When the electronics sector evolves, so does the rest of the world. Every day, the world’s most breakthrough technologies arrive in deceptively little electronics boxes, and society transforms as they become commonplace.
India is currently witnessing a digital revolution, which is increasing the usage of electronic devices. The growing middle-class population, rising disposable incomes, and falling electronics prices in the country are all contributing to the country’s progress. In addition, India has long been one of the world’s greatest buyers of electronic goods, particularly in the Asia-Pacific region.
India has already begun to see beginning activity with increasing production and assembly operations across products such as mobile phones and other consumer electronics, thanks to several government efforts aimed at boosting domestic manufacturing.
With this surge in electronic product demand, India’s ESDM (Electronics System Design & Manufacturing) sector is expected to reach US$ 220 billion by 2025, growing at a 16.1% compound annual growth rate (CAGR) between 2019 and 2025.
By 2025, India’s EMS sector is expected to be worth US$ 152 billion. The high internet penetration rate in India, as well as the country’s position as the world’s second-largest smartphone manufacturer, has enhanced electronic product adoption, which is driving the ESDM industry. The Indian government wants to encourage and attract investment in semiconductor FABs (fabrication plants). India is home to more than 90% of the world’s semiconductor research and development centers.
Many government efforts, such as ‘Make in India,’ ‘Digital India,’ and ‘Start-up India,’ have made electronics manufacturing a critical pillar. The ESDM sector is critical to the government’s goal of producing one trillion dollars in economic value from the digital economy by 2025.
Smartphone shipments in India surpassed 150 million units in 2018, while 5G smartphone shipments surpassed 4 million in 2020.
Fund Allocation for Industry:
The government has set aside Rs. 2,631.32 crore to support M-SIPS, the Electronics Development Fund (EDF), and Manufacturing Clusters, all of which are aimed at promoting electronics and IT hardware manufacturing.
Schemes for Electronic Industry:
Three new programs have been proposed by the government to establish India as a global center for the ESDM sector. The Production Linked Incentive Scheme (PLI), the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS), and the Modified Electronics Manufacturing Clusters scheme are examples of these programs (EMC 2.0). For five years, Rs. 420 billion will be offered as a 4-6 percent incentive on incremental sales (of goods manufactured locally) as part of the PLI scheme.
In May 2021, Union Cabinet approved a proposal to implement the PLI scheme ‘National Programme on Advanced Chemistry Cell (ACC) Battery Storage’ to achieve a manufacturing capacity of 50 GWh of ACC and 5 GWh of ‘Niche’ ACC, with an outlay of Rs. 18,100 crore.
For growth industries, such as consumer electronics, electric vehicles, and renewable energy, ACC battery production represents one of the biggest economic opportunities.
Market Overview:
India’s electronic imports totaled US$ 50 billion in 2020, compared to US$ 28 billion for China and Hong Kong. In 2021, India’s electronic goods exports were valued at $11.7 billion. Electronic products exports totaled US$ 950.17 million in May 2021. In 2020, smartphone shipments surpassed 150 million units, with 5G smartphone shipments exceeding 4 million.
By FY25, the electronic system market is predicted to grow by 2.3 times its current size, reaching US$ 160 billion. Electronics design is expected to account for 27% of the ESDM market size in FY25, with a growth rate of 20.1%. By 2025, India’s consumer electronics and appliances market is predicted to be the fifth-largest in the world.
FDI Inflow in India:
FDI inflows into the defense electronics sector are allowed up to 49% under the automatic route and beyond 49% with government approval. The government has set up an automatic route for 100% FDI in the ESDM industry to attract investors, including original equipment manufacturers (OEMs) and integrated device makers (IDMs). By 2021-22, the government wants to attract Rs. 18,000 crore (US$ 2.4 billion) in investments in the electronics manufacturing sector. FDI equity inflows were US$ 3,166.43 million from April 2000 to March 2021.
Investments and key developments in the ESDM sector:
19 firms have applied for the production-linked incentive (PLI) scheme for IT hardware as of March 2021. The plan is expected to generate Rs. 160,000 crore in total production over the next four years. IT hardware businesses have requested a total output of Rs. 135,000 crore, with domestic companies proposing a total production of Rs. 25,000 crore.
