Government of India is giving special attention to the promotion of Electronics system Design and Manufacturing sector in India. According to the assessment of the Task Force constituted by the Department, the demand of electronics hardware in India is projected to grow from USD 45 Billion in 2009 to USD 400 Billion by 2020. At the current rate of growth, the domestic production can cater to a demand of USD 104 Billion by 2020 and the remaining would have to be met by imports. The value addition in the domestically produced electronics goods is also very low varying from 5 to 15 percent in most cases.
2. The Electronics System Design and Manufacturing (ESDM) is expected to attract investments of nearly USD 100 Billion and create direct and indirect employment for nearly 28 million people over the next decade or so. India offers 400,000 engineering graduates per annum and equally large skilled blue collar job force at one of the lowest wage rates anywhere in the world. India is already becoming a favoured destination for chip design, embedded software and board design which are important part of any electronic product. Government permits 100 percent FDI through the automatic route for most ESDM products
3. It is with this objective that the Cabinet has, recently approved the National Policy on Electronics (NPE) 2012 which envisions making India a globally competitive destination in the sector and attracting investment of USD 100 billion by 2020. Several incentives have also been approved to attract investment in the sector. These incentives include:
i. Modified Special Incentive Package Scheme which provides upto 25% capital subsidy for investment in the sector
ii. Electronic Manufacturing Clusters Scheme which provides 50% of the cost for development of infrastructure and common facilities in Greenfield clusters and 75% of the cost for Brownfield clusters
iii. Preference to domestically manufactured electronic goods in Government procurement and those electronic products which have security implications.
iv. Additionally Government of India is finalizing a partner for setting up a Wafer Fab Manufacturing in India.
Apart from the above, the policy provides opportunities for investment in areas like skill development, testing laboratory infrastructure and venture capital.
i. Providing opportunities for skill development for the private sector through two Sector Skills Councils- Telecom and Electronics
ii. Opportunities for investment in testing laboratory infrastructure under the mandatory standards regime brought in force.
iii. Opportunities to participate in Venture Capital funds being promoted to support R&D and innovation in the sector.
iv. Several State Governments, including Andhra Pradesh and Karnataka have already announced complementary incentives as part of their State Electronic Policies. Electronic Manufacturing Clusters have been announced by states of Andhra Pradesh, Punjab and Kerala. Other states are also in process of taking similar initiatives, thereby offering a host of incentives and facilities for ESDM investors
4. India provides a huge market for Japanese companies. Some of the sector specific opportunities are.
i. Automotive Electronics: India produced 20.4 million automobiles in 2012. Nearly 20%-40% values of these vehicles are electronics. Companies like Suzuki, Honda and Mitsubishi are already doing manufacturing and assembly of vehicles. Automotive Electronics can leverage on India’s Software Design and automobile manufacturing ecosystems
ii. Medical Electronics: Medical electronics in India is growing at a CAGR of 17%. Currently estimated around USD 1 Billion, it sis expected to touch USD 6.4 Billion by 2020. Greater awareness, education, coupled with development of appropriate devices (catering to disease common to the sub continent) at affordable prices will definitely result is higher growth.
iii. Solar Energy: Jawaharlal Nehru national Solar Mission with target of 20 GW of Solar Power by 2022 and requirement to manufacture locally will provide a huge market for the domestic manufacturing segment
iv. Atomic Energy: With plans to develop 63 GW by 2032, India has ambitious plans to develop Nuclear energy. 7 nuclear reactors are currently under construction. Japanese companies can service this demand through local manufacturing.
v. Rail car Manufacturing:India has tremendous opportunities in rail car manufacturing with huge urban metro rail system coming up in several cities. In additions, India made rail cars can be exported to South East Asia under the FTA which India has with these countries.
vi. Consumer Electronics: The market is anticipated to grow at a CAGR of around 17% during 2012-2015 to reach over US$ 15 Billion by the end of 2015