ELECTRONICS - IBEF · 2016-10-17 · electronics over the years has been accompanied by an increase...
Transcript of ELECTRONICS - IBEF · 2016-10-17 · electronics over the years has been accompanied by an increase...
11Updated on October 14, 2016
ELECTRONICS
For updated information, please visit www.ibef.orgUpdated on October 14, 2016
22Updated on October 14, 2016 For updated information, please visit www.ibef.org
Executive Summary………………….…….…3
Advantage India…………………….……….. 5
Market Overview and Trends……….……… 7
Porter’s Five Forces Analysis .....................19
Strategies Adopted……...............................21
Growth Drivers…………………….….……. 23
Opportunities…………………….….……… 35
Success Stories…………………….……… 40
Useful Information…………………..……... 47
ELECTRONICS
Updated on October 14, 2016
33Updated on October 14, 2016
0.41
35
FY16 FY20E
84.80
200
FY16 FY18E
100
400
FY16 FY20E
EXECUTIVE SUMMARY … (1/2)
Source: Department of Electronics & Information Technology; TRAI
Notes: DTH - Direct-to-Home (satellite television broadcasting); CAGR - Compound Annual Growth Rate, LED - Light Emitting Diode
FY161 - Data is for April 2015; FY162 - Data is as on December 2015
By 2020, the electronics market
in India is expected to increase
with a CAGR of 41.4 per cent to
USD400 billion from USD100
billion in 2016
One of the largest growing
electronics market in the world
By 2020, the LED market in
India is expected to expand to
USD35 billion from USD0.41
billion in FY161
Promotion of LED products to
boost demand
By 2018, the number of DTH
subscribers in India is expected
to rise to 200 million from 84.80
million in FY162
Digitisation to drive growth in
DTH market
For updated information, please visit www.ibef.org
CAGR: 41.4%
CAGR: 53.6%
CAGR: 204.1%
ELECTRONICS
USD Billion
2
1USD Billion
USD Billion
44Updated on October 14, 2016
9.4
16.8
2016 2020E
20
30
FY16E FY20E
For updated information, please visit www.ibef.org
EXECUTIVE SUMMARY … (2/2)
Source: Department of Electronics & Information Technology; Indian Semiconductor Association; FICCI, TechSci Research
Notes: CAGR – Compound Annual Growth Rate; E – Estimated, 20161 – Data has been projected till December 2016
By 2020, the semiconductor
design market in India is
expected to increase with a
CAGR of 29.4 per cent to
USD52.58 billion from USD14.5
billion in 2015
Rising demand and availability
of talent to boost growth in the
semiconductor design market
By 2020, the television industry
in India is expected to expand
to USD16.8 billion from USD9.4
billion in 20161
World’s third-largest TV market
By 2020, demand for telecom
equipment in India is expected
to rise to USD30 billion from
USD20 billion in FY16E
Rising teledensity in the
country is leading to higher
demand for telecom equipment
ELECTRONICS
CAGR: 29.4%
CAGR: 10.7%
CAGR: 15.6%
14.5
52.58
2015 2020EUSD Billion
USD Billion
1
USD Billion
ADVANTAGE INDIA
ELECTRONICS
66Updated on October 14, 2016
Growing demand
For updated information, please visit www.ibef.org
ADVANTAGE INDIA
Source: Corporate Catalyst India; Department of Information Technology; Make in India, TechSci Research
Notes: FDI – Foreign Direct Investment; FY – Indian Financial Year (April–March); USD – US dollar, CAGR – Compound Annual Growth Rate, E - Estimated
Growing demand
• Demand from households is set to accelerate given rising disposable incomes, changing lifestyles, and easier access to credit
• Government and corporate spending will also contribute to growth in demand
Attractive opportunities
• The electronics market is expected toexpand at a CAGR of 41.4 per centduring 2016–20
• Intended reduction in government’simport bill is likely to boost domesticelectronics manufacturers
Policy support
• 100 per cent FDI allowed in the electronicshardware manufacturing sector under theautomatic route
• Initiatives like Modified Special IncentivePackage Scheme(M-SIPS) will provide acapex subsidy of 20 – 25 per cent
• As per Make in India Initiative, ElectronicDevelopment Fund Policy has beenapproved which would rationalise aninverted duty structure
Higher Investments
• Sector has attracted strong investmentsin the form of M&As and other FDI inflows
• Companies are set to augmentinvestments in production, distributionand R&D in the next few years
• Government has received investmentproposals for USD17.5 million for whichthey intend to provide incentives underM-SIPS scheme. Applications receivedbefore July, 2020 will be considered
2016E
Market size
– USD100
billion
2020E
Market size
– USD400
billion
Advantage
India
ELECTRONICS
MARKET OVERVIEW AND TRENDS
ELECTRONICS
88Updated on October 14, 2016 For updated information, please visit www.ibef.org
THE INDIAN ELECTRONICS SECTOR IS SPLIT INTO SIX PRODUCT SEGMENTS
ELECTRONICS
Electronics
Consumer electronics
Mobile phones
TVs
Music
systems
Industrial electronics
UPS systems
SCADA
PLC
AC drive systems
Computers
Notebooks
Desktops
Servers
Communication and broadcasting
equipment
Direct-To-Home (DTH)
Set Top Box (STB)
Strategic electronics
Radars
Satellite based communication
Internal security system
Disaster management
system
Electronic components
Semiconductor devices
Cathode ray tubes
Capacitors
Picture tubes
Source: Department of Information Technology Annual Report; Corporate Catalyst India; TechSci Research
Notes: SCADA – Supervisory Control and Data Acquisition; PLC – Programmable Logic Controller
99Updated on October 14, 2016 For updated information, please visit www.ibef.org
EVOLUTION OF THE INDIAN ELECTRONICS SECTOR
ELECTRONICS
Source: India Electronics and Semiconductors
Association, Corporate Catalyst India; TechSci Research
• Closed market
• Development in
transistor radios,
black and white TVs,
calculators etc
• Continuous and rapid
industry growth
• Developments in colour
TVs
• Advent of computers
and telephone
exchanges in 1985,
followed by digital
exchanges in 1988
• Sharp decline in
custom tariffs
• Signing of WTO-FTA
agreement in 1997,
wherein India
committed to complete
elimination of all
custom duties on IT
• Increasing penetration of high-end
electronics products such as High
Definition TVs (HDTVs), LCDs,
LEDs, and tablet
• Approval of National Policy on
Electronics (2012) and setting up of
National Electronics Mission
• FDI of up to 26 per cent is
approved through government
approval in case of defence
electronics items, while, FDI in
excess of 26 per cent is allowed
through the approval of cabinet
committee on security
• Cumulative FDI inflows into the
electronics sector during April 2000
– March 2016 reached USD21.02
billion
1965 to early
1980s
1984-1990
1991- 2005
Late 2000s
Introductory
stage
Golden period
Liberalisation era
Growth era
1010Updated on October 14, 2016
14.6
21.0 21.123.3
28.230.6
32.7
29.931.6
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
For updated information, please visit www.ibef.org
Value of electronics hardware production in India
(USD billion)
Source: Department of Information Technology Annual Reports; TechSci Research
Notes: LED – Light Emitting Diodes
Total production of electronics hardware goods in India
reached USD31.6 billion in FY15 and USD104 billion by
2020
Production expanded at a CAGR of 10.1 per cent during
FY07–15
High production is majorly contributed by accelerating
demand for advanced TVs, mobile phones, computers and
defence related electronic equipments during FY07 to FY15
During FY16, production of industrial electronics, mobile
phones and LED was recorded at USD6.89 billion, USD8.25
billion and USD0.55 billion, in value terms, respectively.
ELECTRONICS PRODUCTION IN INDIA HAS BEEN GROWING AT A RAPID PACE
ELECTRONICS
CAGR: 10.1%
1111Updated on October 14, 2016 For updated information, please visit www.ibef.org
Shares in total production of electronic goods
(FY15)
Source: Department of Information Technology
(2014–15 Annual Report); TechSci Research
Notes: C&B – Communication and Broadcasting.
According to government estimates, Consumer Electronics
has the highest share (29.7 per cent) in the total production
of electronic goods in India. The growth in consumer
electronics over the years has been accompanied by an
increase in imports in respect of certain items like LCD/LED
TVs
The Electronic Components had witnessed a growth of about
23.74 per cent from the previous year which was supported
by the rapid growth in domestic manufacturing of electronic
components. Industrial electronics contributed 20.9 per cent
of the total output of electronics goods industry in FY15.
Industrial electronics is expected to grow at a considerable
pace with the new plans and schemes by govt.
Communication and broadcasting equipment constitutes 10
per cent of total production of electronic goods in India in
FY15. Not surprisingly, computers are a key component of
total electronics output in India (9.9 per cent in FY15); the
segment’s share is likely to go up over this decade, given
greater policy focus on encouraging computer hardware
manufacturing.
As of FY16, production of industrial electronics, mobile
phones and LEDs, in value terms, stood at around
USD6887.11 million, USD8249.31 million and USD548.43
million, respectively.
