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Domestic electronics manufacturing may touch $94.2 bn by 2015

However, reliance on imports continues to be high with 65% of demand for electronic products being met by imports

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Piyali Mandal New Delhi

The Indian electronics manufacturing and semiconductor industry is expected to touch $94.2 billion by 2015, fuelled by increasing demand for electronics good and favorable government policies for promoting the indigenous manufacturing of electronics items.

According to a report by Frost and Sullivan and the Indian Semiconductors Association on the Indian electronics sector (2011-2015), the domestic market is the is expected to grow by 9.9% from $64.6 billion in 2011. The India Semiconductor Association represents the electronics, system design and manufacturing (EDSM) and semi-conductor industry.    

"Growth rate of 9.9% for the Indian electronics, system design and manufacturing industry is fantastic considering a tough global economic environment," association's Chairman Satya Gupta said.    

The Indian government has announced the  National Electronics Policy, in October 2012, to promote domestic electronics goods production. The move is expected to create a domestic electronics manufacturing ecosystem and to fill the gap between domestic demand and supply in electronics goods.

 

The consumption of electronics goods in India has skyrocketed over the last decade. However, most of the electronics goods sold in India are currently imported.

Key findings on the electronics market
Domestic ESDM industry to grow from $64.6 billion in 2011 to $ 94.2 billion in 2015
Reliance on imports continues to be high, with 65% of the demand for electronics products being met by imports
High Value Added Manufacturing to decline to 6.7% in 2015 resulting in a cumulative opportunity loss of $200 bn during 2011-2015
Total Semiconductor Market grows from $6.03 bn in 2011 to $9.7 bn by 2015
Achieving 50% of total domestic manufacturing by 2015 will create additional direct employment of 2 lakhs

The report said reliance on imports continues to be high, with 65% of the demand for electronics products being met by imports. In the absence of policy interventions, imports are likely to grow from $28 billion in 2011 to $42 billion in 2015, the report added.    

High value-added manufacturing is set to decline to 6.7% in 2015 resulting in a cumulative opportunity loss of  $200 billion during 2011-15, it said.       

The total semi-conductor market would grow from USD 6.03 billion in 2011 to USD 9.7 billion by 2015, while local demand and sourcing from  $2.9 billion in 2011 to $3.6 billion in 2015 due to heavy reliance on imported electronic products.    

Achieving 50% total domestic manufacturing by 2015 will create additional direct employment of two lakh, it said.

Government plans a fab this year

The government is in negotiations with electronic chip makers for setting up a high-tech facility in India this year, Telecom and IT Minister Kapil Sibal today said announcing the one year road map for the Department of Electronics and IT (DEITY). Besides, the government is also looking at attracting investments of around Rs 25,000 crore in electronic manufacturing clusters.  

The one-year agenda is in line with government's plan to boost domestic manufacturing of electronics goods. As per the agenda, in 2013, the Department will focus on 18 Specific agenda items covering areas including initiatives under Information technology policy, Electronics policy, R&D Policy, Cyber Security policy and development of people oriented IT solutions.

"We have to set up a fab (electronic chip fabrication) unit here in this year. Negotiations are on. We will have proposal very soon in our office. We will take it for Cabinet approval for that fab," Sibal told reporters here. The project to set up two semiconductor plants in the country was approved by the Cabinet. It envisages investment of around Rs 25,000 crore. The exact level of government support for these plants has to be decided through negotiation with chip makers.     

The government has already received the first application under the Modified Special Incentive Package Scheme (M-SIPS) entailing an investment of about Rs 550 crore from Bosch Electronics.

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First Published: Jan 22 2013 | 8:49 PM IST

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