'Electronics industry to grow to $112-130 billion by 2018'

The Indian electronics and hardware industry is expected to grow at a compound annual growth rate (CAGR) of 13-16 percent to reach $112-130 billion by 2018 from the current level of $75 billion, a study has said.

The CAGR of 13-16 percent during 2013-18 is expected to be on the back of rising demand, growing disposable incomes, declining prices of electronics, wider broadband connectivity and e-governance programmes, said the study, 'Turning the Make in India dream into a reality for electronics and hardware industry', conducted by Assocham and Ernst and Young (EY).

"The Make in India initiative, combined with global manufacturers looking to relocate their manufacturing base from China to alternate locations such as India, Vietnam and Indonesia due to mounting labour costs provides a strong impetus to the industry," said Milan Sheth, partner and leader (technology), EY.

"It presents an opportunity to become a manufacturing-led sector in India from being predominantly consumption-driven."

The study also highlights the key demand-side and supply-side challenges faced by companies in this sector and presents some of the policy recommendations to strengthen electronics manufacturing in the country.

According to the study, growing reliance on imports for electronic components and rapidly increasing demand for electronic products makes it crucial to enhance and strengthen India's electronics manufacturing capabilities.

"Around 50-60 percent of the demand for electronic products and the demand for nearly 70-80 percent of the electronic components market is fulfilled through imports," the study added.

The study also noted that with the electronics sector expected to grow rapidly in the coming years, avenues will open for manufacturers to invest in the Indian market.

"Companies are looking at increasing their manufacturing base in India to serve domestic markets and also the Middle East, Africa and SAARC countries."

"However, to ensure that this momentum keeps pace, the industry and the government need to work together, to make the Indian electronics industry highly competitive," the report added.