CONSUMER ELECTRONICS HAVE THE HIGHEST SHARE IN PRODUCTION
ELECTRONICS
29.7%
21.1%20.9%
10.0%
9.9%
8.3%
ConsumerElectronics
Components
IndustrialElectronics
C & B equipment
Computers
StrategicEquipment
1212Updated on October 14, 2016 For updated information, please visit www.ibef.org
Comparison in production trends of C&B
equipment and the overall electronics hardware
sector in India (USD billion)
Source: Department of Information Technology (Annual Report); TechSci Research
Notes: C&B – Communication and Broadcasting
Production (by value) of C&B equipment in India has
expanded at a CAGR of 5.1 per cent over FY07–15.
Consumer electronics have grown over the years which has
been accompanied by increase in LCD/LED TV imports and
accordingly this segment has registered about 16 per cent
growth in 2014 - 15
Growth in the hardware segment is expected to far outpace
the overall growth of electronics goods production in the
country (CAGR of 10.1 per cent over the same period)
The total computer hardware to reach USD31.6 billion in
FY15 from USD29.9 billion in FY14
Comparison of C & B equipment with other equipments… (1/2)
ELECTRONICS
14.6 21 21.123.3
28.230.6
32.7 29.9 31.6
2.14.6 5.8 6.5 7.8 8.6 8.5
4.4 3.1
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Hardware C & B
Linear (Hardware ) Linear (C & B)
1313Updated on October 14, 2016
67
%
73
%
74
%
74
%
75
%
76
%
77
%
74
%
71
%
72
%
33
%
27
%
26
%
26
%
25
%
24
%
23
%
26
%
29
%
28
%
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY20F
Other Electronics Consumer Electronics
For updated information, please visit www.ibef.org
Share of Consumer Electronics in electronics
production over FY07–20F
Source: Department of Information Technology Annual Report, TechSci Research
Notes: C&B – Communication and Broadcasting,
F – Forecast
Production value of all other segments in the electronics
sector (other than Consumer Electronics) grew at a rate of
10.9 per cent over FY07-15
With growth in Consumer Electronics far outpacing those in
other segments till FY15, the former’s share in total
electronics production has doubled over FY07–12 to 8.4 per
cent.
The share of consumer electronics in the overall electronics
industry in India is likely to reach 28 per cent by FY20 with
the value of consumer electronics reaching USD29 billion
by FY20.
Comparison of Consumer Electronics with other equipments … (2/2)
ELECTRONICS
1414Updated on October 14, 2016
2.83.3
6.8
5.5
8.9 9.18.1 7.7
6.1
2.3
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
For updated information, please visit www.ibef.org
Electronics exports from India (USD billion)
Source: Department of Information Technology Annual Report;
Electronics and Computer Software Export Promotion Council;
TechSci Research
Notes: C&B – Communication and Broadcasting
FY161 - Data is for April-August 2015
Electronic exports from India reached USD6.1 billion in
FY15, over FY07–15, exports from the sector (CAGR: 10.2
per cent)
Consumer Electronics have shown a positive growth over
the years with the growth in the production of LCD/LED TVs
rising to almost 40 per cent in 2013 – 14 as compared to a
mere 11 per cent in 2012 - 13
Technological improvements and competitively cost
effectiveness are main drivers for demand of Indian
electronics products abroad
ELECTRONICS EXPORTS FROM INDIA HAVE OUTPACED TOTAL PRODUCTION IN THE SECTOR
ELECTRONICS
CAGR: 10.2%
1
1515Updated on October 14, 2016 For updated information, please visit www.ibef.org
Source: Company websites; Dataquest; Corporate Catalyst India; TechSci Research
Notes: DVD – Digital Video Disc; AC – Air Conditioner; TV – Television; PC – Personal Computer
KEY PLAYERS IN THE ELECTRONICS SECTOR … (1/2)
Company Business description
• Established to meet specialised needs of Indian defence services
• Focuses on contract manufacturing, design and manufacturing services, software development and quality
assurance, has got plans to venture into solar energy
• Third largest consumer durables manufacturer in India after LG and Samsung, holds one fourth of the
consumer durables market in India
• Manufactures and markets TVs, DVD players, microwave ovens, refrigerators, washing machines, ACs and
power backup solutions
• Second largest leader in consumer durables after Samsung
• Manufactures TVs, audio-visual solutions, computers, mobile phones, refrigerators, washing machines,
microwave ovens, vacuum cleaners and Ac’s
• Largest player in the consumer durables market, provides employment to around 8000 people
• Manufactures TVs, home theatre systems, DVD players, mobile phones, digital cameras and camcorders,
refrigerators, ACs, washing machines, microwave ovens and computers, leads smart phone segment
• Leading IT hardware and software provider, extensive global offshore infrastructure and offices in 31 countries
• Manufactures and markets PCs, PC servers, storage solutions, display products and other electronic products
ELECTRONICS
1616Updated on October 14, 2016 For updated information, please visit www.ibef.org
Source: Company websites; Dataquest; Corporate Catalyst India; TechSci Research
Notes: CRT – Cathode Ray Tube
KEY PLAYERS IN THE ELECTRONICS SECTOR … (2/2)
Company Business description
• World's second-largest company in the optical storage media segment
• Supplies products to a number of branded players such as Sony, Verbatim, TDK, Maxell, Imation and
Samsung,
• Also has a presence in the photovoltaic and is the largest home entertainment company
• Offers high-value, high-margin design services for mobile phones and telecom/networking software
• Manufactures TV tuners, set top boxes, energy meters, networking cards, drug delivery devices, diagnostic
equipment
• Offers state-of-the-art solutions for Frequency Control Products (FCP), Electronic Manufacturing Service (EMS)
and Hybrid Micro Circuits (HMC), also has presence in Defence & Aerospace, Space industry
• Acquired Celetronix, one of the largest electronic equipment manufacturers in India, in 2006
• Offers printed circuit boards, enclosure integration, and distribution and repair services with in-region design
services support
• Largest Indian integrated manufacturer of a wide range of display devices such as TV picture tubes, CRT guns,
heaters and cathodes, and deflection yokes
• Operates a facility in Germany to manufacture high-tech, high-resolution CRTs for demanding applications
such as aircraft avionics and medical monitors
ELECTRONICS
1717Updated on October 14, 2016 For updated information, please visit www.ibef.org
Consumer electronics
• Increased presence of organised retail and affordability due to technological advancement
• Expansion into new segments such as HDTVs, tablets and smart phones
• Under Union Budget FY17, government exempted parts & components, subparts for
manufacturing of routers, broadband modems, set-top boxes for internet & TV, CCTV
camera/IP camera, lithium-ion battery except mobile handsets from the purview of BCD,
CVD, SAD duties.
Industrial electronics
• Application of state-of-the-art systems such as Decision Analysis, 3–D coordinate
systems, smart image processing, Nanotechnology, Nanoscale assemblies, DCS, etc.,
across various sections of the industry
• Introduction of robotics to manage process and equipments for sensitive industries like
Chemical Industry, Nuclear Power Generation etc.
• Integration of production and business operations
• Artificial Intelligence has been made available which would help the sector to improve its
quality control thereby making it more efficient
Computers
• One of the fastest-growing IT systems and hardware market in Asia Pacific
• Notebooks segment have recorded a growth rate of 17 per cent in FY15; tablet ownership
registered a growth of 27 per cent in 2014 – 15 from the previous year
• The industry of computer hardware in India grew from USD2.9 billion in FY14 to USD3.06
billion in FY15
• Expansion of server market into smaller cities, and small and medium businesses
Source: Department of Information Technology Annual Report; Corporate Catalyst India; TechSci Research.
Notes: BCD – Basic Custom Duty, CVD – Counter veiling Duty, SAD – Special Additional Duty, TV – Television
NOTABLE TRENDS IN THE ELECTRONICS SECTOR … (1/2)
ELECTRONICS
Electronic components
• Semiconductors lead segmental growth
• High growth in key determinants for electronic components, namely consumer electronics,
telecom, defence and IT verticals
• Total Semiconductor market in India is estimated to reach USD9.66 billion by the end of
2015
1818Updated on October 14, 2016 For updated information, please visit www.ibef.org
Strategic electronics
• The production in strategic electronic segment in India increased from USD2.29 billion in
FY14 to USD2.57 billion in FY15
• Economic growth and low costs are likely to provide impetus to aerospace market
• Nuclear power to play a large role in India’s energy security needs
• Companies such as Bharat Electronics Limited, Hindustan Aeronautics Limited,
Electronics Corporation of India Limited, Bharat Dynamics Limited dominated this segment
C&B equipment's
• Growing broadband subscriber base
• As on 30th June, 2016, the total number of telephone subscribers in the country was
1,059.86 million, covering wireless subscriber base of 1,035.12 million and wireline
subscriber base of 24.74 million, respectively
Source: Department of Information Technology Annual Report; Corporate Catalyst India; TechSci Research, TRAI
Notes: C&B – Communication and Broadcasting; DTH – Direct-to-Home (Satellite Television Broadcasting)
NOTABLE TRENDS IN THE ELECTRONICS SECTOR … (2/2)
ELECTRONICS
E – Waste Management • Increasing Adoption of Electronic Waste Management Scheme supported by the
regulatory framework has improved the electronics sector to a large extent
Major Contributors to
Employment
• Major segments such as Consumer Electronics, Telecom Equipment, and IT Hardware
can be major contributors to employment
Increasing Consumption
and potential for
production
• Increasing PFCE on Recreational and Educational services, and Home appliances are
expected to contribute to the rise in consumption and production of Electronics and IT
Hardware.
