cgimunich.gov.in sector_2017... · web viewthe indian electronics market grew by 8.6% yoy to reach...

Electronics Sector of 25

Table of contentsS. No Title of Contents Page no.

Foreword

1. Introduction 5

2. Trends and Challenges in the Electronics Manufacturing Industry 5

2.1 The demand for smart electronics devices continues to rise 6 2.2 Pressures mount for green electronics manufacturing 6

2.3 There’s a push for energy-efficient electronics, forcing manufacturers to develop new methods to produce devices that consume less energy

6

2.4 Medical device technology is a market to watch in 2017 6

2.5 Electronics manufacturing services (EMS) has had steady positive growth, but electronics manufacturing as a whole is expected to have slow growth in early 2017

2.6 Strategic partnerships will help electronics manufacturers control costs. 6

2.7 Electronics manufacturers will place more emphasis on logistics for rapid delivery

7

3. German Electrical and Electronic Industry 7

3.1 Business cycle report 7

4. Important sectoral trade shows in Germany 8

4.1 Eltefa 8

4.2 Sensor+Test 8

4.3 PCIM Europa 8

4.4 Electronica Munich 8

5. Business Investment Opportunities in Germany 8

5.1 Manufacturing Business 9

5.2 Laser cutting and welding of metal parts Business 9

5.3 IT sales support business 9

5.4 Wholesale Electronic supply business 9

5.5 Auto Spare parts business 9

6. Indian Firms in Germany: Recent developments and the road ahead 9

6.1 Challenges and the road ahead 10

7. Electronic market of India 10

7.1 Electronics production in India growing at rapid pace 11

7.2 Some highlights of Electronic Sector in India 12

7.3 Various recent initiatives by government of India 12

8. Opportunity for manufacturing in Electronics sector in India 13


S. No Title of Contents Page no.

8.1 Growing Industry 13

8.2 Rising Import to meet demand 13

8.3 Production expansion to meet local and export demand 14

9. Advantage India 14

9.1 Recent policy initiatives of government of India 15

9.2 National Policy on Electronics (NEP) 15

9.3 Electronics System design and manufacturing (ESDM) 16

10. Incentive Schemes 18

10.1 Modified Special Incentive Package Scheme (M-SIPS) 18

11. Make in India Strategy for Electronic Products 18

11.1 Global Electronic Hardware 18

11.2 A snapshot of Indian Electronics Industry 2014 - 2015 18

11.3 Growth Trend 21

12. References 22


Foreword

Sugandh RajaramConsul General of India

MunichI am pleased to present this important report on “Electronic Sector:

Opportunities for Bilateral Co-operation.

In the next few years, demand for electronic products in India is poised for a significant growth, driven by a strong economic outlook. The Indian electronics market grew by 8.6% YoY to reach US$75 billion in 2015, driven by rising local demand and growing disposable incomes. It is expected to grow at a CAGR of 13%–16% during 2013–18 to reach US$112– 130 billion by 2018.

The Government of India has treated the electronics sector as a priority sector under its “Make in India” program. Government has set up Electronic Hardware Technology Parks (EHTPs), Special Economic Zones (SEZs) and brought about a favorable climate for foreign direct investment (FDI). It has also increased liberalization and relaxed tariffs to promote growth in the sector. Various schemes aimed to create an indigenous manufacturing eco-system for electronics in the country has been launched by the GOI.

In Germany, electronics is one of the largest industrial sectors and has a wide-ranging, dynamic, and innovative portfolio. Thanks to high investments in research and development, seven out of ten companies regularly launch product or process innovations, thereby offering ample opportunities for Indian businesses to invest, collaborate with German counterparts for manufacturing as well as to gain access to niche technologies. On the other hand, the production level of electronic goods in India is at an intermediary stage, offering huge potential for growth and investment by German electronics companies, a viable option.

I hope that this report serves as good reference manual to the stakeholders and would enhance the co-operation between India and Germany.

*****************

1. Introduction Electronics Sector of 25

The electronics sector includes industrial electronic equipment and consumer electronics products, such as computers, televisions, telecommunication equipment and circuit boards etc. The most profitable sector within electronics is the Semiconductor industry with a value of around $248 billion globally. Electronic industries are growing rapidly because of increasing demand particularly from emerging market economies. In 2007, Asia had a share of 56% of electronic production followed by the US with 37% and Europe at 22%. Electronics retail is maturing as an industry, becoming increasingly competitive and experiencing unique challenges.

