The electronics industry, however, still needs to boost domestic production to meet the government’s vision of turning India into a manufacturing hub.
Increasing disposable income among India’s growing middle class population has led to increased demand for consumer electronics, including TVs, mobile phones and computers, which, in turn, shows a positive outlook for the industry, according to a joint study by Assocham and NEC Technologies.
In fact, the demand of electronics products in the country is expected to grow at a compound annual growth rate (CAGR) of 41% to reach ₹26.82 lakh crore ($400 billion) by 2020, the domestic production, which is currently growing at a CAGR of 27%, may touch ₹6.97 lakh crore ($104 billion) leaving a huge gap for import to the extent of ₹20.12 lakh crore ($300 billion), according to the joint study.
The industry, however, still needs to boost domestic production to meet the government’s vision of turning India into a manufacturing hub. Demand for electronic products in India is poised for significant growth in the next few years, driven by a strong economic outlook. The Indian electronics and hardware market grew by 8.6% YoY to reach ₹5.03 lakh crore ($75 billion) in 2015, driven by rising local demand.
The investments in electronic manufacturing, which was just ₹11,000 crore in June 2014, has increased exponentially to ₹1,27,880 crore in 2016. This is also due to the government’s efforts to create an enabling policy ecosystem in the sector bringing through initiatives like Make in India and Digital India and providing special focus to schemes like the Modified Special Incentive Package Scheme (M-SIPS) and Electronic Development Fund (EDF).
However, even though there are signs of promising growth, the local production of electronic products has to be increased significantly to meet the domestic demand, according to the study. The industry suggest the government to focus on both infrastructural as well as at the policy level, increased emphasis has to be provided for increasing the percentage of local component manufacturing in India. Simplifying the complex regulatory structure for making compliance easier for new entrants and developing a participatory approach, where all the stakeholders are involved in the policy making process.