• Growth of 17 per cent is expected with major contributors being Consumer Electronics,
Telecom and computers
PORTER FIVE FORCES ANALYSIS
ELECTRONICS
2020Updated on October 14, 2016 For updated information, please visit www.ibef.org
PORTERS’ FIVE FORCES ANALYSIS
Source: TechSci Research
• Competitive rivalry is quite high in this sector, as players use
innovation and product differentiation to beat peers
• Each player adopts different strategies to capture market share; for
example, one player innovates while another diversifies, thus
intensifying the rivalry in the sector
Threat of New Entrants Substitute Products
Bargaining Power of Suppliers Bargaining Power of Customers
• Threat is low due to capital-
intensive nature of the industry
• Evolving technology, brand
loyalty block entry
• Low bargaining power of
suppliers, as product
differentiation is less
• Low switching costs for
customers
• High as buyers possess
considerable product
information these days, which
helps in comparison
• Availability of similar options
• Threat is low because there is
no substitute for electronics
• Threat is present within the
industry due to product
innovation by peers
Competitive Rivalry
Competitive
Rivalry
(High)
Threat of New
Entrants
(Low)
Substitute
Products
(Medium)
Bargaining
Power of
Customers
(High)
Bargaining
Power of
Suppliers
(Low)
ELECTRONICS
STRATEGIES ADOPTED
ELECTRONICS
2222Updated on October 14, 2016 For updated information, please visit www.ibef.org
STRATEGIES ADOPTED
ELECTRONICS
Source: A report by Corporate Catalyst India (CCI) on ‘Electronics Industry in India’; TechSci Research
• Companies increasingly spending on R&D and stepping up innovation
• Customers frequently change to new-generation products due to low switching costs; thus,
companies with newer technologies gain significant market share
• With HD TVs entering the market, TVs working on CRT (Cathode Ray Tube) lost their
market share
• Most companies are now diversifying into other profitable segments; for example,
Samsung is focussing heavily on mobile phone manufacturing, while earlier it focussed
more on consumer electronics
• Videocon is also foraying into other segments such as TV Network and mobile phone
manufacturing
• Most electronics companies, especially consumer electronics, are shifting towards popular
ad campaigns to boost their sales
• Most companies in India are embracing aggressive social strategies (e.g., by going online)
to target young audience and build brand loyalty among them
• Most companies are forming strategic alliances and JVs for mutual benefits
• LG and Sun Microsystems are jointly developing Java platforms to enable LG phones and
TVs
• LG and Siemens have collaborated to develop standard solutions for air conditioners
Innovation
Diversification
Marketing strategy
JVs & partnerships
• Manufacturing technologies are exchanged with other countries for better knowledge of
innovations
• Being competitive on global platform is key to sustainability and growth for the sector
Outsourcing of
technology
GROWTH DRIVERS
ELECTRONICS
2424Updated on October 14, 2016
STRONG DEMAND AND POLICY SUPPORT ARE DRIVING INVESTMENTS
For updated information, please visit www.ibef.org
Source: TechSci Research
Notes: EHTP – Electronic Hardware Technology Park; SEZ – Special Economic Zone;
FDI – Foreign Direct Investment; R&D – Research and Development
ELECTRONICS
Growing demandGrowing demand
Higher real
disposable
incomes, easy
consumer credit
Falling prices,
increasing
penetration
Growing
consumer and
industrial base
Policy supportStrong
government
support
Policy support
Setting up of EHTPs, SEZs, favourable FDI
climate
Increasing liberalisation,
tariff relaxation
National Policy on
Electronics and
National Electronics
Mission
Innovation
Expanding
production and
distribution
facilities in India
Increased R&D
activity
Providing support
to global projects
from India
Resulting
Increasing
investments
Inflow of FDI in
sector
Increasing
domestic
investment
Expansion by
existing big
companies in the
sector
DrivingInviting
2525Updated on October 14, 2016 For updated information, please visit www.ibef.org
Rising per capita income in India (USD)
Source: IMF, World Bank, TechSci Research
Note: F – IMF Forecast
Increase in discretionary income and credit availability has
boosted demand for consumer durables
The government is one of the biggest consumers of the
sector and leads the corporate spend on electronics; this is
not surprising given that electronics facilitates e-
governance, developmental schemes and initiatives
launched by the government
Strong demand and favourable investment climate in the
sector are attracting investments in R&D as well as
manufacturing
Increasing demand for defence equipments has boosted the
production of electronics goods up to a considerable level
Electronic Manufacturing Services and R&D based exports
also drives the market. The increased value – addition
would further increase the demand for sales, production,
after – sales support and services. This would trigger the
demand for skilled human resources in the country
Rapid urbanisation have unravelled new markets for
consumer goods; easy financing options have made
consumer goods affordable
KEY GROWTH DRIVERS ARE RISING INCOMES, CREDIT AVAILABILITY AND GOVERNMENT SPENDING
ELECTRONICS
13
87
.9
14
55
.7
1444.3 14
56
.2
15
76
.8
15
81
.6
17
47
.5
18
74
.9
2026.7
22
07
.6
24
02
.4
0
500
1000
1500
2000
2500
3000
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
GDP per capita, current prices Growth Rate
2626Updated on October 14, 2016 For updated information, please visit www.ibef.org
Source: Department of Commerce, Government of India;
Department of Electronics and Information Technology; TechSci Research
Notes: FDI – Foreign Direct Investment; SAD – Special Additional Duty of Customs,
R&D – Research & Development
POLICY SUPPORT AIDING GROWTH IN THE SECTOR … (1/2)
ELECTRONICS
Encouragement to FDI,
SEZs
• 100 per cent FDI is allowed under the automatic route in the Electronics Systems Design &
Manufacturing sector and is subject to all applicable regulations and laws.
• In case of electronics items for defence, FDI up to 49 per cent is allowed under the
government approval route, whereas anything above 49 per cent is allowed through the
approval of the cabinet committee on security.
Customs duty relaxation
• No customs duty on 217 tariff lines covered under the Information Technology Agreement
(ITA-1) of the WTO
• Peak rate for basic customs duty is 10 per cent
Reduced central excise
• Mean rate of excise duty (CENVAT) is 12.5 per cent
• Microprocessors, hard disc drives, CD ROM drives, DVD drives/DVD writers, flash memory
sticks, and combo-drives are exempt from excise duty payment and SAD
• Components and accessories of mobile handsets are exempt from excise duty and SAD
Electronic Development
Fund Policy
• Approved by Cabinet in December 2014
• Supports R&D by participating in venture funds, Innovation and IP Generation in Electronics,
Information Technology and Nano Electronics
Inverted Duty• Inverted Duty has been rationalised for various electronics products including tablets, mobile
phones, LED lights, LCD/LED TVs, telecom equipment etc.
2727Updated on October 14, 2016 For updated information, please visit www.ibef.org
EPCG, EHTP schemes• EPCG allows import of electronic capital goods without paying any customs duty
• EHTP provides benefits, such as duty waivers and tax incentives, to companies which
replace certain imports with local manufacturing
Intellectual Property
Rights
• Intellectual Property Rights (IPR) are a key determinant of progress in R&D and innovation
in the electronics sector
• GOI has amended relevant IPR-related acts (like the Copyright Act, Trademark Act, New
Designs Act) from time to time to help spruce up innovation and new technologies in the
sector
Source: Department of Commerce, Government of India; Department of Information Technology Annual Report; TechSci Research
Notes: EPCG – Export Promotion Capital Goods Scheme; EHTP – Electronic Hardware Technology Park Scheme;
IPR – Intellectual Property Rights; GOI – Government of India
POLICY SUPPORT AIDING GROWTH IN THE SECTOR … (2/2)
ELECTRONICS
MSIPS
• The Union Cabinet gave its green signal to the Modified Special Incentive Package
Scheme (MSIPS) under which the central government will be offering up to USD1.7 billion
in benefits to the electronics sector in the upcoming five years
• The scheme was notified on July 27, 2015 to attract investments in electronics
manufacturing
• Incentives would be provided under MSIPS on the investment proposals being received.