(Source: Investopedia)

Electronics sector growth is greatly accelerated by increasing consumer spending around the world. With the growth of developing economies, consumer demand for electronics has also witnessed the corresponding increase. Increased competition is driving the costs associated with electronics production down and expanding the availability of affordable electronics products.

Over the years, electronics retailing is becoming increasingly fragmented and competitive. Many electronics brands are now offering their products at their own stores as a means of becoming more profitable. Online stores also compete for customer spending. As variety of electronics products increases, traditional stores struggle to offer enough of the more popular products to consumers and concede some of the market to online retailers. While purchasing volume increases, many larger companies decline as the sector becomes fragmented with a greater number of companies offering electronic products.

2. Trends and Challenges in the Electronics Manufacturing Industry

Electronics manufacturing is facing both challenges and opportunities in 2017. The need to control costs continues to be a priority for manufacturers, while new technologies enter the landscape providing revenue opportunities but requiring manufacturers to partner with technology solutions providers and other organizations that can supply capabilities outside of the company’s core focus. The nature of electronics manufacturing trends in 2017 is such that every trend comes along with challenges. Electronics manufacturers need to focus on finding ways to capitalize on current trends while balancing the need to control costs, integrate technologies outside of their primary areas of expertise, and meet customer demands for more efficient, eco-friendly manufacturing processes and electronics. Here’s a look at seven of the biggest trends shaping electronics manufacturing in 2017 as well as the challenges each presents

2.1. The demand for smart electronics devices continues to rise

Smart devices are in demand. Devices like smartphones have been around for years, but now people need the same connectivity in everything from vehicles to microwaves. This trend will lead to the development of new partnerships as electronics manufacturers seek technology partners to aid in


building in and supporting the connectivity required by smart devices. For manufacturers, this opportunity represents tremendous revenue potential. However, the challenge lies in the ability to get secure, scalable connected products into consumer’s hands, when for most manufacturers the connectivity aspect isn’t their core expertise. Manufacturers therefore, need to be flexible and adaptable to keep up with constantly evolving electronics demands.

2.2. Pressures mount for green electronics manufacturing

As climate change statistics continue to mount, there’s increasing pressure from all areas – consumers, businesses, and governments – to consider more eco-friendly manufacturing solutions. The various carbon cap or carbon trading plans being implemented are also helping to drive this push. With major programs being launched to drive research in the field, manufacturers who can get their ISO certifications in place could see a lot of interest, even in countries that aren’t at the low end of the global manufacturing cost scale.

2.3. There’s a push for energy-efficient electronics, forcing manufacturers to develop new methods to produce devices that consume less energy

Environmental concerns are paramount not only during the manufacturing process, but also throughout the lifespan of electronics devices. Reducing energy consumption is an effective way to cut costs, leading both businesses and consumers to opt for energy-efficient electronics. The pressure is on manufacturers come up with products that are less expensive to use owing to lower energy demands. This trend is having a domino effect, contributing to increased demand for related technologies such as global voltage supervisor ICs.

2.4. Medical device technology is a market to watch in 2017

The field of medicine has always been an early adopter of technology, particularly when it comes to medical devices. Because these industries inherently need to be close to the manufacture because of the high quality and reliability required for these types of electronic devices, this sector will continue to see growth.

2.5. Electronics manufacturing services (EMS) has had steady positive growth, but electronics manufacturing as a whole is expected to have slow growth in early 2017.

Electronics manufacturing overall is expected to experience slow growth in early 2017, according to data published in January 2017 by IPC – Association Connecting Electronics Industries.

2.6. Strategic partnerships will help electronics manufacturers control costs.

Contract manufacturing is undergoing a shift. As original equipment manufacturers (OEMs) increasingly outsource product design and development to electronics manufacturing services (EMS) partners, they are able to reduce overall costs as well as shift fixed costs to variable costs, a key benefit in the race to control manufacturing costs. This trend spells opportunity for EMS partners, enabling them to expand into new lines of business and revenue opportunities, and are resulting into more strategic partnerships. Strategic partnerships are valuable, but there are several important considerations. Venture Outsource outlines several key strategy considerations for EMS and OEMS, including evaluating current customer and product portfolios, aligning strategy and business models, and evaluating value propositions to ensure they’re in line with current needs and strategic business decisions.

