable price points.
  • Expedite adoption of best practices in e-waste management.
  • Create specialized governance structures within government to cater to specific needs of the ESDM sector, including high velocity of technological and business model changes.
  • Facilitate loans for setting up electronics manufacturing units in identified areas.

Electronics Manufacturing in Other Sectors

Automotive Electronics: Technological developments in engine electronics and the incorporation of safety systems in cars will be the key growth drivers for the Indian automotive electronics market in the next five years as it attains a Compound Annual Growth Rate (CAGR) of 21.8 percent

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India automotive electronics manufacturing

LED: Penetration of LEDs in India could significantly reduce lighting load, peak demand and overall energy consumption without compromising on the entire lighting industry in India in 2009 was estimated to be 7167 crore according to Statistics of Indian Lighting Industry, ELCOMA, out of which, the share of LED lighting was 216.38 crore.

The Indian LED market is anticipated to grow at 54% till 2014 based on the industry estimates. The growth factors can be attributed to: Government support for promoting investments in energy efficient lighting Development of national standards for testing and performance evaluation Transfer and improvements in existing technology for new applications Global mandate to address GHG emissions, and decline in average prices of LED. It is expected that by 2021, the LED technology will penetrate 57 percent of the lighting market.

Medical Electronics:
Medical electronics to have a CAGR of 17-19% by following a strategy to consolidate the design and development of an affordable medical electronic device industry and to develop downstream manufacturing activities through sector specific clustering.

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Solar Photovoltaics: The contribution of electronics manufacturing is on a striking growing path to build the manufacturing capacity of solar photovoltaics to support 20 GW of solar power by 2020.

The reality of the ‘indigenous’ Electronic Indian manufacturing base today is that it is tuned to the traditional consumer electronic industries of glass, picture tubes, wire wound components, ferrites, passives, and so on. The other areas of manufacturing excellence are: power conditioning, automotive electronics for two wheelers and lighting electronics, etc. But these are a far cry from the advanced technologies which are required to produce advanced digital consumer products such as LCD TVs, cell phones, digital cameras and the like. There is one area of excellence in the new world—Telecom infrastructure—where the Indian government has mandated that local manufacturing takes place.

The major electronics manufacturing firms currently making a mark in India are:

Company Revenue ($ Million) Market share (%)
SCI system 5,367 17.4
Solectron 2,934 9.5
Celestica 2,600 8.5
Jabil Circuit 833 2.7
Avex Electronics 717 2.3
Nm Steel 680 2.2
Venture Manufacturing 569 1.9
Manufacturers Services Ltd. 475 1.5
Flextronics International 463 1.5
Bull Electronics 425 1.3
Total Top Ten 15,063 49.0

Conclusion

The significant growth driver that would help you gain market for your new products would be:

a.Strong and growing domestic demand for mobile phones, personal computers, consumer and automotive electronics.
b.Increasing demand for telecom infrastructure equipment -teledensity to increase from the present 9 per 1000 to 52 by 2013.
c.Rising labor costs in China.
d.Presence of global EMS majors in India and their plans for increased investments in India.

Apart from this, the Growth drivers are, robust and consistent growth in Electronic Hardware market of approximately 25% due to a stable economy & large middle class of 350 million people. The fastest growing segments are demand for telecom services particularly cell phones, internet subscribers & growth in demand for it products with increasing penetration of computers, falling prices & Government support to rapidly encourage usage of IT in all sectors.

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