Till September 2015, investments of USD17.5 billion has been received
Electronic
Manufacturing Cluster
(EMC) Scheme
• The Scheme attracts investments for the Electronics Systems Design and
Manufacturing(ESDM) Sector by supporting the creation of world – class infrastructure
• The scheme provides support for setting up Greenfield and Brownfield EMCs in the form
of grant – in – aid only
• As of July 2015, investments of USD13.96 million for 2 EMCs have been approved. Total
number of EMCs approved in the last 1 year have become 21; 16 for Greenfield EMCs, 3
for Brownfield EMCs in 7 states
• As of December 2015, investments of USD18.67 billion has been allocated in the
electronics manufacturing sector
2828Updated on October 14, 2016 For updated information, please visit www.ibef.org
Magnetic Heads• BCD of 7.50/10.00 per cent would be imposed on ceramic/magnetic cartridges and stylus,
level meters/level indicators/ tuning indicators/ peak level meters/ battery meter/VC
meters/ tape counters, antennas, EHT cables, tone arms, electron guns
Road Construction
Machinery
• CVD of 12.50 per cent would be charged on specified machinery required for construction
of roads
Source: Department of Electronics and Information Technology (DeitY), Union Budget 2016 – 17, TechSci Research,
Notes: BCD – Basic Custom Duty, CVD – Counter veiling Duty, SAD – Special Additional Duty,
VoIP – Voice over Internet Protocol, PCB – Printed Circuit Board
Union Budget 2016 – 17
ELECTRONICS
Mobile Phones
• BCD of 10 per cent, CVD of 12.50 per cent and SAD of 4 per cent will be imposed on
charger/adapter, battery & wired headsets/speakers for manufacture of mobile phones
• Whereas, no duty will be charged on inputs, parts & components, subparts for
manufacturing of charger/adapter, battery and wired headsets/speakers of mobile phones
• SAD of 2 per cent on populated PCB for manufacturing of mobile phones
Telecommunication
Equipment
• BCD of 10 per cent on specified telecommunication equipment (Soft switches and VoIP
equipment namely VoIP phones, media gateways, etc.
• BCD of 10 per cent on preform silica to manufacture telecom grade optical fibre/cables
Tablet & Desktop
Computers/Laptops
• SAD of 4 per cent on populated PCBs for manufacture of personal computers (laptop or
desktop)
• SAD of 2 per cent on populated PCB for manufacture of tablet computers
2929Updated on October 14, 2016 For updated information, please visit www.ibef.org
Electrical Equipments
• Exemption of BCD & SAD from machinery, electrical equipment & instrument and parts,
thereof (except PCBs) for semiconductor wafer fabrication/LCD fabrication units
• Machinery, electrical equipment and instrument and parts thereof (except populated
PCBs) imported for Assembly, Test, Marking and Packaging of semiconductor chips
(ATMP) would be exempted from BCD & SAD
Source: Department of Electronics and Information Technology (DeitY); TechSci Research,
Notes: BCD – Basic Custom Duty, CVD – Counter veiling Duty, SAD – Special Additional Duty, PCB – Printed Circuit Board
ELECTRONICS
Capital Goods
• Exemption of BCD on specified capital goods and inputs used in manufacturing of Micro
fuses, sub-miniature fuses, resettable fuses and thermal fuses
• CVD would be exempted from capital goods/spare: raw materials, parts, material handling
equipment and consumable for repairs of ocean-going vessels by a ship repair unit
Medical Equipments
• All type of duties will be exempted from disposable sterilized dialyzer and micro barrier of
artificial kidney
• Exemption of BCD from Medical Use Fission Molybdenum-99 imported by Board of
Radiation and Isotope Technology (BRIT) for manufacture of radio pharmaceuticals
Digital Electronics
• All duties exempted from parts and components, subparts for manufacture of routers,
broadband Modems, Set-top boxes for gaining access to internet, set top boxes for TV,
digital video recorder (DVR) / network video recorder (NVR), CCTV camera / IP camera,
lithium ion battery, other than those for mobile handsets
Union Budget 2016 – 17
3030Updated on October 14, 2016 For updated information, please visit www.ibef.org
Favourable business
conditions
• To create an ecosystem for a globally competitive electronic system design &
manufacturing sector and to achieve a turnover of about USD400 billion by 2020, including
investments of about USD100 billion, as well as to provide employment to around 28
million people at various levels
Focus on new
technologies
• To build on the emerging chip design and embedded software industry for achieving
global leadership in Very Large Scale Integration (VLSI), chip design, and other frontier
technical areas, and to achieve a turnover of USD55 billion by 2020, also focus on
handling e-waste in an environment friendly policies
Source: Department of Information Technology; TechSci Research
NATIONAL ELECTRONICS POLICY 2012 – KEY OBJECTIVES … (1/2)
ELECTRONICS
Promote exports• To increase export in the electronic system design & manufacturing sector from USD5.5
billion to USD80 billion by 2020
Improving supply chain• To build a strong supply chain of raw materials, parts, and electronic components for
raising the indigenous availability of these inputs from the current 20–25 per cent to over
60 per cent by 2020
Building competencies• To develop core competencies in strategic and core infrastructure sectors such as
telecommunications, automotive, avionics, industrial, medical, solar, information and
broadcasting, and railways
Electronic
Manufacturing Clusters
(EMCs)
• Provide incentives for setting up of 200 Electronic Manufacturing Clusters (EMCs) - setting
up of greenfield EMCs and up gradation of brownfield EMCs
3131Updated on October 14, 2016 For updated information, please visit www.ibef.org
Incentives provided by government to attract investors
Source: Department of Information Technology; TechSci Research
ELECTRONICS
NATIONAL ELECTRONICS POLICY 2012 – KEY OBJECTIVES … (2/2)
Strategies
Favorable eco -system
Promoting exports
Focus on Human
resource development
Developing and
mandating electronics standards
Focus on strategic
electronics
Focus on innovation and R&D
To provide subsidy of up to USD10 million per 100
acres of project in electronics manufacturing
clusters
Reimbursement of excise duties for capital
equipment in non-SEZ units
No central taxes and duties for 10 years in high-
tech facilities such as semiconductor fabricating
units
Preferential market access to domestically
manufactured electronic products
Various export incentives such as 2–5 per cent of
duty credit on exports of different products
Create a completely secure cyber ecosystem in the
country
Implementation of e-waste (Management and
Handling) Rules, 2011
Moreover, the government proposed an
Electronics Development Fund worth USD2 billion
to promote innovation, R&D, product
commercialisation, and nano–electronics
3232Updated on October 14, 2016 For updated information, please visit www.ibef.org
Source: Department of Industrial Policy and Promotion (DIPP); TechSci Research
Notes: FDI – Foreign Direct Investment; FY – India Financial Year (April – March)1 – Includes computer software & hardware sector inflows
Cumulative FDI inflows into the electronics sector, including computer hardware and software, increased at a CAGR of
13.56 per cent, with the value increasing from USD9.8 billion in FY10 to USD21.02 billion in FY16
Demand growth, supply advantages, and policy support have been instrumental in attracting FDI
Cumulative FDI inflows to the electronics sector
(USD billion) (FY16)Cumulative FDI inflows to electronics sector
(combined)1 (USD billion) (FY16)
THE ELECTRONICS SECTOR IN INDIA HAS ATTRACTED STRONG FDI INFLOWS
ELECTRONICS
0.80.89
1.16 1.19
1.34
1.49
1.64
FY10 FY11 FY12 FY13 FY14 FY15 FY16
9.810.7 11.2 11.69
12.82
17.29
21.02
FY10 FY11 FY12 FY13 FY14 FY15 FY16
3333Updated on October 14, 2016
Key Mergers and Acquisitions (M&A)
Source: Thomson One Banker; Grant Thornton;
CMIE Business Beacon; TechSci Research
Note: NA is Not Available,
M&A – Mergers and Acquisitions
Of the M&A deals in the sector since 2010,
acquisition of Crompton Greaves by Singapore
state run investment company Temasek Holdings
Private Limited and private equity firm Advent
International was the highest in terms of value
In 2015, Intel Corporation acquired Altera
Corporation in an all-cash transaction for USD54
per share. The deal is valued at approximately
USD16.7 billion
In 2016, Centum Electronics Ltd acquired 51 per
cent controlling stake in France based Adetel
Group SA
Acquirer Target Deal dateDeal value
(USD million)
Mitsubishi Electric
CorpMessung Group
23rd January,
2012NA
Crompton Greaves
LtdZIV Group 27th July, 2012 192
Toshiba Mitsubishi-
Electric
AEG Power
Solutions India28th April, 2014 12.40
MSR Telecom Pvt
Ltd
Bloom Mobiles
Pvt Ltd19th May, 2014 NA
Silver Eagle
Acquisition
Corp(SEAC)
Videocon
D2H6th January, 2015 300
Intel CorporationAltera
Corporation1st June, 2015 16.70
Advent International
and Temasek
Holdings(Pvt.) Ltd
Crompton
Greaves3rd August, 2015 331.80
UrbanClap
Technologies India
Pvt. Ltd.
Handy Home
Solutions Pvt.
Ltd.
25th January,
2016NA
Centum Electronics
Ltd.
