The ESDM sector in India is predicted to be worth North of US$ 220 billion by 2025. It is currently expanding at 16.1 per cent CAGR
Thanks to different PLI schemes, and other initiatives by the government of India and Ministry of Electronics and IT (MeitY), India’s electronic sector is on a roll. The sector touched electronic goods exports worth US$ 1.03 billion in the month of June 2021.
A report by IBEF notes that the demand for electronic products will rise to US$ 400 billion by 2025 from US$ 33 billion in FY20. Electronics system market, as per the same report, is expected to witness 2.3x demand of its current size (FY19) to reach US$ 160 billion by FY25. Similarly, the electronics design segment, growing at 20.1 per cent, was 22 per cent of the ESDM market size in FY19; it is anticipated to be 27 per cent of the ESDM market size in FY25.
Some major investments
Intel has already invested over $7 billion in design and R&D facilities in the country to date. The Tatas, on the other hand, have already announced plans to enter the semiconductor manufacturing arena. Aiwa, an iconic Japanese brand, has also shared plans to invest over $10 million.
Panasonic Life Solutions India, in January 2021, had also announced that it has plans yo invest Rs 600 crore (approx US$ 82.34 million). The company was in the process of setting up an electrical appliances manufacturing facility in Sri City, Andhra Pradesh.
Amazon, during febuary 2021, had announced that it was finalizing plans to start manufacturing of electronics products from India. The same is to be done with the help of Cloud Network Technology. The latter is a subsidiary of Foxconn located in Chennai. Amazon, under its device manufacturing program in India, will be manufacturing ‘Fire TV Stick’ catering to demands of customers in India.
“In December 2020, Lenovo announced its plan to start manufacturing tablets in India and expand its laptop manufacturing by 10x. The company is also expecting to grow by 25-30% in the current fiscal year, due to increase in demand from the education segment and large enterprises.” read the IBEF report.
It continued, “In December 2020, to establish the required ecosystem at Noida, the Indian Cellular and Electronics Association (ICEA) proposed the establishment of a centre of excellence in Noida for product-based Li-ion cells (post-cell). This has been approved and groundwork will begin as soon as the Government of India receives sanctions. In partnership with the Ministry of Electronics & Information Technology and industrial associations, the government will create three centres of excellence.”
The MeitY budget
The government of India has allocated US$920 million for the Ministry of Electronics and Information Technology (MeitY) in the 2020-21 budget. has been allocated ~US$ 920 million. In the allocated budget, revenue expenditure allocation is ~US$ 870 million and capital expenditure allocation is US$ 50 million.
The Government of India has also allowed 100 per cent Foreign Direct Investment (FDI) under the automatic route in the ESDM sector. In case of electronics items for defence, FDI up to 49 per cent is allowed under automatic route and beyond 49 per cent, government approval is required.
India, as per IBEF, has set a goal of producing one billion mobile handsets worth US$ 190 billion (Rs 13,00,000 crore) by 2025, with 600 million handsets worth US$ 110 billion (Rs 7 lakh crore) targeted for exports.
