Imports may fulfil 75% of electronic goods demand in India by 2020: Study

While market is expected to reach $ 400 bn by 2020, domestic production to account for just $ 104 bn

Last Updated : Jun 13 2017 | 3:09 PM IST

Domestic manufacturers will be unable to fulfil the growing demand for electronic goods in the country, with imports accounting for as high as 75 percent of the market by 2020. The demand of electronic products in India is expected to grow at a CAGR (compound annual growth rate) of 41 percent during 2017-2020 to reach $ 400 billion by 2020, the domestic production, which is currently growing at a CAGR of 27 percent, may touch $ 104 billion leaving a huge gap for import to the extent of $ 300 billion, according to the joint study brought out by Assocham and NEC Technologies.

The study reveals that India is becoming home to a growing middle class population. Increasing disposable income has led to increased 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.

However, what needs to be addressed to meet government’s vision of turning India into a manufacturing hub is the domestic production. 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 YoY to reach $ 75 billion in 2015, driven by rising local demand. The worldwide electronics industry was valued at around $ 1.86 trillion in 2015, noted the study.

Electronics industry valued at $ 1.75 trillion is the largest and fastest growing industry in the world, highlighted the study. India’s total electronics hardware production 2014-15 is estimated at $ 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 $ 63.6 billion out of which 58 percent was fulfilled with imports. With demonetisation adding to the demand for POS devices and mobile phones, this demand is going to increase manifolds.

The investments in electronic manufacturing which was just Rs 11,000 crores in June 2014, has increased exponentially to Rs 127,880 crores 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. The industry suggest the government to focus on both infrastructural as well as at the policy level, increased emphasis has to be 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.