2.7. Electronics manufacturers will place more emphasis on logistics for rapid delivery.

Speed, it seems, will be key in 2017 and beyond. It has been predicted that by 2018, 75% of manufacturers will be coordinating enterprise-wide planning activities under the umbrella of rapid integrated business planning. Another related prediction is a 50 percent increase in investments that


enable digitally executed manufacturing by the end of 2017, also empowering manufacturers to increase agility.

These trends will be the key influencers that shape the electronics manufacturing industry in 2017 and beyond. It all comes down to better service and more sophisticated products, delivered at unprecedented speed with accuracy – while at the same time, controlling costs and minimizing environmental impact.

3. German Electrical and Electronic Industry

The German electrical and electronic industry plays an important part in Germany's industrial landscape. The electrical and electronics industry is the most innovative industry sector in Germany. The ZVEI - German Electrical and Electronic Manufacturers' Association promotes the industry's joint economic, technological and environmental policy interests on a national, European and global level. The ZVEI represents more than 1,600 companies, mostly SMEs. The sector has more than 850,000 employees in Germany and over 704,000 employees all over the world. In 2016, the sector recorded a turnover of €179 bn. One-third of the industry sales are based on new products. Every third innovation in Germany's manufacturing sector stems from solutions of this sector. More than 20 percent of all industrial R&D spending comes from this industry.

3.1. Business Cycle Report

(Source: https://www.zvei.org/)

German Electrical and Electronic Industry recorded double-digit growth in new orders in May 2017, after having seen stagnation in the previous month. Altogether they exceeded their pre-year level by 14.7%. Domestic and foreign orders rose by 13.4% and 15.6%, respectively. Hence, the economic momentum within the sector resumes its upward trend. In the full period from January through May 2017 bookings were 9.1% higher than in the same period last year.

The domestic E&E Industry’s real production – i.e., adjusted for price – has soared by 11.9% (year over year) in May 2017. Thus, for the full period from January through May of this year a growth in output by 5.3% (again year on-year) was recorded, even though the growth had been uneven. There have been three booming months (January, March and May) and two meagre ones (February and April) so far. The sector’s companies have slightly revised lower their production plans in June. Anyway, they still take an expansionary course.

4. Important sectoral trade shows in Germany Electronics Sector of 25

4.1. Eltefa: Eltefa, a biennial trade show for Electrical Engineering and Electronics that takes place in Stuttgart, Germany. In 2017 edition, about 494 exhibitors showcased their products and services at the trade fair. As per available data, 23008 visitors attended fair to apprise themselves of latest innovations and trends in their business. The main exhibit sectors of the trade show are Electrical installation technology, lighting systems, transmitting and reception systems / broadband distribution technology, information and communication systems, data and network technology, electric drive technology / industrial controls, measuring and test technology / measuring and sensor systems, energy engineering, safety systems, plant / warehouse / assembly equipment, services, training and further education. Landesmesse Stuttgart GmbH is the trade show organizer in charge of eltefa. Next edition of the fair would take place from 27 to 29th March 2017.

(Source: http://www.messe-stuttgart.de/eltefa/)

4.2. SENSOR+TEST: The International Trade Fair for Sensors, Measurement and Testing Technologies with Concurrent Conferences takes place at Nuremberg annually. In 2016 the trade show witnessed participation of about 586 exhibitors. As the name suggest, the fair is an ideal platform for technologies related sensors to evaluation: a comprehensive overview of system expertise for measuring, testing and monitoring tasks in all industries. The next edition of the fair would take place from 26- 28th June 2018.

(Source: www.sensor-test.com)4.3. PCIM Europe: PCIM Europe is a trade fair for Semiconductors, passive components, magnetics

and core materials, thermal management, sensors, assemblies and subsystems, intelligent motion (servo-technology / actuators, motors, rectifiers), power supplies, power quality, test and measurement, development software, energy storage technologies, information and services. The next edition of the PCIM fair, an annual trade fair, would be held at Messe Frankfurt from 05-07 June 2018.

