Make In India
By Spotlight - 26-03-2019
16-17 over 2015-16, which is estimated to continue further to reach about 25% in the current financial year 2017-18 over 2016-17.
The production of Mobile handsets grew to approx. `90,000 crore in 2016-17 compared to `54,000 crore in 2015-16, exhibiting a growth rate of about 66%, whereas, the production of Mobile handsets is estimated to be about `1,32,000 crore in 2017-18. In volume terms, production grew to about 175 million in 2016-17, over 110 million in 2015-16, exhibiting a growth of about 60%, which is further estimated to grow to 225 million units in 2017-18.
India has the second largest wireless network in the world. The country has witnessed a significant rise in manufacture of mobile handsets during the last three years. The value share of mobile handsets industry in the total electronics segment in India is estimated to be nearly 35%, which makes mobile handsets industry the largest electronics vertical. Several initiatives have been taken during the year leading to significant investments in new manufacturing operations. Some of the important initiatives like Phased Manufacturing Programme (PMP) for mobile handsets have played a key role to transform the manufacturing space.
Electronics is a key area of defence technologies and become a vital component of nearly all the weapon
systems, platforms and equipment designed and developed for defence purpose. The strategic electronics segment consists of Military Communication systems, Radars and Sonars, Network Centric systems, Electronic Warfare systems, Weapon systems, Satellite based Communication, Navigation and Surveillance systems, Navigational aids, Underwater electronic systems, Infra-Red (IR) based detection and ranging system, Disaster management system, Internal security system etc.
However, the sector is dependent on imports and foreign technology. Recently, few domestic small and
medium scale companies have come up and they have the capability to absorb technology and meet stringent requirements of strategic equipment. Some of these companies provide EMS services and meet critical supply requirements of MNCs as well as Defence PSUs. These include companies such as Rangsons, Centum Electronics, Kaynes Technology, Data Patterns and more. Some of the larger Indian business groups are foraying into strategic electronics sector and these include, Tata, L&T, Wipro and HCL, who have the capability and resources to take up big offset projects and collaborate with global leaders. As per ELCINA, the production of Strategic Electronics has grown from `18,055 crore during 2015-16 to `20,760 crore during 2016-17. The production is estimated to be about `23,562 crore during 2017-18, exhibiting a growth of about 13.5% over 2016-17. India’s defence, aerospace and nuclear sectors are poised for substantial growth on the back of economic growth and the need to maintain national and energy security. The role of IT in defence is also expanding with the focus on cyber security.
The policies and schemes of the Government, including, inter-alia, rationalization of tariff structure, Phased Manufacturing Programme (PMP), Modified Special Incentive Package Scheme (M-SIPS) and notification of electronics products under the Public Procurement (Preference to Make in India), Order 2017 for the growth of electronics sector, under the umbrella of ‘Make in India’ and ‘Digital India’ Programmes and increase in the customs duty on LED Lights, Set Top Boxes (STBs), Energy Metres, Flat Panel TVs, Mobile Phones, Microwave Ovens etc., will have a cascading positive impact on the domestic demand for relevant components.
It is also expected that the export in the components segment shall witness a gradual upward trend as Merchandise Exports from India Scheme (MEIS) benefit for electronic components has also been increased. The focus by the Government and the Industry on Electric Vehicles (EVs) will also add value to the sector, encouraging local manufacturing. As per ELCINA, Electronic Industries Association of India, the domestic production of electronic components for the year 2017-18 is estimated to be about `58,351 crore vis-à-vis `52,099 crore during 2016-17, exhibiting a growth of about 12%.
It is, however, noteworthy that a significant share (over 70%) of this component production is being exported leaving about 25% for domestic consumption, which is used in domestic electronic equipment production. Majority of electronic components are not manufactured in the country and have to be imported. As such, Government has been taking proactive measures for promotion of domestic manufacturing of electronic components.
The emerging high growth areas for domestic manufacturing are LED lighting, Automotive electronics, Energy meters, Solar energy, Mobile Phones and IT products apart from the existing sectors, viz.,
telecommunications, consumer electronics and industrial electronics, which are driving the growth of electronic components manufacturing in the country. The Indian electronic component production is dominated by electro-mechanical components (like printed circuit boards, connectors, etc.,) with 29% share and passive components (like wound components, capacitors, resistors, etc.) with 24% share. Further, the shares of active components (like ICs, diodes, transistors, picture tubes, etc.) and the associated components (like optical disc, magnets, RF tuners etc.) of the components industry are about 18% and 29%, respectively.