Adetel Group
SA.17th June, 2016 NA
ELECTRONICS
THE SECTOR HAS WITNESSED A NUMBER OF KEY M&A DEALS
For updated information, please visit www.ibef.org
3434Updated on October 14, 2016
2012 2013-14
• May 05: LG Electronics
launches latest series of
Cinema 3D Smart TVs
with marketing spend of
USD20.8 million
• Jan 17: Samsung to
raise its investments to
USD41.4 billion for
consolidation in its
position in mobile chips
and flat screens
• Videocon plans to invest
around USD12.5 million
in Research and
Development during
FY13
• Oct 31: Sony to invest
USD100 million in
expansion and marketing
• Mar 13: Reliance and
Videocon are in talks to
invest USD5.2 billion to
set up a chip
manufacturing plant
• Jul 13: Panasonic plans
to invest USD250 million
over the next three years
to launch a range of
smart phones in India
• Sep 13: Mitsubishi
Electric plans to invest
about USD55 million in
India by 2016 for setting
up manufacturing
elevators and making air
conditioning equipment
• Apr 14: Toshiba
Mitsubishi Electric
acquired complete share
capital of AEG Power
Solutions
2015
• Feb 15: Tejas Networks,
Tessolve Semiconductor
and Bosch are in talks for
investing around USD431
million in the
manufacturing of electronic
projects over the next few
years
• Jun 15: Hero Group are set
to invest USD82.9 million
for the formation of its new
subsidiary Hero Electronix
in the coming years
• Jun 19, 2015: LG
electronics, South Korean
handset maker, plans to
invest USD163.7 million in
research and development
sector and in marketing
during FY15
ELECTRONICS
Source: India Electronic News; Assorted News articles; TechSci Research
Note: R&D – Research and Development
RECENT INVESTMENTS BY KEY PLAYERS
For updated information, please visit www.ibef.org
2016
• April 16: Xiaomi invested
around USD25 million in
India’s Hungama Digital
Media Entertainment for
video on demand service.
• May 16: Panasonic
invested
aroundUSD137.50 million
at Jhajjar Techno Park to
expand production of air
conditioners, washing
machine and welding &
cutting machines.
• February 16: Delta India
Electronics announced its
plans to expand operations
in India, wherein, on 11th
April 2016, the company
opened its third
manufacturing plant in
Tamil Nadu.
OPPORTUNITIES
ELECTRONICS
3636Updated on October 14, 2016 For updated information, please visit www.ibef.org
Source: Department of Information Technology Annual Reports; A Report by Corporate Catalyst India (CCI) on
‘Electronics Industry in India’; Dataquest India; Electronics Industries Association of India, TechSci Research
MULTIPLE FACTORS FAVOUR INVESTMENT IN ELECTRONICS
ELECTRONICS
Growing customer base: Market for electronics is expected to expand at a CAGR of 66.1% during
2015–20. The demand for electronics hardware in India is projected to increase to USD94.2 billion
by 2015
Targeted reduction in import bill: Domestic electronic production accounts for around 45.0% of
the total market demand. Therefore, in order to reduce the import bill, the government plans to boost
the domestic manufacturing capabilities and is considering a proposal to give preference to Indian
electronic products in its purchases
Increasing penetration in the consumer durables segment: Consumer durables market in India
is characterised by low penetration in various product segments, viz. 1.0% in microwaves, 3.0% in
ACs, 16.0% in washing machines, 18.0% in refrigerators, etc. Higher disposable incomes are
leading to realisation of penetration potential in various product segments, especially in rural areas
Policy and investment support: To compliment the targeted reduction in import bill, the
government has proposed a minimum investment of USD555.0 million for semiconductor
manufacturing plants and USD222.0 million for ecosystem units. This is considered a major step
toward attracting foreign companies to set up manufacturing facilities in India. In Union Budget
2016 – 17, inputs, parts, components & subparts for manufacturing of charger/adapter, battery &
wired handsets/speakers of mobile phones are fully exempted from Basic Customs Duty (BCD),
Counter Veiling Duty (CVD) and Special Additional Duty (SAD)
Growth in
electronics
Incentives and concessions under schemes: Export Oriented Unit (EOU) Scheme, Electronics
Hardware Technology Park (EHTP) Scheme, Software Technology Park (STP) Scheme and
EOU/EHTP/STP Schemes
3737Updated on October 14, 2016
84.80
200
FY16 FY18E
• 306 million households (as of 2020F)• 202 million TV sets (as of 2020F)• 66% TV penetration in total HHs (as
of 2020F)• 87% C&S penetration of TV HHs (as
of 2020F)
For updated information, please visit www.ibef.org
Source: Department of Information Technology, Dish TV Investor Presentation,
TRAI, TechSci Research
Notes: TV – Television, HHs – Households, C&S – Cable & Satellite,
FY161: Data is as on December 2015, F – Forecast
ERA OF DIGITISATION OPENS NEW OPPORTUNITIES … (1/3)
ELECTRONICS
• 284 million households (as of 2016)• 181 million TV sets (as of 2016)• 64% TV penetration in total HHs (as
of 2016)• 85% C&S penetration of TV HHs (as
of 2016)
Households with TVs in India
The government announced the digitisation of cable
television in India in four phases, which would be completed
by December 2016
Digitisation will lead to complete switchover from analogue
cable to Digital Addressable Systems in a phased manner
The number of DTH subscribers in India is expected to
increase from 84.80 million in December 2015 to 200 million
by 2018
DTH subscribers (million units)
CAGR: 53.6%
2016 2020F
1
3838Updated on October 14, 2016
26%
21%
20%
16%
12%
5%Dish TV
TATA Sky
Airtel Digital
Videocon D2h
Sun TV
Big TV
For updated information, please visit www.ibef.org
Source: Dish TV, TechSci Research
Dish TV accounted for the largest share in the DTH market
with 26 per cent in FY16, followed by Tata Sky and Airtel
Digital with shares of 21 per cent and 20 per cent, during the
same year, respectively, based on gross subscribers.
Dish TV is considered to be the first company to achieve a
break-even point in the Indian DTH market
Market Share of Leading Companies (FY16)
ELECTRONICS
ERA OF DIGITISATION OPENS NEW OPPORTUNITIES … (2/3)
3939Updated on October 14, 2016
213.80 218.50
294.20
421.70
374.90
334.70347.80
372.20392.57
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
102.50
159.90
228.40
314.50
417.60399.00
414.60
460.10
340.30
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
For updated information, please visit www.ibef.org
Source: Department of Information Technology; Company Websites, TechSci Research
The digitisation of cable television has led to increased demand for set-top boxes, dish, cables, and other electronic
component; this has resulted in many opportunities for local and foreign players to enter the market
Digitisation will lead to increased broadband penetration in India and open up new avenues for companies offering value-
added services such as online gaming, HD television Internet, music, and radio
Dish TV revenues (USD million) Sun TV revenues (USD million)
ELECTRONICS
ERA OF DIGITISATION OPENS NEW OPPORTUNITIES … (3/3)
CAGR: 7.9%CAGR: 16.18%
SUCCESS STORIES
ELECTRONICS
4141Updated on October 14, 2016
1008.31028.8
1092.5
1199.4 1205.2
1103
1015.6
1107.4 1114.4
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
For updated information, please visit www.ibef.org
BHARAT ELECTRONICS (BEL): A PUBLIC SECTOR ICON … (1/2)
Salient features
• An Indian state-owned aerospace and defence
company
• Established in 1954 under the Ministry of Defence to
meet specialised electronic needs of the Indian
defence services
• The company has a strong commitment to quality and
innovation, with two dedicated central research
laboratories
• During FY16, R&D expenditure was 9.6 per cent of the
company’s total turnover
• The company has nine manufacturing units; each unit
has its own Development and Engineering (D&E)
division
• Joint Venture with General Electric Medical System
and Multitone, UK
Revenues (USD million)
Source: BEL website; Annual Reports; Business Standard;
TechSci Research
ELECTRONICS
4242Updated on October 14, 2016 For updated information, please visit www.ibef.org
BHARAT ELECTRONICS (BEL): A PUBLIC SECTOR ICON … (2/2)
Key success factors
• Focus on innovation and R&D
• Key technological collaborations with leading European,
American and Israeli companies
• Rising defence spending in India
• Governmental emphasis on indigenisation and reduction
of import bill
• Diversification in the civilian and export market
• Under the Navratna category in 2016, Bharat Electronics
Ltd (BEL) won four PSE Excellence Awards 2015
Source: BEL website; Annual Reports; TechSci Research
Note: GOI – Government of India
ELECTRONICS
Financial highlights
• As of 31st March 2016, BEL's order book was around
USD4.9 billion
• During FY08–16, BEL’s revenue increased at a CAGR
of 1.26 per cent, from USD1008.3 million in FY08 to
USD1114.4 million in FY16
• During the same period, BEL’s net profits decreased at a
CAGR of 0.13 per cent, from USD205.29 million in FY08
to USD207.4 million in FY16.
• In 2016, GOI announced its plans to buy back 25 per
cent shares of Bharat Electronics Ltd (BEL)
4343Updated on October 14, 2016 For updated information, please visit www.ibef.org
Market share in consumer durables (FY15)
Source: Company website; TechSci Research
Third largest consumer durables company in India and one
of the largest Colour Picture Tube (CPT) manufacturers
globally
17 manufacturing sites in India and plants in Mainland
China, Poland, Italy and Mexico
Holds about one-fourth market share in the consumer
durables market
Leads the market in colour TV, refrigerator, washing
machine, and microwave oven segments
Acquired Colour Picture Tube (CPT) businesses from
Thomson S.A through a wholly owned offshore subsidiary.
