Currently, India is undergoing a digital revolution leading to a surge in the consumption of electronics devices in India. This growth is mainly attributed to increasing middle-class population, rising disposable incomes and declining electronics prices in the country.
With this spike in demand for electronic products, the electronics system design & manufacturing (ESDM) sector in India is expected to reach ~US$ 220 billion by 2025, expanding at a 16.1% CAGR between 2019 and 2025. India has a goal of producing 1 billion mobile handsets worth US$ 190 billion by 2025, with 600 million handsets worth US$ 110 billion targeted for exports. The ESDM was valued at US$ 90 billion in FY19 and is segmented into electronics system (78%) and electronics design (22According to the IESA (India Electronics & Semiconductor Association), more than 90% semiconductor companies globally have their R&D centres in India. The semiconductor R&D generates about US$ 2.5 billion in revenue and 6 lakh jobs in India.
The Electronics System Design & Manufacturing (ESDM) sector has seen some developments, investments and support from the Government in the recent past.
The cumulative FDI equity inflow in the Electronics industry is US$ 4.13 billion during the period April 2000-March 2023.
India is one of the largest consumer electronics markets in Asia Pacific Region and is home to considerable talent for electronic chip design and embedded software. India has committed to reach US$ 300 billion worth of electronics manufacturing and exports of US$ 120 billion by 2025-26.
In FY23, the imports of electronics goods stood at US$ 73.46 billion, whereas exports stood at US$ 22.68 billion. During April-June 2023, the imports of electronics goods stood at US$ 18.76 billion and exports stood at US$ 6.75 billion.
Major Government initiatives such as ‘Digital India’, ‘Make in India’, and supportive policies including favorable FDI Policy for electronics manufacturing have simplified the process of setting up manufacturing units in India.
India is the second fastest digitizing economy amongst the 17 leading economies of the world. The Government of India aims to make Electronics Goods amongst India’s 2-3 top ranking exports by 2026. Electronics Goods exports are expected to increase from the projected US$ 15 billion in 2021-22 to US$ 120 billion by 2026.
In FY23, the exports of electronic goods were recorded at US$ 23.57 billion as compared to US$ 15.66 billion during FY22, registering a growth of 50.52%.
The Union Budget 2023-24 has allocated Rs. 16,549 crore (US$ 2 billion) for the Ministry of Electronics and Information Technology, which is nearly 40% higher on year. The budget for FY23 had allocated Rs. 14,300 crore (US$ 1.73 billion) for the IT ministry.
The government has allocated Rs. 3,000 crore (US$ 363.4 million) for the Indian Semiconductor Mission in the Union Budget 2023-24, which is likely to help kickstart the development of the semiconductor and display manufacturing ecosystem in India.
India committed to reach US$ 300 billion worth of electronics manufacturing and exports by 2025-26. Artificial Intelligence is expected to add US$ $967 billion to Indian economy by 2035 and US$ 450–500 billion to India’s GDP by 2025, accounting for 10% of the country’s US$ 5 trillion GDP target.
The Government is promoting the development of Electronics Manufacturing Clusters (EMCs) throughout the Country to provide world-class infrastructure and facilities. India is home to considerable talent for electronic chip design and embedded software.
Exports of electronic goods stood at US$ 2,009.07 million in September 2022. The Government of India aims to make Electronics Goods amongst India’s 2-3 top ranking exports by 2026. Electronics Goods exports are expected to increase from the projected US$ 15 billion in 2021-22 to US$ 120 billion by 2026. Moreover, Post COVID, The Government of India aims to increase India’s contribution by around US$ 400 billion worth of electronics goods including exports worth US$ 120 billion, which would account for 9-10% of the overall global value chains, from the current supply potential of 1-2%.
During April 2022-February 2023, the imports of electronics goods stood at US$ 70.07 billion, whereas exports stood at US$ 20.69 billion.
Imports of electronics goods stood at US$ 7.14 billion in September 2022.
Production-linked scheme (PLI) for large-scale electronics manufacturing (including mobiles) has seen investments worth Rs. 6,887 crore (US$ 833 million) (till June 2023), already surpassing the target for FY24 which was Rs. 5,488 crore (US$ 664.4 million).
In July 2023, electronics maker Elista announced that it will invest Rs. 100 crore (US$ 12.1 million) in Andhra Pradesh to set up a manufacturing unit for Smart LED TVs, smartwatches, audio speakers, and large appliances.
US CHIP design major Advanced Micro Devices (AMD) will invest up to US$ 400 million in India over the next five years and will set up its biggest design facility in the country.
The Index of Industrial Production of manufacturing of computer, electronic, and optical products (weight: 1.57%) was valued at 137, during FY23.
