New Factors Driving India’s Electronics Industry
India’s electronics industry has grown to become one of the largest consumer electronics markets in the Asia Pacific Region. There are numerous factors amplifying this growth in recent years. These include the growth of India’s middle-class population, increasing disposable income among its citizens and dropping prices for electronics.
Despite being considered a single economic class, its demographics are quite diverse. It’s estimated that India’s middle class will increase from 250 million to 583 million people by 2025, which will make it more than 40% of the population. The percentage of middle-class Indians aged 25 or younger applying to universities has increased by more than 60% in the past decade and is expected to continue to rise. With this growing middle class has also come an increase in economic consumption.
The adoption of high-end technologies is also contributing to the growth in consumer electronic devices. The introduction of major technology transitions like IoT and 4G/LTE networks are rapidly increasing the adoption of consumer electronics. India is already the Asia Pacific’s fastest-growing smartphone market, and its IoT market is projected to be worth $9 billion by 2020. [1,2]
India’s Electronics Market
The Indian government has initiated projects like Smart City and Digital India to stir up demand for IoT within the national market. The digital banking sector, including payment banks and wallet players, is another factor raising demand for VSAT and POS mobile ATMs. These will give further impetus to the rapidly expanding electronics industry.
The cumulative result of these advances and projects is that India has become one of the largest electronics markets in the world. Some estimates anticipate that India’s electronics market will reach $400 billion by 2025. Additionally, the consumer electronics and appliances industry is expected to become the 5th largest electronics industry in the world by the same year.
India experiences average annual growth rates of 26% in its electronics sector, 185% in mobile manufacturing, 17% in domestic manufacturing, and 8.60% in its hardware market. Projections also show that the Indian gaming market will be valued more than $801 million by 2022. The electronics market is currently expected to reach $228 billion by 2020. This is a significant increase from 2016-17 when it was valued at $100 billion.
In 2015, India’s electronic products industry was worth $61.8 billion. India’s electronic products made up 82% of the overall market in 2015 with the remainder being electronic components. The entire electronic component industry was worth about $13.5 billion in 2015. Between 70 to 80% of India’s electronic components market is driven by imports. 
Domestic Electronics Deficit
Despite the upturn in domestic manufacturing, India’s electronics production during 2018-19 is estimated to be Rs 4,58,006 crore (about USD 70 billion) whereas the global electronics production is estimated to be of the order of USD 2.1 trillion (about Rs 136 lakh crore). Therefore, India’s share in global electronics production is about 3.3%. India’s domestic electronics hardware manufacturing sector faces a lack of level-playing field against competing nations on account of several disabilities which render the sector uncompetitive.
There are several factors creating this trade deficit: adequate infrastructure, domestic supply chain and logistics, high cost of finance, inadequate availability of quality power, inadequate components, limited design capabilities, and inadequacies in skill development. India’s government recognizes this imbalance for electronics, as being the 3rd largest contributor to imports, and is working to quickly correct this issue.
The government has taken a slew of initiatives; as a result, production of electronics in India has risen to an estimated Rs 4.58 lakh crore in FY19, growing at a compound annual growth rate (CAGR) of about 25% in the last four years, compared to a rate of 5.5% in 2014-15. 
India’s Technological Growth
There are numerous factors driving the continued growth in India’s electronics industry. These include Wi-Fi connectivity and routers, IoT, digital wallets, and machine-to-machine devices. The Indian government has set a goal of building 100 smart cities by 2020. Through its cloud initiative, known as Meghraj, India is moving fully into the world of e-governance services. The Indian government is also working to connect educational institutions and laboratories through its National Knowledge Network (NKN).
Finally, India is integrating renewable energy technologies by investing in solar-powered pump sets and water pumping stations. As part of ongoing efforts to continue increasing the growth of India’s electronics industry, the Department of Electronics and Information Technology (DEIT) has implemented a number of policies and projects. These are designed to promote further domestic production in the electronics industry.
- National Policy on Electronics: This policy aims to give preferential treatment to domestically produced electronics, in order to build a globally trusted electronics market and provide new opportunities for job growth throughout India. The Indian government recently announced that it’ll add an update to the National Policy, which will likely occur soon. This update adds the goal of increasing design opportunities for electronic devices, along with expanding domestic production. By adding opportunities for tech innovation, the government aims to develop the devices that will prove vital in the next decade. These electronic devices would be a part of industries ranging from medicine to transportation to defense. 
- Preferential Market Access (PMA): This incentive gives preference to domestic manufacturers when it comes to government procurement. This scheme is designed to increase domestic manufacturing, including electronics, in India. Items must meet safety standards according to the Compulsory Registration Order (CRO), which gives a framework for other electronics to be added. Assistance up to 50% with a maximum of $8 million is available for common facilities including training centers, testing facilities, and social infrastructure. Hard infrastructure like power, water, and roads, are also included. 
- Skill Development Scheme: This scheme provides for reimbursement up to 100% of training fees for specialized skills required of prospective employees within the country. To qualify, training must be provided by a facility recognized by the Electronics Sector Skills Council (ESSC). A scheme was passed in 2014 to support 3,000 more PhDs, split evenly between IT/ITES and ESDM. 500 PhDs in ESDM will be full-time and 100 full-time PhDs will be supported by the state government. 
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Our flagship Chennai location opened in 2006 and lies within a Special Economic Zone (SEZ) for electronics manufacturing, offering economic incentives for imports and exports. This primary facility is within 90 minutes of the Chennai seaport and 20 minutes to the international airport, with additional road and rail connectivity linking to the rest of India and beyond, as well as infrastructure advantages with faster import and export clearances. We also have labor force availability, both technical and manual, to rapidly scale to client demand.
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