The company has manufacturing facilities in Poland, Italy,
Mexico and China along with support research and
development facilities
ELECTRONICS
VIDEOCON: A PRIVATE SECTOR GIANT … (1/3)
26%
74%
Videocon
others
4444Updated on October 14, 2016
2.5
2.0
3.1
2.8
2.6
3.3
3.1
2.0
0.4
21
2.1
86
.8
15
7.0
11
9.6
24
.9
-13
.2
0.5 -9.1 -43
.8
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Revenues (USD Billion) Net Profit (USD Million)
For updated information, please visit www.ibef.org
Top line and bottom line trends (USD million)
Source: Company website; TechSci Research
FY101 Data for 15 months
FY132 Data for 18 months (Jan 2012 to June 2013)
FY143 Data for 18 months
FY154 Data for 12 months till December 2015
FY165 Data for 6 months
During FY07–14, Videocon’s revenues increased at a
CAGR of 3.3 per cent
During the 6 months ended June 15, the company's
revenues reached USD1016.9 million
ELECTRONICS
Notes: FY – Financial Year; CAGR – Compound Annual Growth Rate,
During 2007–09, the financial year was October–September; however,
In 2013 the company changed its financial year end to June
VIDEOCON: A PRIVATE SECTOR GIANT … (2/3)
1 2 3 4 5
4545Updated on October 14, 2016 For updated information, please visit www.ibef.org
ELECTRONICS
Strong presence in the
consumer electronics
market
Sales expanded at a
CAGR of 3.3% during
FY08-14
Market capitalisation of
USD929 million
Revenue base of over
USD1016.9 million,
with net profit of USD3.4
million for 6 months
ended June 2015
Primary focus on consumer electronics products
Foray into manufacturing compressors and motors and crude oil business
Aggressive growth via acquisitions and entry in
telecom, DTH, and mobile handset manufacturing
Focus on R&D
Strong brand
presence in Tier 2
and Tier 3 cities
Foray into telecom
services and handset
manufacturing
Launched LCD TV
bundled with DTH
and Internet chip
1985–95 1995–05 2005–14
Plans to set up a
SEZ in Pune and
Aurangabad in
Maharashtra
Acquisitions
Thomson, Philips,
and Electrolux
plants
Source: Videocon website; TechSci Research
Note: DTH – Direct to Home
VIDEOCON: A PRIVATE SECTOR GIANT … (3/3)
Videocon DTH to
float IPO by the
end of 2014
The company
joined hands with
Coolpad group to
for smartphones
4646Updated on October 14, 2016
75.7
337.8
510.8
290.4
572.1
1184.7
FY09 FY10 FY11 FY12 FY13 FY14
For updated information, please visit www.ibef.org
Growth in Revenue
(USD million)
Source: Micromax website; TechSci Research
Micromax started out as an IT software company in 2000
Micromax began manufacturing mobile phones in 2010;
besides sourcing from China, and became one of the
largest Indian domestic mobile handsets company operating
in low cost feature phone segments by 2010
Micromax had a 9.7 per cent market share in Indian tablet
market during Q2 2013 and is ranked second in smart
phones market with 24.3 per cent share
With presence across 14 countries, the company
manufactures mobile handsets, tablets, and LED televisions
During FY09–14, Micromax’s revenues increased at a
CAGR of 73.3 per cent to USD1184.7 million in FY14
The company’s share in the mobile handset market in India
increased from 5 per cent in 2011 to 8.7 per cent in 2013
In April 2016, Micromax entered into strategic partnership
with TranServ and Visa to offer a digital payment
infrastructure platform to consumers.
THE MICROMAX STORY
ELECTRONICS
CAGR: 73.3%
USEFUL INFORMATION
ELECTRONICS
4848Updated on October 14, 2016
INDUSTRY ASSOCIATIONS … (1/2)
Electronics Industries Association of India (ELCINA)
ELCINA House, 422 Okhla Industrial Estate,
New Delhi – 110 020, India
Phone: 91 11 26924597,26928053
Fax: 91 11 26923440
E-mail: [email protected]
Website: www.elcina.com/
Telecom Equipment Manufacturers Association (TEMA)
4th Floor, PHD House, Opp. Asian Village,
New Delhi – 110 016, India
Tel: 91 11 26859621
Fax: 91 11 26859620
E-mail: [email protected]
Website: http://www.tfci.com/cni/tema.htm
For updated information, please visit www.ibef.org
ELECTRONICS
4949Updated on October 14, 2016
INDUSTRY ASSOCIATIONS … (2/2)
Manufacturers Association for Information Technology (MAIT)
4th Floor, PHD House, Opp. Asian Games Village,
New Delhi 110 016, India
Tel: 91 11 26855487
Fax: 91 11 26851321
E-mail: [email protected]
Website: www.mait.com
Consumer Electronics and Appliances Manufacturers Association
(CEAMA)
5th Floor, PHD House
4/2, Siri Institutional Area, August Kranti Marg
New Delhi-110 016
Telefax: 91- 11- 46070335, 46070336
e-mail: [email protected]
Website: www.ceama.in
For updated information, please visit www.ibef.org
ELECTRONICS
5050Updated on October 14, 2016
GLOSSARY
For updated information, please visit www.ibef.org
C&B: Communication and Broadcasting
CAGR: Compound Annual Growth Rate
Capex: Capital Expenditure
CENVAT: Central Value Added Tax
EHTP: Electronic Hardware Technology Park
EPCG: Export Promotion Capital Goods Scheme
FDI: Foreign Direct Investment
FY: Indian Financial Year (April – March); for example FY10 means April 2009 – March 2010
PLC: Programmable Logic Controller
R&D: Research and Development
SCADA: Supervisory Control and Data Acquisition
USD: US Dollar
Wherever applicable, numbers have been rounded off to the nearest whole number
ELECTRONICS
5151Updated on October 14, 2016
Year INR equivalent of one USD
2004–05 44.81
2005–06 44.14
2006–07 45.14
2007–08 40.27
2008–09 46.14
2009–10 47.42
2010–11 45.62
2011–12 46.88
2012–13 54.31
2013–14 60.28
2014-15 61.06
2015-16 65.46
2016-17 (E) 66.95
Year INR equivalent of one USD
2005 43.98
2006 45.18
2007 41.34
2008 43.62
2009 48.42
2010 45.72
2011 46.85
2012 53.46
2013 58.44
2014 61.03
2015 64.15
2016 (Expected) 67.22
Exchange rates (Fiscal Year)
For updated information, please visit www.ibef.org
EXCHANGE RATES
Exchange rates (Calendar Year)
Source: Reserve bank of India,
Average for the year
ELECTRONICS
5252Updated on October 14, 2016
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DISCLAIMER
ELECTRONICS
11Updated on October 14, 2016
CHEMICALS
Updated on October 14, 2016 For updated information, please visit www.ibef.org
22Updated on October 14, 2016 For updated information, please visit www.ibef.org
Executive Summary……………….............. 3
Advantage India……………………............. 4
Market Overview and Trends……………….6
Porters Five Forces Analysis……….……..21
Growth Drivers…………………………..…. 23
Opportunities………………………….…… 32
Success Stories…………………………… 40
Useful Information…………………………..48
CHEMICALS
Updated on October 14, 2016
33Updated on October 14, 2016 For updated information, please visit www.ibef.org
Leading position
globally
• In terms of value and production volume, Indian chemical industry is the 3rd largest
producer in Asia and 6th by output in the world. Indian chemical industry could grow at 11
per cent p.a. to reach size of USD224 billion by 2017
• In 2015, India chemicals industry had a market size of USD144 billion
• By 2025, the Indian chemical industry is projected to reach USD403 billion.
High GDP share
• The chemical industry in India is a key constituent of Indian economy, accounting for
about 2.11 per cent of the GDP
• More than 70,000 commercial products such as petrochemicals and basic chemicals are
covered under chemical sector.
Global dye supplier• India accounts for approximately 16 per cent of the world production of dyestuff and dye
intermediates, particularly for reactive acid and direct dyes
Source: Make in India, Confederation of Indian Industry,
TechSci Research
Notes: PCPIR - Petroleum, Chemicals and Petrochemical Investment Regions; E – Estimates, (1) April 2015-January 2016
EXECUTIVE SUMMARY
CHEMICALS
Global player in
specialty chemicals
• India is currently the world’s third largest consumer of polymers and third largest producer
of agrochemicals
• India specialty chemical market is expected to reach USD70 billion by 2020
Increasing exports of
inorganic and organic
Chemicals
• Value exports of inorganic chemicals from India is estimated at USD1.21 billion in FY16,
with the organic chemical market reaching USD11.51 billion in FY16. Exports of organic
chemicals from India stood at USD4.02 billion in FY16(1)
ADVANTAGE INDIA
CHEMICALS
55Updated on October 14, 2016
Growing demand
For updated information, please visit www.ibef.org
ADVANTAGE INDIA
Source: FICCI, Make in India, Department of Industrial Policy and Promotion (DIPP), TechSci Research
Notes: PCPIR - Petroleum, Chemicals and Petrochemical Investment Regions, CII – Confederation of Indian Industry; E – Estimates
Attractive opportunities
• Polymers and agrochemicals industries in India present immense growth opportunities
• In FY15, India’s construction chemical market was valued at USD589.58 million, thereby representing ample growth opportunity in chemical sector.
• In 2015, India’s Plastic & Polymer market stood at USD22 billion, thus generating more opportunities.