(Source: https://www.mesago.de/)4.4. Electronica Munich: Electronica is the international trade show for electronic components,

systems and applications and shows as the world's leading trade fair the full range in all its diversity in width and depth. It reflects the high degree of innovation throughout the industry. Exhibitors and users in the areas of systems, applications and technologies of electronics can receive the information of the latest innovations and developments in the fields of system peripherals, power engineering to printed circuit boards or EMS. The exhibition offers ranges from display on sensor solutions, power supplies, electronic design (ED / EDA) to software in electronics. It offers the combined expertise of the developers to management in nearly all consumer segments and user industries. The next edition of Electronica will take place from 13 th - 16th November at Messe Munich.

(Source: www.messen.de/de/8440/muenchen/electronica/info)

5. Business Investment Opportunities in Germany

Germany is known for its large companies that are major global brands, such as Mercedes-Benz, Volkswagen, Bosch, BMW, Deutsche Bank, Adidas, Siemens, etc. But there are also extremely productive small and medium-sized businesses—known as the Mittelstand—which employ almost 60% of the country’s workforce and form the bedrock of the economy. Doing business in Germany has many advantages, as the environment is conducive to growth. The largest number of German start-ups focus on Software-as-a-Service (SaaS), followed by e-commerce and software development.

Germany takes its start-ups very seriously. The government has set up grants like EXIST—which supports universities and research institutes—and has initiated private-public venture capital funds such as High-Tech Gründerfonds (HTGF). Founded in 2005, HTGF is a partnership between the Federal Ministry for Economic Affairs and Energy (BMWi), KfW Development Bank and private companies. Endowed with €560 million, HTGF is one of the largest and most active seed-stage investors in technology companies. In addition, the German government is working on incentivising Electronics Sector of 25

http://www.messen.de/de/8440/muenchen/electronica/info

https://www.mesago.de/

http://www.sensor-test.com/

http://www.messe-stuttgart.de/eltefa/

business angels’ investments and launching a pre-market web platform that connects start-ups with investors.

5.1. Manufacturing Business: Germany is a preferred destination when it comes the manufacturing of standard products. One can choose to go into the manufacturing of electronic gadgets; you can choose to go into the manufacturing of auto spare parts or the manufacturing of any goods of your choice.

5.2. Laser Cutting and Welding of Metal Parts Business: Starting a laser cutting business in Germany is one business that you can easily start in Germany and it is highly profitable. A Laser cutting business requires low start-up capital, and an individual can run and manage the business alone.

5.3. IT Sales Support Business: Germany is a highly industrialized nation and technologically driven. The market for IT sales support business is very large and it cut across all the strata of the economy of Germany

5.4. Wholesale Electronic Supply Business: When it comes to reliable electronics and technology, Germany is in the fore front. Wholesale electronic supply business in Germany can make a good return on investment especially if one is able to secure international market.

5.5. Auto Spare Parts Business: Auto spare parts business is yet another viable and highly profitable business that can easily be started in Germany. One can either choose to start an auto spare parts manufacturing business or can choose to go into the wholesale or retailing of auto spare parts.

6. Indian Firms in Germany: Recent Developments and the Road Ahead

In recent past, Indian firms have scaled up their investments in Germany with some significant investment projects. Reports suggest that Germany continued to remain a destination of choice for many an Indian firm. Seeking access to technology and patent portfolios is increasingly driving Indian investments in Germany even as Indian firms try to augment their in-house R&D capabilities in order to compete on innovation. Other side, Indian firms often struggle to integrate themselves in


the local eco-system and to fully benefit from the national, regional, and sectoral innovation systems in Germany.

6.1. Challenges and the Road ahead: This is, however, easier said than done. Even though the basic tenor of Indian investments in Germany continues to remain overwhelmingly positive, Indian companies do face certain challenges in a vastly different operational setting than back home. Work culture, the regulatory framework, and the socio-economic environment differ very significantly to India. Many Indian firms prefer to keep to themselves. One reason can of course be rooted in the linguistic challenges faced by expatriate managers. Another, and probably not any less important, reason lies in the sometimes seemingly excessive focus on short-term gains and profits. Quite a substantial number of Indian firms choose to interact primarily with their (prospective) customers and suppliers that have an immediate bearing on their revenues. Additionally, many firms continue to follow a very hierarchical system, where even minor decisions are outsourced to the headquarters back in India, which usually is ill-equipped in comprehending the ground realities in Germany.