India's electronics sector is set to harness US$ 7 billion untapped revenue by 2035 via circular business model and policy pathways, industry stakeholders said. Current commitments and targets set the projected market size for these circular models at US$ 13 billion in 2035.
India has overtaken China as the second-largest manufacturer of mobile devices in the world, according to a report released by the international research firm Counterpoint in August. The ‘Make in India’ initiative's mobile phone shipments from India exceeded 2 billion cumulative units and an annual growth rate of 23% was recorded.
According to a report 'India Monthly Wearable Device Tracker' by International Data Corporation (IDC), "hundreds" of" smartwatch model launches in the first half of the calendar year 2023 contributed to India's wearable market's growth of 53.3% year-over-year (YoY). The companies shipped 57.8 million units of wearables like smartwatches, earwear, and eyeglasses to the market in the first half of CY23.
The Ministry of Electronics and IT (MeitY) announced the exchange of signing of a Memorandum of Understanding (MoU) between the Centre for Nano Science and Engineering (CeNSE) at the Indian Institute of Science (IISc), Bengaluru and Lam Research India at the SemiconIndia in Gandhinagar.
India Semiconductor Mission organized a three-day SemiconIndia 2023 Conference in July 2023 with the theme ‘Catalysing India’s Semiconductor Ecosystem’ in Gandhinagar, Gujarat. In March 2023, the Government approved setting up of the Electronics Manufacturing Cluster (EMC) at Hubli-Dharwad in Karnataka, worth US$ 22 million (Rs. 180 crore) and is expected to create about 18,000 jobs.
In FY23, India manufactured wearables such as earphones and smartwatches worth Rs. 8,000 crore (US$ 976.7 million), boosted by the implementation of a phased manufacturing plan (PMP). The industry is hopeful of doubling the production to Rs. 15,000-17,000 crore (US$ 1.83-2.07 billion).
As global companies are leveraging the well-developed manufacturing system in the State, Tamil Nadu has emerged as one of the major electronics hardware manufacturing and exporting States in the country. The state is well positioned to achieve a US$ 100 billion ESDM industry in the next five years.
In November 2022, Voltas entered into a technology license agreement with Denmark’s Vestfrost Solutions to develop, manufacture, sell and service medical refrigeration and vaccine storage equipment including ice lined refrigerators, vaccine freezers and ultra-low temperature freezers to the India market.
In September 2022, MeitY Startup Hub (MSH), an initiative of the Ministry of Electronics & Information Technology (MeitY), and Meta announced the launch of an accelerator programme to support and accelerate XR technology startups across India.
The first-of-its-kind in India Electropreneur Park (EP) set up by MEITY and IESA started in 2016 and created 51 hardware products, 51 patents, and 23 startups were funded. The EP will grow to be a hub with 20 spoke centres aimed to promote innovation and create unicorns in ESDM by offering access to a holistic ecosystem to accelerate the government’s flagship schemes like Startup India and Make in India.
STPI Signs MoUs to Strengthen Tech Startup Ecosystem: AIC STPINEXT Initiatives (STPINEXT), a special purpose vehicle of Software Technology Parks of India (STPI), an organisation under the Ministry of Electronics and Information Technology (MeitY) has signed two memorandums of understanding (MoUs), one with HDFC Bank, and another with Excelpoint Systems India Pvt. Ltd., a niche technology player for fostering entrepreneurship and nurturing tech startups in the country. These partners would play critical role in supporting and handholding the startups in the growth journey through technical guidance & assistance, mentoring, pitching to investors, funding support, and market connect & access etc.
Voltas announced plans of Rs. 400 crore (US$ 50.10 million) capex under PLI scheme to manufacture components for white goods in May 2022.
Ministry of Electronics & Information Technology (MeitY) has announced “Scheme for Promotion of Semiconductor Ecosystem” in India with a massive outlay of Rs. 76,000 crore (US$ 9.48 billion) in 2022.
As per Union Budget 2022-23, the Ministry of Electronics and Information Technology (MeitY) has been allocated Rs. 14,300 crore (US$ 1.73 billion).
In the allocated budget, revenue expenditure allocation is Rs. 13,911.99 crore (US$ 1.8 billion) and capital expenditure allocation is Rs. 388.01 crore (US$ 50.4 million).
In India, smartphone shipments from India crossed 168 million units in CY 2021, and in 2022, smartphone shipments from India are expected to reach 190 million.
About 80% of the Production-Linked Incentive scheme (PLI) to encourage manufacturing in the country, which covers 14 industries and has a total investment of Rs. 3 lakh crore (US$ 38.99 billion), is concentrated in only three sectors: electronics, automobiles, and solar panel production.