- Panasonic Life Solutions India stated this year that it will invest Rs. 600 crore in Sri City, Andhra Pradesh, to build a new electrical appliance manufacturing facility.
- Amazon has announced that it will begin producing devices in Chennai, India, using Cloud Network Technology.
- Lenovo stated last year that it would begin manufacturing tablets in India and double its laptop production.
- C4V, a US-based lithium-ion cell producer, spent $537.15 million in Karnataka’s electric battery manufacturing sector in July of this year.
Government Initiatives:
MeitY (Ministry of Electronics & Information Technology) has been allotted Rs. 9,720.66 crore in the Union Budget 2021-22. The total budgetary allocation for the ‘Digital India’ program in 2021-22 is Rs. 6,806.33 crores.
MeitY will create a quantum computing applications lab in the country, in conjunction with Amazon Web Services, to speed quantum computing-led research and development and enable new scientific breakthroughs.
The Consumer Electronics market is driven by innovation, which is defined as the continuous enhancement of existing items and the blending of these products to create new commodities. As a result, many of the gadgets in this market serve many purposes (for example, smartphones can be used as cameras, radios, and so on), and to achieve a consistent segmentation, the focus is on their primary function. Increasing technological improvements in consumer electronics such as computers, cellphones, earphones, speakers, and headphones are expected to boost the consumer electronics market’s growth.
The use of disruptive technologies such as machine learning, artificial intelligence, and the Internet of Things improves the product’s functionality even more. Overall, rising demand for energy-efficient appliances with a wide range of functions would boost consumer electronics market share over the forecast period.
Impact of Covid-19 in Sudden Surge of Consumer Electronics’ Demand
This bizarre predicament has appeared in our lives without warning and has remained an unwelcome visitor. The pandemic was a disaster not just for humanity, but also for people’s fast-paced lives, developing economies, future goals, increased jobs and improved healthcare. Many industries gained traction in the post-covid era as a result of emerging trends, such as work from home, digital entertainment, and digital health and safety concerns.
The pandemic factor has contributed to the following in terms of the consumer electronics market-
- Wider use of consumer gadgets:
People are being pushed out of their comfort zones and adopting new attitudes, habits, and behaviors at a rapid pace. Today, most daily activities, such as remote employment, Zoom exercise sessions, and an all-virtual social life, take place online. We are seeing a surge in demand for things like televisions, wearables, and other telecommunication gadgets as a result of presence-free living.
- Monitoring.
As the need for speedy lab-free COVID-19 testing has skyrocketed, a number of firms presented early detection technologies. When their users identify an active infection, they separate themselves and seek medical attention. Abbot, for example, demonstrated the BinaxNOW COVID-19. This test system uses a mobile app to offer a user a daily health passport.
- Protective accessories with added functionality:
Naturally, the epidemic has made a mask a must-have item. While fashion designers seek to incorporate it into their designs, IoT businesses and developers are adding new features to this critical component of our new normal.
A smart face mask, like the AirPop Active+ project, can monitor air quality, offer voice-amp technology, and enable Bluetooth-enabled hands-free calling in MaskFone, in addition to safeguarding a user from illness.
- Voice command:
Consumers are becoming more accustomed to voice-controlled gadgets, which range from smart home hubs to voice assistants. People only have their homes for both work and life, therefore it’s happening a lot more while trying to find a work-life balance. Everyone is attempting to make their houses smarter so that they may spend less time doing housework and perform better at work. Manufacturers are aware of this and are incorporating the capabilities into a wide range of devices. In response, LG unveiled their next-generation model, the InstaView refrigerator, which can open its door using voice commands. For a safer atmosphere, this is also an example of a no-touch door operation.
The ESDM sector in India is expected to reach US$ 220 billion by 2025, growing at a 16.1 percent CAGR between 2019 and 2025, thanks to strong legislative backing, massive investments by public and private stakeholders, and a surge in demand for electronic products.
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