7. Electronics Market of India

The Government of India is striving to give a boost to the electronics sector manufacturing in India and has developed a comprehensive plan to realize the vision of making the country self-reliant and with a target NET ZERO Imports by 2020. Several policy and regulatory initiatives has been taken in this direction like ‘Make in India’, ‘Digital India’, and Preference for Domestically Manufactured Electronic Goods (PMA) etc. This leads to boost to local manufacturing and opportunity for employment.

The electronics market of India is one of the largest in the world and is anticipated to reach US$ 400 billion in 2022. The market is projected to grow at a compound annual growth rate (CAGR) of 24.4% during 2012-2020.Total production of electronics hardware goods in India is estimated to reach US$ 104 billion by 2020. The communication and broadcasting equipment segment constituted 31%, which is the highest share of total production of electronic goods in India in FY13, followed by consumer electronics at 23%. Electronic exports from India was expected to reach US$ 8.3 billion in FY13, a CAGR of 27.9% during FY07-12. Technological improvements and competitively cost effectiveness are main drivers for demand of Indian electronics products abroad.

The growing customer base and the increased penetration in consumer durables segment has provided enough scope for the growth of the Indian electronics sector. Also, digitization of cable could lead to increased broadband penetration in the country and open new avenues for companies in the electronics industry.


7.1.Electronics Production in India Has Been Growing at a Rapid Pace

Total production of electronics hardware goods in India is estimated to reach US$ 47.87 billion in FY17 and is expected to reach US$ 104 billion by 2020.

Production expanded at a CAGR of 12.60 percent during FY07–17. High production is majorly contributed by accelerating demand for advanced TVs, mobile phones,

computers & defence related electronic equipment during FY07 to FY15. During FY16, production of industrial electronics, mobile phones & LED was recorded at US$ 6.89

billion, US$ 8.25 billion & US$ 0.55 billion, in value terms, respectively.


(Source: www.ibef.org)

7.2.Some of the highlights of Electronic Sector in India


7.3.The various recent initiatives by Government of Indian in the Sector are

i. The Government has set up Electronic Hardware Technology Parks (EHTPs), Special Economic Zones (SEZs) and a brought about a favourable climate for foreign direct investment (FDI).

ii. It has also increased liberalisation and relaxed tariffs to promote growth in the sector. iii. Introduction of Modified Special Incentive Package Scheme (MSIPS) under which the central

government will be offering up to US$ 1.7 billion in benefits to the electronics sector in next 5years.

8. Opportunity for manufacturing in Electronics Sector in India

8.1. Growing Industry :

The demand for flat TV, refrigerators, washing machines and air conditioners is on a rise with reduced penetration of products vis-a-vis global levels, rising disposable income and urbanization of consumers.

Market for white goods and televisions has been growing at close to 14% p.a., and is expected to accelerate to close to 17% in the coming years.

8.2. Rising imports to meet demand:

There has been a rise in imports from low-cost regions such as China and SE Asia due to various free trade agreements and availability of products at a lower cost as compared to costs incurred in local manufacturing.


8.3. Production expansion to meet local and export demand: To meet the rising local demand and export demand to neighbouring regions companies are planning

to expand their local manufacturing in India and make the country an export hub. Major Indian and global consumer durables companies have announced investments of around

US$1.4 billion over the coming years in India.

9. ADVANTAGE INDIA

9.1.Recent policy initiatives of Government of IndiaElectronics Sector of 25

India is one of the fastest growing markets for electronics. The demand is projected to reach USD 400 Billion by 2020. Government of India (GoI) has launched the National Policy on Electronics 2012 (NPE 12) with the vision to make India a globally competitive destination for Electronics System Design and Manufacturing (ESDM). Besides, India has large young talent, low wage costs and Government of India.

The National Telecom Policy 2012 (NTP, 2012) works in conjunction with NPE, 2012 and provides for creating a design and manufacturing ecosystem for telecom equipment.

9.2.National Policy on Electronics (NPE)

National Policy on Electronics launched in 2012 (NPE 12) is holistic, investor friendly and market driven towards creating a conducive environment to attract global and domestic companies to invest towards the growing Electronics System Design & Manufacturing (ESDM) sector in India. This gives unique opportunity for companies to consider India as a destination in ESDM sector and be part of the next largest Electronic Manufacturing Hub of the world and also provide value added manufacturing involving medium and high technologies.

