When the electronics industry evolves, the world evolves alongside it. The most groundbreaking technologies in the world are arriving every day in deceptively small electronics enclosures, and society shifts as they become ubiquitous.
Presently India is undergoing a digital revolution leading to a surge in the consumption of electronics devices. The growth is mainly attributed to the increasing middle-class population, rising disposable incomes, and declining electronics prices in the country. Besides, India has been one of the largest consumers of electronic products, specifically in Asia-Pacific.
With various government initiatives aiming to boost domestic manufacturing, India has already started witnessing initial movement with increased production and assembly activities across products such as mobile phones and other consumer electronics.
With this spike in demand for electronic products, the ESDM sector in India is predicted to reach ~US$ 220 billion by 2025, expanding at a 16.1% CAGR between 2019 and 2025. The EMS industry in India is projected to reach US$ 152 billion by 2025. The high internet penetration rate and India’s position as the second-largest smartphone manufacturer worldwide boosted the penetration of electronic products, which in turn is driving the ESDM market. The government intends to incentivize and attract investments to set up semiconductor FABs (fabrication plants) in India. More than 90% of semiconductor companies globally have their R&D centers in India.
The government has made electronics production 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.
In India, smartphone shipments reached 150 million units and 5G smartphone shipments crossed 4 million in 2020.
Fund Allocation for Industry: The Government has allocated Rs. 2,631.32 crore to promote electronics and IT hardware manufacturing programmes – M-SIPS, Electronics Development Fund (EDF), and Manufacturing Clusters.
Schemes for Electronic Industry: The government announced three new schemes to position India as a global hub for the ESDM sector. 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). As a part of the PLI scheme, 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.
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: In 2020 India’s electronic imports accounted for US$ 50 billion, wherein China and Hong Kong accounted for US$ 28 billion. India’s exports of electronic goods were valued at US$ 11.7 billion in 2021. In May 2021, exports of electronic goods were valued at US$ 950.17 million. Smartphone shipments reached 150 million units and 5G smartphone shipments crossed 4 million in 2020. The electronics system market is expected to witness 2.3x demand of its current size to reach US$ 160 billion by FY25. The electronics design segment, growing at 20.1%, it is anticipated to be 27% of the ESDM market size in FY25. In 2020, the production value of mobile devices reached US$ 30 billion from US$ 3 billion in FY15. The consumer electronics and appliances industry in India is expected to become the fifth-largest in the world by 2025.
FDI Inflow in India: For defense electronics, FDI inflows in this sector up to 49% are allowed under automatic route and beyond 49% through government approval. 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. From April 2000 to March 2021, FDI equity inflows stood at US$ 3,166.43 million.
Investments and key developments in the ESDM sector: As of March 2021, 19 companies have filed for the production-linked incentive (PLI) scheme for IT Hardware. Over the next four years, the scheme is expected to lead to a total production of ~Rs. 160,000 crore. Of the total production, IT hardware companies have proposed production of Rs. 135,000 crore; and domestic companies have proposed production of Rs. 25,000 crore. In April 2021, Japanese electronics brand AIWA, is re-launching with five products in the TWS (True Wireless Stereo) and audio segments at a total investment outlay of US$ 10 million. This year Panasonic Life Solutions India, announced that it will invest Rs. 600 crore to set up a new electrical appliances manufacturing facility in Sri City, Andhra Pradesh. Amazon announced that it will commence manufacturing of electronics products from India with Cloud Network Technology in Chennai. Last year Lenovo announced its plan to start manufacturing tablets in India and expand its laptop manufacturing by 10x. In July this year, C4V, a lithium-ion cell manufacturer in the US, invested US$ 537.15 million in the electric battery manufacturing sector in Karnataka.
Government Initiatives: As per Union Budget 2021-22, MeitY has allocated Rs. 9,720.66 crore. In 2021-22, the total budget allocation towards the ‘Digital India’ programme is Rs. 6,806.33 crores. To accelerate quantum computing-led research & development and enable new scientific discoveries, MeitY, in collaboration with Amazon Web Services, will establish a quantum computing applications lab in the country.
The Consumer Electronics market is driven by innovation – a constant improvement on existing products and their blend in the creation of new commodities. This is why many of the devices contained in this market have more than one purpose (e.g. smartphones can be used as cameras, radios, etc.), and, in order to realize a consistent segmentation, the focus is on their main function. The consumer electronics market growth is poised to be stimulated by increasing technological advancements in consumer electronics comprising laptops, smartphones, earphones, speakers, and headphones. The product functionality is further enhanced by the incorporation of disruptive technologies comprising machine learning, artificial intelligence, and the Internet of Things. On the whole, the surging demand for energy-efficient appliances having versatile performance will escalate consumer electronics market share through the forecast period.
Impact of Covid-19 in Sudden Surge of Consumer Electronics’ Demand: This covid scenario came into our lives so unprecedented and stays here like some uninvited guest. The pandemic was not only plague to humanity but also to the rushing lives, growing economy, future plans, rising employment, enhanced healthcare sector. A lot of sectors gained traction during the post-covid scenario due to the latest trends evolving be it work from home, digital entertainment, or digital health & safety concerns.
The pandemic factor has contributed to the following in terms of the consumer electronics market-
Wider use of consumer gadgets: People are pushed out of their normal routines and are quickly adopting new attitudes, habits, and behaviors. Most daily activities are happening online today, like distant work, Zoom fitness classes, and an all-virtual social life. With presence-free living, we see surging demand for products such as televisions, wearables, and other telecommunication devices.
Monitoring. As demand for rapid lab-free COVID-19 testing has exponentially increased, a number of manufacturers showcased products enabling early detection. Their users detect an active infection, self-isolate, and seek medical care. For example, Abbot presented their BinaxNOW COVID-19. This test system works with a mobile app and provides a daily health passport for a user.
Protective accessories with added functionality: Of course, the pandemic has made a mask a new must-have accessory. While designers are working on making it part of their fashion collections, IoT companies and developers are enhancing this vital part of our new normal with additional functions. In addition to protecting a consumer against the infection, a smart face mask can monitor air quality, like the AirPop Active+ project; feature a voice-amp technology; empower Bluetooth-enabled hands-free calling in MaskFone.
Voice command: From smart home hubs to voice assistants, consumers are getting more used to voice-controlled devices. It is happening a lot more while seeking a work-life balance as people only have their homes for both work and life. Everyone is trying to make their homes a smart one so that they have to spend less time on house chores to perform better in their work scenario. Manufacturers know that and are implementing the functionality into all types of gadgets. In response to this, LG presented their next-gen model, the InstaView fridge that can open its door via voice command. This is also an example of a no-touch door operation for a safer environment.
Fueled by strong policy support, huge investments by public and private stakeholders, and a spike in demand for electronic products, the ESDM sector in India is predicted to reach US$ 220 billion by 2025, expanding at 16.1% CAGR between 2019 and 2025.