The government allows 100% FDI in the ESDM sector through an automatic route to attract investments, including original equipment manufacturers (OEMs) and integrated device manufacturers (IDMs). The government has set a target to get ~Rs. 18,000 crore (US$ 2.4 billion) investments in the electronics manufacturing segment by 2021-22.
On April 1, 2020, the government announced three new schemes to position India as a global hub for the ESDM sector and push further the vision of the National Policy on Electronics (NPE) 2019. These schemes include Production Linked Incentive Scheme (PLI), Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) and Modified Electronics Manufacturing Clusters scheme (EMC 2.0).
Production Linked Incentive Scheme (PLI), one of the significant incentive schemes, is aimed at boosting domestic manufacturing of mobile phones and their components, including Assembly, Testing, Marking and Packaging (ATMP) units. As a part of this scheme, ~US$ 5.7 billion (Rs. 420 billion) will be extended as an incentive of 4-6% on incremental sales (of goods manufactured locally) for a period of five years.
Under the production-linked incentive (PLI) scheme for IT Hardware Products, the Ministry of Electronics and Information Technology has approved 14 qualified applicants. To manufacture these products in India, the government will offer incentives of US$ 983.76 million over the next four years. In this duration, production worth US$ 21.62 billion and exports of US$ 8.06 billion are expected.
In May 2021, the cabinet, chaired by the Prime Minister Mr. Narendra Modi, approved a proposal by the Department of Heavy Industries and Public Enterprises to implement the production-linked incentive (PLI) scheme 'National Programme on Advanced Chemistry Cell (ACC) Battery Storage’ to achieve manufacturing capacity of 50 GWh (Giga Watt Hour) of ACC and 5 GWh of ‘Niche’ ACC, with an outlay of Rs. 18,100 crore (US$ 2.47 billion).
On November 11, 2020, Union Cabinet approved the production-linked incentive (PLI) scheme in 10 key sectors (including electronics and white goods) to boost India’s manufacturing capabilities, exports and promote the ‘Atmanirbhar Bharat’ initiative.
For growth industries, such as consumer electronics, electric vehicles and renewable energy, Advanced Chemistry Cell (ACC) battery production represents one of the biggest economic opportunities. PLI scheme for the ACC battery would allow key domestic and international players to set up a competitive ACC battery plants in the region.
Under the PLI scheme for IT Hardware, the approved enterprises are estimated to manufacture equipment worth >US$ 21.62 billion over the next four years. Of the total production, foreign companies have suggested production worth US$ 11.38 billion, whereas domestic enterprises have planned a production of US$ 10.20 billion.
For skill development in the ESDM sector we have organisations such as Electronics Sector Skills Council of India, National Institute of Electronics & Information Technology, Ajmer, India Electronics and Semiconductor Association.
Electronics Sector Skills Council of India (ESSCI) aims to facilitate a world-class ecosystem for developing a future ready workforce in the Electronics System Design & Manufacturing Sector. Its mission is to become a global leader in skill development in Electronics by aligning to the product lifecycle – Design, Manufacturing & Service through blended Skilling, R&D, Innovation & adoption of state-of-the-art technologies to reach masses and lead to the growth of the ESDM sector.
The Government of India launched the 'Scheme for financial assistance to select states for skill development in ESDM sector' in November 2013. The scheme was aimed at enhancing the skilling capacities in ESDM Sector through public and private sector for students/unemployed youth belonging to other disciplines.
India Electronics and Semiconductor Association (IESA) aims to grow the ESDM & electronics business segment in India & make India the preferred destination for electronics & semiconductor design & manufacturing.
India Electronics and Semiconductor Association (IESA) acts as a trusted knowledge partner to the Central & State Governments helping device policies & incentives for the ESDM industry to help attract investments into India. In order to promote technology solutions to positively impact the lives of 1.3 billion Indian citizens is a key aim for IESA, which it achieves by bridging the gap between academia & industry to bring innovations faster to market.
The future outlook of the Electronics System Design & Manufacturing (ESDM) sector looks on track with pandemic easing out.
To support the ESDM sector and its growth path, the government has made electronics production as a vital pillar of many initiatives such as 'Make in India', 'Digital India' and 'Start-up India'. The ESDM sector holds a position of crucial importance in the government's goal of generating US$ 1 trillion of economic value from the digital economy by 2025. The high internet penetration rate and India’s position as the second-largest smartphone manufacturer worldwide is expected to boost the penetration of electronic products, which in turn will drive the ESDM market. %). The Indian electronics manufacturing industry is projected to reach US$ 520 billion by 2025. The electronics sector is expected to nearly double in contribution to the GDP in the next few years, owing to increased support from the government to domestic manufacturing.