The highlights of the policy initiative taken by Government of India include:

Modified Special Incentive Package Scheme (MSIPs) subsidy of 25% of capital expenditure (20% in SEZs) is available and all excise/CVD paid on capital equipment is reimbursed.

Electronic Manufacturing Clusters Scheme which provides 50% of the cost for development of infrastructure and common facilities in Greenfield clusters (undeveloped or underdeveloped area from electronic manufacturing point of view) and 75% of the cost for Brownfield clusters (area where a significant number of existing EMC exists). Land can be made readily available in several of the new Electronic Manufacturing Clusters being supported by the Government of India. Currently around 30 Electronic Manufacturing clusters are notified and GoI is targeting for 200 Electronic Manufacturing clusters by 2020.

Preference to domestically manufactured goods in Government procurement. Extent of government procurement will not be less than 30%. Around 30 electronic products are already notified under this scheme.

Export of domestically manufactured Set-top boxes and other electronic products are eligible for 2-5 % incentive in Focus Product Scheme under the Foreign Trade Policy.

Electronic Development Funds for Research & Development and Innovation in Electronics sector is under active consideration to support start-ups in electronics and IP generation in the area of electronics.

Department has accorded approval for setting up of two semiconductor wafer Fabrication (FAB) manufacturing facilities in the country.

To promote greater research in electronics and IT, Government of India will fund PhD students in Universities across the country for research in industry specific needs. 3000 PhDs will be generated through this program in the area of electronics & IT/ITES.

Providing opportunities for skill development for the private sector through two Sector Skills Councils- Telecom and Electronics.

Opportunities for investment in testing laboratory infrastructure under the mandatory standards regime brought in force.

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 Madhya Pradesh, 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.

In addition, to recognize and motivate the Micro Small and Medium Scale Enterprises (MSMEs) in the Electronic System Design & Manufacturing (ESDM) sector, the Government of India (GoI) has announced a national scheme for the sector. The Scheme will provide assistance for the following activities:


Reimbursement of expenses relating to compliance of electronic goods with “Indian Standards” notified by DeitY. The total GIA for one model is limited to `1 Lakh, only for 200 models (maximum).

Reimbursement of expenses for testing and certification required for export. The total GIA under the Scheme for one model is `1.25 Lac, 800 models (maximum).

Development of Electronic Manufacturing Clusters by MSMEs for diagnostic study, soft intervention and for preparing Detailed Project Reports, etc. The Total GIA available under this Section of the Scheme for Development of Clusters of `10 Lac /Cluster (max) would be available for setting up of 20 Clusters.

All these incentives are available for electronics design and manufacturing unit. This is also available for relocation of manufacturing plant from foreign country. Some of the sector includes Semiconductor FAB, Telecom products, LED FAB and products, automotive electronics, Semiconductor ATMPs, Consumer Electronics and Appliances, Hand-held devices including Smartphone and Tablets, Strategic Electronics, EMC, Avionics and Medical Electronics etc. The product based R&D expenditure has also been included under MSIPS.

9.3.Electronic System Design & Manufacturing (ESDM)

Over the last couple of decades India has been the epi-centre of consumer demand fuelled by a phenomenal GDP growth. It is projected that the demand for electronics hardware in the country is likely to increase from USD 45 billion in 2009 to USD 400 billion by 2020. While the estimated production will reach USD 104 billion by the year 2020, there will be a gap of USD 296 billion in demand and production. This creates a unique opportunity for companies in the ESDM (Electronic System Design & Manufacturing) sector to look at India as their next destination to cater to the domestic Indian demand as well as act as an exports hub.


(Source: http://meity.gov.in/esdm)

Accordingly, the Government has initiated several initiatives for the development of electronics sector in the country. The Government has recently approved National Policy on Electronics (NPE). One of the important objectives of the NPE is to achieve a turnover of about USD 400 Billion by 2020 involving investment of about USD 100 Billion and employment to around 28 million by 2020. This inter-alia, includes achieving a turnover of USD 55 Billion of chip design and embedded software industry, USD 80 Billion of exports in the sector. Moreover, the policy also proposes setting up of over 200 Electronic Manufacturing Clusters. Another important objective of the policy is to significantly upscale high-end human resource creation to 2500 PhDs annually by 2020 in the sector.