The Electronics Manufacturing Services (EMS) industry in India is growing rapidly and key global players as well as a number of domestic companies are operational in the country. This segment needs very high efficiency of operations to stay profitable. Availability of components and an effective supply chain is vital for EMS companies for their growth. Domestic companies have generally followed the business model of staying in low-volume and high-mix business segments, where the margins are better. However, the EMS players need to operate in high-volume and low-margin segments to compete with the global players.
Light Emitting Diodes (LEDs) Products
One of the driving forces for growth in electronics manufacturing and for growing electronic components demand is the Indian Lighting market. The demand for energy efficiency has brought forward an immediate need for more energy efficient products, such as Light Emitting Diode (LED) products. LED is the choice for next generation energy efficient lighting for its technical and economic virtues. Many countries have set LED as the national strategic industry. It is foreseen that LED products will have a penetration of about 75% by 2020. LED products save about 70% and 50% energy, as compared to the use of Incandescent Lamps (IL) and Fluorescent Lamps (FL), respectively. Over the years, opportunities for Light Emitting Diodes (LEDs) have increased in automobiles, communications, signage, signaling, architecture and entertainment sectors. The opportunity for LEDs in the general space illumination segment of residential and commercial buildings is expanding rapidly. As per ELCINA, the LED Products manufacturing in India is estimated to reach `9,630 crore in 2017-18, as compared to the production of about `7,134 crore in 2016-17, exhibiting a growth of about 35%.
With the growth of Automobile industry and the increasing digitization of automobile controls, Automotive electronics has come to occupy an important segment of the electronics industry. Automotive Component Manufacturing Association (ACMA) has projected that Indian Automotive Electronics Sector will reach approximately `36,500 crore by 2020. The global market for automotive electronics is set to account for 230 Billion US $ in 2020, from 140 Billion US $ in 2010. Some key technologies used in automotive electronics are as Anti-lock Braking System (ABS), Body Control Module (BCM), Tyre Pressure Monitoring System (TPMS), Electronic Power Steering (EPS) etc., while parking, cam, crank and oxygen sensors are the key sensors to be focused.
Medical devices play a crucial role from the diagnosis to the after-care phase of medical treatment and
significantly impact affordability of and access to healthcare. As per the Annual Report of Department of
Pharmaceuticals, the global medical devices market is expected to grow to US $ 332 billion by 2020, from an estimated US $ 228 billion in 2015 due to rising prevalence of chronic diseases; ageing population; increasing income and affordability, resulting in higher demand & utilization of healthcare services. The Indian market is among the top twenty in the world by market size, and fourth in Asia after Japan, China and South Korea. Indian market is import–dependent to the extent of 70%.
Government has taken several measures for the growth of the exports of Electronics Hardware sector. Special Economic Zones (SEZs) set up to enable hassle-free manufacturing and trading for export purposes and EHTP units are the major contributors to exports. 100% Income Tax exemption on export profits is available to SEZ Units for 5 years, 50% for next 5 years and 50% of ploughed back profits for 5 years thereafter. The Electronics Hardware Technology Park (EHTP) Scheme is an export oriented scheme for undertaking manufacturing of electronic goods. Merchandise Exports from India Scheme (MEIS) benefits are available for export of electronic goods under the Foreign Trade Policy (FTP 2015-20). The other schemes for export promotion are Export Promotion Capital Goods (EPCG) Scheme, Duty Exemption and Remission Schemes, Duty Free Import Authorization (DFIA) Scheme, Deemed Exports, etc. Due to the effective steps taken, exports have been showing signs of improvement during the year 2017-18, as compared to the year 2016-17. As per the Directorate General of Commercial
Intelligence and Statistics (DGCI&S) data, the export of electronic goods was US $ 5962.9 Million (`39,979.6 crore) during 2016-17, as compared to US $ 5959.5 Million (`39,063.5 crore) during 2015-16.
As per the DGCI&S data, the total import of Electronics into India in 2016-17 was US$ 42,878.9 million (Rs.2,87,558 crore), as compared to the import during the preceding year 2015-16, which was about US$ 40,939.8 million (Rs.2,68,105.3 crore), an increase of 4.74% in US $ terms and 7.26% in rupee terms.