Policy support
• In 2015, CII launched second phase of “Chemistry Everywhere” campaign to boost the growth of chemical industry in India
• 100 per cent FDI is permissible in the Indian chemicals sector; manufacturing of most chemical products is de-licensed
• Setting up of PCPIRs
• The Government of India has launched the Draft National Chemical Policy, which aims to increase the share of chemical sector in the country’s GDP
2015
Market
size:
USD144
billion
2017E
Market
size:
USD224
billion
Advantage
India
CHEMICALS
Robust demand
• A large population, dependence on agriculture, and strong export demand are the key growth drivers for the chemicals industry
• Per-capita consumption of chemicals in India is lower relative to Western peers and there exists a large latent demand
Increasing
investments
• Lured by the size and returns of the Indian market, foreign firms have strengthened their presence in India
• From April 2000 to March 2016, total FDI inflows into the Indian chemicals industry (excluding fertilisers) were USD11.90 billion.
MARKET OVERVIEW AND TRENDS
CHEMICALS
77Updated on October 14, 2016
EVOLUTION OF THE INDIAN CHEMICAL INDUSTRY
Source: FICCI, Make in India, CII, TechSci Research
Note: MNC – Multinational Corporation, DCPC - Department of Chemicals and Petrochemicals
CHEMICALS
• Chemical
products to
protect crops
• Agrochemicals,
dyes,
pharmaceuticals
• Public sector
companies were
set up to
develop the
petrochemical
industry
• Plastic and
fibres,
petrochemical
products
• Consolidation
started from
largely
fragmented firms
with small
capacities and
high cost
structures
• Paints, dyes,
pharmaceuticals
and detergents
• In 2015, DCPC has announced to design a
16 point plan framework that would
encourage the domestic production of
chemicals
• Alliances and partnerships to achieve scale
• Licensing requirements removed except in
the case of hazardous chemicals
• Increasing investments by foreign players
in India through mergers & acquisition and
joint ventures
• Allowed 100 per cent FDI in the chemicals
Industry
• In 2016, Partnership between Indian
Chemical Council (ICC) and the Tamil
Nadu Pollution Control Board (TNPCB)
promoted development of chemical
industry by launching "Responsible Care®“
programme, which aims at achieving
sustainable development in chemical
industry
Basic needs
(1950-72)
Establishment
(1972-80)
Consolidation
(1980-92)
Liberalisation
(1992-95)
Expansion
(1995 onwards)
• Major investment
plans by both
Indian firms and
MNCs
• Lower tariff
barriers
• Diminishing role
of public sector
companies
• Petrochemicals,
engineering
plastic, specialty
fibres
For updated information, please visit www.ibef.org
88Updated on October 14, 2016 For updated information, please visit www.ibef.org
Base chemicals• Petrochemicals, man-made fibres, industrial gases, fertilisers, chlor-alkali, and other
organic and inorganic chemicals
Specialty chemicals• Dyes and pigments, leather chemicals, construction chemicals, personal care ingredients
and other specialty chemicals
Pharmaceuticals • Active Pharmaceutical Ingredients (APIs) and formulations
Source: TATA Strategic Management Group, TechSci Research
MAJOR SEGMENTS OF THE INDIAN CHEMICAL INDUSTRY
CHEMICALS
Agrochemicals • Insecticides, herbicides, fungicides and other crop protection chemicals
Biotechnology • Bio-pharma, bio-agri, bio-services and bio-industrial products
99Updated on October 14, 2016 For updated information, please visit www.ibef.org
Source: TechSci Research
PRODUCT-WISE CLASSIFICATION OF THE INDIAN CHEMICAL INDUSTRY
CHEMICALS
Alkali
chemicals
• Soda ash
• Caustic soda
• Liquid
• Chlorine
Inorganic chemicals
• Aluminum flouride
• Calcium carbide
• Carbon black
• Potassium chlorate
• Titanium dioxide
• Red phosphorus
Organic
chemicals
• Acetic acid
• Acetone
• Phenol
• Methanol
• Ortho Nitro
Chlorobenzene
(ONCB)
• Isobutyl
• Para
Nitrochlorobenzene
(PNCB)
• Ethyl
• Alkyl Amines
• Acetic Anhydride
• Formaldehyde
Pesticides
& insecticides
• Dichlorodiphenyltri-
chloroethane (DDT)
• Malathion
• Parathion
• Ethicon
• Endosulphan
• Phosalone
• Phorate
• Acephate
• Fenvalerate
Dyes
& dyestuffs
• Azo dyes
• Disperse dyes
• Fast colour bases
• Ingrain dyes
• Napthols
• Vat dyes
• Reactive dyes
• Pigment Emulsion
• Sulphur dyes
• Other dyes
1010Updated on October 14, 2016 For updated information, please visit www.ibef.orgSource: FICCI, TechSci Research
Note: R&D – Research and Development
CHARACTERISTICS OF THE INDIAN CHEMICAL INDUSTRY
CHEMICALS
• As on 2015, the National Chemical Policy of India which is expected to help in improving the chemical industry is in final stages and
as a part of this, the Government is planning to launch Indian Bureau of Corrosion Control and setting up National Chemical Centre
that could prevent losses from corrosion and act as a repository information center for the chemical industry
• Strong economic growth and rise in per-capita income has meant a steady increase in demand for chemicals
• Expected to clock a growth of 10-13 per cent over the coming years
• The industry has left behind a low-growth and regulated environment to emerge more mature
• There is strong government support towards R&D; this would benefit the sector
• In 2015, Department of Chemicals and Petrochemicals added three new chemical and petrochemical products under its supervision.
• In 2016, Department of Chemicals and Petrochemicals, Ministry of Chemicals & Fertilizers, Govt. of India and Federation of Indian
Chambers of Commerce & Industry (FICCI) launched, ‘India Chem-2016’ to develop Indian Chemical and Petrochemical Industry.
High domestic
demand potential
Focus on new
segments such as
specialty and
knowledge
chemicals
Gujarat and
Maharashtra have
emerged as most
favoured zones
Fragmented
industry
Increase in focus
on R&D
Indian chemical
industry
1111Updated on October 14, 2016 For updated information, please visit www.ibef.org
Total production of major chemicals (000’ MT)
Source: Department of Chemicals and Petrochemicals,
TechSci Research
Note: MT - Metric Tonne
FY16: (1) – Data upto September 2015
Total chemical production in India was 4808 MT in FY15
(upto September 2014) and reached to 4863 MT in FY16
(upto September 2015) . The growth of 1.1 per cent was
registered from FY15 to FY16
Favourable demographics and strong economic growth are
driving demand for chemicals
External demand and specialty chemicals have also
contributed strongly to the growth of the industry
India’s growing per capita consumption and demand for
agriculture-related chemicals offers huge scope of growth
for the sector in the future
The R&D spending of chemical industry is estimated to
increase to around USD12 billion by 2017.
DOMESTIC AND EXTERNAL DEMAND DRIVING GROWTH IN THE SECTOR … (1/2)
CHEMICALS
9107 9396 9440 9628 9632
4863
FY 11 FY 12 FY 13 FY 14 FY 15 FY 16⁽¹⁾
1212Updated on October 14, 2016 For updated information, please visit www.ibef.org
Production of major chemicals (000’ MT)
Source: Department of Chemicals and Petrochemicals, TechSci Research
Notes: MT - Metric Tonne, Kg - Kilo gram,
CAGR - Compound Annual Growth Rate
Note: (1) -April to September 2015
With 69 per cent share in the total production, alkali chemicals accounted for the largest share in Indian chemical industry in
FY16 (upto September 2015)
During FY16 (April to September 2015), production of alkali chemicals in India stood at 3,322 MT.
Production share of major chemicals during FY16 (1)
CHEMICALS
DOMESTIC AND EXTERNAL DEMAND DRIVING GROWTH IN THE SECTOR … (2/2)
68.31%
9.91%
16.68%
2.06%3.04%
AlkaliChemicals
InorganicChemicals
OrganicChemicals
Pesticides
Dyes&Dyestuffs
0
5000
10000
15000
20000
25000
30000
35000
40000
AlkalieChemicals
InorganicChemicals
OrganicChemicals
Pesticides Dyes & Dyestuffs
FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 (April 15 to Sept 15)
1313Updated on October 14, 2016 For updated information, please visit www.ibef.org
Chemical exports of India (USD billion)
Source: Ministry of Commerce, TechSci Research
Notes: FY16(1) - April ’15 – January ‘16
Chemical exports from India stood at USD9.61 billion for
FY16(1).
Exports in the chemical industry grew from USD12.4 billion
in FY13 to USD12.7 billion in FY15, registering a growth of
0.9%
EXPORTS HAVE BEEN RISING OVER THE YEARS
CHEMICALS
CAGR: 0.9%
12.40 12.60 12.70
9.61
FY13 FY14 FY15 FY16⁽¹⁾
1414Updated on October 14, 2016 For updated information, please visit www.ibef.org
India’s chemical imports (USD billion)
Source: Ministry of Commerce, DGCI&S, TechSci Research
Notes: FY16(1) - Data is for April ’15 – January ’16
CAGR - Compound Annual Growth Rate
Total imports of chemicals grew from USD10.1 billion in
FY13 to USD19 billion in FY15, a CAGR of 37.5%
Total imports of chemicals reached USD14.47 billion in the
FY16(1).
