Electronics industry estimated to grow at a CAGR of up to 23%

Electronic products market has been growing at a CAGR of 10% over the past two years

India's ESDM (Electronic System Design and Manufacturing) industry is forecasted to grow at a Compound Annual Growth Rate of 16-23 per cent to reach $171-228 billion by 2020, an industry specific report said on Tuesday.

"In 2015, India's ESDM industry is sized at $82 billion, growing at a CAGR of eight per cent from 2013. By 2016-17 the sector will become a 100 billion plus opportunity and is estimated to grow further at a CAGR of 16- 23 per cent to reach $171-228 billion by 2020," the report said.

It said that apart from sector-specific drivers, the forecasts are based on several parameters such as overall GDP growth of India, currency movement, inflation, existing trade agreements, consumer sentiments, potential government consumption, existing government policies, investments, manufacturing entities, and type of value addition in India.

The Indian ESDM Industry Update, an India Electronics and Semiconductor Association (IESA)- Ernst&Young (EY) report was announced at the India Electronics and Semiconductor Association (IESA) 'Vision Summit' in Bengaluru.

IESA is the trade body representing the Indian ESDM industry in the country.

On the Indian ESDM sector and economic outlook, the report said that the robust growth of India's electronics industry is primarily driven by huge domestic demand for products that can be attributed to a multitude of factors, including a growing middle class, rising disposable incomes and favourable duty structures.

Citing large-scale public procurement needs that are driven by government projects like broadband connectivity to villages, rural electrification and e-governance programs as among the reasons, it said favourable ESDM policy initiatives and rising interest of MNCs and Indian enterprises in the sector have created a positive impact on the Indian ESDM value chain.

On electronic production, the report said that in 2015, the electronic products market is sized at $61.8 billion, growing at a CAGR of 10 per cent over the past two years and that the sector was expected to grow at a CAGR of 15-19 per cent to reach $123-150 billion by 2020.

It said domestic manufacturing has been growing at a CAGR of 17 per cent in recent past, which is expected to increase further over the next five years.

The Mobile devices segment remains the largest segment in electronics products, as the Indian mobile devices market has been driven by rising demand for mobile handsets, reducing prices and tariffs.

Pointing out that the Electronic Manufacturing Services segment has been one of the major beneficiaries of the Government's focused effort towards developing the ESDM sector, the report noted that Indian EMS market is estimated to witness an exponential growth of 42-68 per cent over the next five years to reach $6 billion to13.2 billion by 2020.

It will be driven majorly by mobile manufacturing in India and further supported by steady growth in other sectors such as strategic electronics due to offset policy.

The report said that while electronic components market is estimated to grow at a CAGR of 22-33 per cent to reach $36.6-56.5 billion, design services revenue is forecast to reach $23.5-29.2 billion by 2020 at a CAGR of 13-18 per cent.