The semiconductors and electronics sector is a key player in the economy and one of the most globalised industries in the world. It is a strategic enabler and a driving force for all the services, be it the Internet, telecom, precision engineering industries, aviation, energy or banking. The rapidly growing Indian electronics industry can be broadly categorised into six segments. They are consumer electronics (the largest chunk of the market), industrial electronics, strategic electronics, computers, communication and broadcasting equipment, and electronic components.
India has a well-developed semiconductor design industry and is ranked second, globally, in terms of design revenues. The government’s initiatives as well as the potential of the growing electronics goods market in the country has attracted many global original equipment manufacturers (OEMs) and Electronic Manufacturing Services (EMS) firms, including Samsung, LG, Nokia, Toyota, Hyundai, Flextronics, among others, to set up their facilities in India in recent years.
The rapid growth of consumer electronics in India and the growing demand for smartphones and tablets are the key growth drivers of the overall electronics market. The domestic Electronic System Design and Manufacturing (ESDM) market is expected to grow at a compound annual growth rate (CAGR) of 9.9 per cent and reach US$ 94.2 billion in 2015. The government also estimates the demand for electronics to increase to US$ 400 billion by 2020.
Presently, there are more than 120 companies in India focused on semiconductor design for global products. According to the Department of Electronics and Information Technology (DeitY), nearly 2000 chips are being designed every year in India and more than 20,000 engineers are working on various aspects of chip design and verification.
Rising demand and availability of talent is expected to see the Indian semiconductor design market to grow to US$ 14.5 billion in 2015, according to a Frost and Sullivan report titled ‘Indian ESDM Markets (2011-2015)’.
In recent years, many OEMs and Integrated Device Manufacturers (IDMs) have invested in the semiconductor industry in India. Some of the notable investments in this sector are as follows:
The Government of India, over the years, has adopted several measures, including the formation of Software Technology Parks of India (STPI) in 1991 as well as 100 per cent Export oriented Units (EoUs), to upgrade the semiconductor industry in the country. Some of the initiatives take by the government in the recent past are as follows:
The key drivers for the semiconductor market in India include telecom infrastructure equipment, wireless handsets, notebooks and other IT and office automation products, set-top boxes and smart cards. Growth sectors, including health care equipment, automotive, consumer goods and industrial goods—all of which increasingly use electronics—are also expected to boost semiconductor consumption in India.
India has one of the biggest domestic electronics markets that is looking to get even bigger in the coming years. There have been many important steps taken by the Government of India in this regard, such as striving for indigenous manufacture of chips.
Exchange rate used: INR 1 = US$ 0.01682 as on June 4, 2014
References: Ministry of Finance, Press Information Bureau (PIB), Media Reports and Press Releases, Department of Industrial Policy & Promotion (DIPP), Media reports, India Semiconductor Association, Ministry of Information Technology and Department of Electronics and Information Technology.