(Source: http://meity.gov.in/esdm)

As part of the efforts to promote the electronics sector, semiconductor wafer fab are being set-up in the country. India has become the hub for semiconductor design with nearly 2000 chips being designed per year and more than 20, 000 engineers are working in various aspects of chip design and verification. Annually India is generating nearly USD 2 Billion in revenues for the chip design services. This provides an enabling environment for the semiconductor wafer fab which will come up in India.


http://meity.gov.in/esdm

http://meity.gov.in/esdm

Several other policy initiatives have been approved recently that include providing very attractive financial investment in electronics manufacturing and providing preference to domestically manufactured electronic goods in all Government procurement as well as all those electronic goods whose use has security implications for the country. The financial incentives are available not only for new units but also for units relocating from abroad. To address the issue of infrastructure, a scheme for Electronics Manufacturing Cluster provides 50% of the cost of upgrading infrastructure and logistics as grant in aid from Government.

10. Incentive Schemes

10.1. Modified Special Incentive Package Scheme(M-SIPS)

To offset disability and attract investments in Electronic manufacturing, Modified Special Incentive Package Scheme (M-SIPS) was notified on 27.7.2012. The scheme is available for both new projects and expansion projects. The scheme provides capital subsidy of 20% in SEZ (25% in non-SEZ) for units engaged in electronics manufacturing. It also provides for reimbursements of CVD/ excise for capital equipment for the non-SEZ units. For some of the high capital investment projects like fabs, it provides for reimbursement of Central Taxes and Duties. The incentives were available for 29 electronic verticals. Units all across the manufacturing value chain are covered under the scheme. For each of the product category, an investment threshold is prescribed which an applicant has to incur for getting eligible for incentives. The scheme was amended on August 3, 2015. The salient amendments include:

(i) The term of the scheme has been extended up to 27/07/2020. (ii) The scope of the scheme has been extended to cover additional verticals. (iii) The procedure for grant of approval has been simplified and streamlined. The incentives are

now available for investments made in a project within a period of 10 years from the date of application

M-SIPS scheme is presently open to receive applications. All Initial applications which will be received by DeitY on or before 26-07-2020 will be considered for incentives under M-SIPS. Any further communication with regard to the application can be addressed to Nodal Officer(M-SIPS), Department of Electronics and IT, Electronics Niketan, Lodhi Road, New Delhi-110003.

11. Make in India Strategy for Electronic Products:

India’s policy options for electronics hardware industry is in favour of an export-oriented strategy. The essential argument made is that at less than $65 billion, the domestic market remains small in relation to the world market, which is in excess of $2 trillion. Going for the larger market would permit the exploitation of economies of scale and agglomeration and help the industry become globally competitive. The alternative import –substitution strategy would gain competitiveness principally in the domestic market since it largely relies on securing the domestic market for domestic producers.

11.1. Global Electronic Hardware:

Industry Electronics industry is among the largest and fastest growing manufacturing Industry in the world. The total Electronics Equipment Production of the world during the year 2014 was estimated to be around US$ 2.0 trillion. The break-up of the sector includes, Computer Systems and Peripherals (26.6 percent) followed by communication equipment (21.7 percent), Consumer Electronics (12.6 percent), Instruments (10.7%), industrial equipment (9.5 percent) and Equipment for Government /


Military (8.8 percent). Over the years, production bases have shifted from USA and EU to Asia as the latter’s share in global production has increased to over 60%.

11.2. A Snapshot of Indian Electronics Industry: 2014-15

India’s total Electronics Hardware Production in 2014-15 is estimated at US$ 32.46 billion. This represents a share of about 1.5 percent in world electronic hardware production. The production, export and import figures of Indian Electronics Industry for FY 14-15 are summarized in Table 1.

Table 1: Production, Exports and Imports of Electronics Hardware by India, 2014-15

(Source: CII & ESC)


(Source: http://niti.gov.in/writereaddata/files/document_publication/ )

Above table provides data on exports and imports. Following three points emerge:

i) First, India has not had much success in penetrating the export markets so far. At $6 billion, India has less than 1 % share in the world markets;

ii) Second, electronic components and electronic instruments account for the bulk of India’s exports; iii) Finally, imports of electronic goods account for more than half of India’s total consumption at

home.

