Indian electronics industry to touch $94 bn in 2015

Bangalore, Jan 22 (IANS) Growing annually around 10 percent, the fledgling Indian electronics industry is projected to touch $94 billion over the next three years, an industry body representative said Tuesday, quoting a report by global consultancy firm Frost & Sullivan.

"The Indian electronic system design and manufacturing (ESDM) and semiconductor industry is on a growth trajectory of 9.9 percent CAGR (cumulative average growth rate) to register a turnover of $94 billion (Rs.5,061 billion/Rs.5.1 trillion) in 2015 from $65 billion in 2011," India Semiconductor Association (ISA) chairman Satya Gupta told reporters here.

Of the total, product segment will account for $79 billion and services $ $15 billion in 2015 as against $56 billion and $9 billion in 2011.

Driven by growing consumer demand, increasing disposable incomes and higher aspirations, the industry is bracing up to leverage on world class talent and favourable policies for innovative product development and value added manufacturing in a tough global environment.

"Import of finished goods and raw materials, however, will continue to be high, meeting 65 percent of the market demand for electronics products. In the absence of policy interventions, imports will grow to $42 billion in 2015 from $28 billion in 2011," Gupta pointed out.

The ESDM industry comprises electronic products, electronic components, semiconductor (chip) design services and electronics manufacturing services (EMS), with the first two representing products and others services.

Of the industry's projected market size ($94 billion), electronic products will account for the lion's share -- $75 billion in 2015 as against $52 billion in 2011. The electronics market comprises of domestic demand and products manufactured for exports.

"Though declining prices and increasing affordability are anticipated to propel domestic demand, the industry needs to increase self-reliance to create and leverage intellectual property (IP) assets and the high design capability to develop global products for and from India in the areas of computing devices, smart electronics, aerospace and defence and medical electronics," ISA president PVG Menon said on the occasion.

According to the report, financial inclusion programmes and rising standards of living are generating demand for new products besides widening customer-base of existing ones.

"The global economic downturn has had a profound impact on the ESDM industry in the past quarters. The high cost of developing products, including duties, taxation, capital and infrastructure makes the industry highly import dependent and driven," the report highlighted.

Noting that the ESDM industry had not been able to realise its potential for a long time and missed the opportunity to emerge as a leader in the global arena, the report has recommended an urgent action plan to effect a paradigm shift by the industry and the government.

"The industry has to achieve 50 percent of the demand for high impact products by local high value added manufacturing from current nine percent, as it will not only reduce imports, but also generate an additional 200,000 direct jobs," Menon added.

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