India's growing electronics demand to create import gap of USD 300 billion

With an ever growing demand for electronic products in India, domestic production may touch USD 104 billion by 2020, thus leaving an import gap of USD 300 billion, according to a study conducted by the ASSOCHAM and NEC Technologies.

Demand for electronics in India has been projected to grow at a Compound Annual Growth Rate (CAGR) of 41 percent from 2017 to 2020, capping at USD 400 billion.

Owing to this, domestic production witnessed a CAGR of 27 percent and is projected to reach USD 104 billion.

India is home to a growing middle class population. Increasing disposable income has led to an increase in consumer demand for electronics products, specially advanced TV's, mobile phones and computers. This surge in demand is huge, which shows a positive outlook for the industry.

Demand for electronic products in India is poised for significant growth in the next few years, driven by a strong economic outlook. The Indian electronics and hardware market grew by 8.6 percent year-on-year to reach USD 75 billion in 2015, driven by rising local demand. At this point, the global electronics industry was valued at around USD 1.86 trillion in 2015, the study noted.

On the production front, India's total electronics hardware production 2014-15 is estimated at USD 32.46 billion. This represents a share of about 1.5 per cent in world electronic hardware production.

The domestic consumption of electronic hardware in 2014-15 was valued at USD 63.6 billion, out of which 58 percent was fulfilled with imports. With demonetisation adding to the demand for POS devices and mobile phones, the demand is expected to surge drastically.

The investments in electronic manufacturing, which was Rs. 11,000 crore in June 2014, has increased exponentially to Rs.1,27,880 crore in 2016. This is also due to the government's efforts to create an enabling policy ecosystem in the sector bringing through initiatives like Make in India and Digital India and providing special focus to schemes like the Modified Special Incentive Package Scheme (M-SIPS) and Electronic Development Fund (EDF).

However, even though there are signs of promising growth, the local production of electronic products has to be increased significantly to meet the domestic demand. Owing to this, the government needs to focus on infrastructure and policy making, with increased emphasis being provided for increasing the percentage of local component manufacturing in India.

Simplifying the complex regulatory structure for making compliance easier for new entrants and developing a participatory approach, where all the stakeholders are involved in the policy making process is also crucial to countering the domestic demand, the study suggested.