Table 3: Exports and Imports of Indian Electronics Industry ($Million) by Segment, 2014-15Electronics Sector of 25

http://niti.gov.in/writereaddata/files/document_publication/


Electronics manufacturing industry has received a tiny part of the total foreign direct investment (FDI) into India. From April 1, 2000 to June 30, 2015, it received only $1.68 billion or 0.66% of the total FDI inflow of $258 billion FDI inflow. In flow terms, the total FDI in electronics in 2014-15 was $142.9 million and amounted to just 0.42% of the total FDI inflow.

Although telecommunications received 6% of the total FDI inflow during 2014-15 on its own, this was almost entirely in the provision of telecommunications services. In several countries, the contribution of electronic industry to GDP is significant. For example, it contributes 15.5% to GDP in Taiwan, 15.1% in South Korea and 12.7% in China as compared to 1.7% in India. Furthermore, OEM/ODM [Original Equipment Manufacturing / Original Design Manufacturing] and local component suppliers are still in infancy in India. Most of the OEM is confined to last mile assembly indicating that the industry remains in the early stages of development.

11.3. Growth Trend

The output of electronic industry has grown from Rs. 1.9 lakh crore in 2004-05 to Rs. 8.2 lakh crore in 2013-14. The simple average of growth rates during this period works out to 21.5%. But remembering that the production value is nominal and not corrected for inflation and the base is still small, the growth is less impressive than this growth rate may indicate.


References:




1. Information published by Zevi group https://www.zvei.org/fileadmin/user_upload/Presse_und_Medien/Publikationen/2017/Juli/ZVEI-Konjunkturbarometer_Juli_2017/ZVEI-Business-Cycle-Report-July_2017.pdf

2. Information published by Pannam Imaging is a recognized worldwide leader specializing in the manufacture of complex, mid-to-low volume integrated human-machine interfaces with unique functional, graphic or performance requirements https://www.pannam.com/blog/top-trends-and-challenges-in-electronics-manufacturing/

3. http://meity.gov.in/esdm/incentive-schemes 4. http://niti.gov.in/writereaddata/files/document_publication/Electronics%20Policy

%20Final%20Circulation.pdf5. http://www.global-innovation.net/team/tiwari/ 6. http://niti.gov.in/writereaddata/files/document_publication/ 7. http://www.cii.in/NewsRoom.aspx?enc=hIe6D6YJK+x2B1OmkR/

gWRK7wseoGgZLxLx9ffGMfWDE/iWQcuLnymUDGDjzm9U9jRln9N3qHput4PTleQsmYHXq+c3Z3sY6m9e17DrF3ZHEqz7zxeAz2l3OTh5rDkihc0UAHEmGBv+2+SDuivKgd+yFjjxdnU8we4b5XJ+C/i613fvUhaE/YEEH2muWeJMKHnqh+S7AMF4+H3gTmAKkbKp3qe/gWOm36YEjF87F1oqoTNCyN7eHUkJN4kHdeCHAA8eo/Kw9eMLXeAhhQRUlhv6ZP/LOGVZgxSG4yQaWpfWzdJVJv9zBXuwMGIo5a8amx3QNvxd3vVfaa5Q7XlF2SA ==

DISCLAIMER


(Note: The information and data contained in this report have been checked and verified from published sources. In case any error or discrepancy is noted, it may be brought to the attention of Consulate General of India, Munich. The information contained in the report is purely for the purpose of reference.)

For queries contact:

Mr. Asheesh Gupta, Consul(E&C)Ms. Shweta Bukshet, Commercial Assistant

Ms. DivyaShilpa Thanneeru, Commercial AssistantMs. Seema Sudershan, Commercial Assistant

Commercial & Economic Wing Consulate General of India

Widenmayerstrasse 15, 80538 Munich, Germany

Ph: 089-21023916Email: [email protected]

Web: www.cgimunich.com Facebook: https://www.facebook.com/ConsulateGeneralofIndiaMunichGermany

Consulate General of India Munich

http://www.makeinindia.com/


(Note: The information and data contained in this report have been checked and verified from published sources. In case any error or discrepancy is noted, it may be brought to the

attention of CGI, Munich. The information contained in the report is purely for the purpose of reference.)

******


cgimunich.gov.in sector_2017... · web viewthe indian electronics market grew by 8.6% yoy to reach...

Documents