… BUT, INDIA IS A NET IMPORTER OF CHEMICALS
CHEMICALS
CAGR: 37.5%
10.1
18 19
14.47
FY13 FY14 FY15 FY16⁽¹⁾
1515Updated on October 14, 2016 For updated information, please visit www.ibef.org
Shares in exports of chemicals in FY16(1)
Source: Ministry of Commerce, TechSci Research
Note: CAGR - Compound Annual Growth Rate(1) - Provisional data for April 2015- March 2016
During FY16(1), organic chemicals accounted for a share of
41.84 per cent in India’s total chemical exports, followed by
miscellaneous chemicals which accounted for a share of
18.59%, in overall chemical exports from India.
Within agrochemicals herbicide is the largest segment
globally, however, consumption of insecticides in India is
dominating. Growth of agro chemicals is largely driven by
export demand
ORGANIC CHEMICALS DOMINATE BOTH EXPORTS AND IMPORTS … (1/2)
CHEMICALS
41.70%
17.46%
16.84%
5.38%
18.62%
Organic
Dyes and Dye stuff
Agro Chemicals
Inorganic
Miscellaneous Chemcials
1616Updated on October 14, 2016 For updated information, please visit www.ibef.org
Shares in imports of chemicals in FY16(1)
Source: Ministry of Commerce, TechSci Research
Note: CAGR - Compound Annual Growth Rate (1) - Data for April-January 2016
Organic chemicals also dominate imports, with a share of
57.26%, followed by inorganic chemicals at 26.08 per cent
in FY16(1)
ORGANIC CHEMICALS DOMINATE BOTH EXPORTS AND IMPORTS … (2/2)
CHEMICALS
57.26%
26.08%
5.43%5.11%
6.12%
Organic Chemicals
Inorganic Chemicals
Dyes and Dyestuff
Agro Chemicals
Miscellaneous Chemicals
1717Updated on October 14, 2016 For updated information, please visit www.ibef.org
Source: FICCI, TechSci Research
Notes: Figures mentioned above is taken from Dept. of
Chemicals and Petrochemicals;
FY16(1) - (April- December 2015)
CHEMICAL INDUSTRY HOLDS A SIGNIFICANT POSITION IN THE ECONOMY
CHEMICALS
India’s
chemical
industry
(2013-15)
In 2025, chemical
industry is expected to
grow and
reach
USD403 billion
mark
2.11 per cent of
national
GDP3rd
largest chemical
industry in Asia,
preceded
by China and
Japan
Government allows
100 per cent FDI in the
chemical sector
One of the
most diversified
sectors, covering
more than
70,000 commercial
products
12.17 per cent of
total exports
and 9.91 per cent
of total imports
in FY16(1)
1818Updated on October 14, 2016 For updated information, please visit www.ibef.org
Contribution to global chemical industry
would increase
Source: FICCI, TechSci Research
Notes: CAGR - Compound Annual Growth Rate, E - Estimate
Strong growth outlook for the Indian chemicals
industry (USD billion)
CHEMICALS
HIGH GROWTH WOULD LEAD TO RISING GLOBAL POSITIONING
2015
• Global chemical industry: USD3.26 trillion
• India chemical industry: USD144 billion
2017E
• Global chemical industry: USD4.5 trillion
• India chemical industry: USD224 billion
2015
2017E
Global India
CAGR: 17.4%
96.54%
3.46%
95.02%
4.98%
118
144
224
2013 2015 2017E
1919Updated on October 14, 2016 For updated information, please visit www.ibef.org
Source: D&B, TechSci Research
CHEMICALS
Jamnagar,
Thane, Pune, Chiplun
Ahmedabad
Hyderabad
Vadodara
Cochin
Haldia
Bengaluru
NCR
Chennai
Bharuch, Hazira, Vapi
Baddi
Derabassi
Panipat
Nagda
Visakhapatnam,
Kakinada
Cuddalore, Puducherry
Mangalore
WIDESPREAD CHEMICAL INDUSTRY INFRASTRUCTURE ACROSS INDIA … (2/2)
Bathinda
2020Updated on October 14, 2016 For updated information, please visit www.ibef.org
Source: Company Annual Reports, TechSci Research
Notes: (1) For data upto 31st March, 2016,
KEY DOMESTIC AND INTERNATIONAL PLAYERS IN INDIAN CHEMICAL INDUSTRY
CHEMICALS
Domestic companySales in FY16(1)
(USD billion) Products
Tata Chemicals Limited (TCL) 1.62Soda ash, salt, marine chemicals,
caustic soda, cement, etc.
United Phosphorus Limited (UPL) 0.91 Agrochemicals
Gujarat Heavy Chemicals Ltd (GHCL) 0.4 Soda ash
Gujarat Alkalies and Chemicals Ltd (GACL) 0.30 Caustic soda
PORTERS FIVE FORCES ANALYSIS
CHEMICALS
2222Updated on October 14, 2016 For updated information, please visit www.ibef.org
PORTERS FIVE FORCES ANALYSIS
CHEMICALS
Competitive Rivalry
• Chemical industry is highly fragmented with intense rivalry amongst
companies
• Since, 100 per cent FDI is allow hence domestic companies face stiff
competition from foreign competitors as well
• International companies may also dump chemicals at low price
Threat of New Entrants
Bargaining Power of Suppliers Bargaining Power of Customers
• Customers have multiple
sources of supply
• Chemical companies are
bound by long-term contracts
• Niche specialty chemicals have
some pricing power
Substitute Products
• Huge capital requirements and
patent protection are significant
barriers
• Other barriers include - R&D
and personnel requirements
• Small chemical companies rely
on supplies from larger plants,
or petrochemical units
• Inputs for a chemical plant
cannot be easily substituted
• Buyers tend to have specific
chemical requirements
• There are no direct substitutes
for a specific chemical
requirement
Competitive
Rivalry
(Medium)
Threat of New
Entrants
(High)
Substitute
Products
(Low)
Bargaining
Power of
Customers
(Medium)
Bargaining
Power of
Suppliers
(High)
GROWTH DRIVERS
CHEMICALS
2424Updated on October 14, 2016 For updated information, please visit www.ibef.org
Source: TechSci Research
GROWTH DRIVERS OF THE INDIAN CHEMICAL INDUSTRY
CHEMICALS
Low-cost
manufacturing
Government
Policy support
and increase in
investment
initiatives
Rise in GDP and
purchasing
power
World class
engineering and
strong R&D
capabilities
Huge growth
potential for the
domestic market
Big
Infrastructural
Investment
2525Updated on October 14, 2016 For updated information, please visit www.ibef.org
ECONOMIC EXPANSION WOULD CONTINUE TO DRIVE GROWTH IN THE CHEMICAL INDUSTRY
Real GDP growth
Source: IMF, World Bank, TechSci Research
Being largely an intermediate product, strong economic growth is an important factor in sustaining demand for chemical
products
Per capita consumption of most of the finished products under chemicals sector is far below the world average; this points to
the vast potential for growth in the industry
As in a number of other industries in India, strong growth in discretionary income and changing lifestyles are counted as a
few of the other major growth drivers of the chemicals sector
Per capita GDP growth
CHEMICALS9
.3%
9.8
%
3.9
%
8.5
%
10
.3%
6.6
%
4.7
%
5.0
%
5.6
%
7.2
%
7.6
%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F
7.7
0%
8.3
0%
2.5
0%
7.0
0%
8.7
0%
5.2
0%
3.7
0%
5.6
0%
6.1
0%
6.3
0%
7.6
8%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F
2626Updated on October 14, 2016 For updated information, please visit www.ibef.org
POLICY SUPPORT FOR FOREIGN INVESTMENT
Annual FDI inflow to the chemical industry
(excluding fertilizer) (USD Million)
Source: Department of Industrial Policy & Promotion,
Ministry of Commerce and Industry, TechSci Research
Note: (1) - Up to March 2016
FDI inflow in chemicals sector (other than fertilisers) stood at USD11,900.29 million during April 2000- March 2016,
accounting for 4.12 per cent of the total inflows
Procedures relating to FDI have been simplified; most of the items in the chemicals sector fall under the automatic approval
route for FDI/NRI/OCB investment up to 100%
Share of chemical industry in total FDI
inflow (excluding fertiliser)
CHEMICALS
2354
4041
292878
10336
11900
FY 11 FY 12 FY 13 FY 14 FY 15 FY 16⁽¹⁾
10.60%11.30%
1.30%
4.44% 4.16% 4.12%
FY 11 FY 12 FY 13 FY 14 FY 15 FY 16⁽¹⁾
2727Updated on October 14, 2016 For updated information, please visit www.ibef.org
Source: Department of Chemicals and Petrochemicals,
TechSci Research
Notes: (1) - Budget Estimate
GOVERNMENT SUPPORT TO THE SECTOR IS INCREASING … (1/2)
CHEMICALS
All figures are in USD million
Name of the
scheme
XI Plan
outlay
(2007-2012)
Annual Plan
FY11
Annual Plan
FY12
Annual Plan
FY13
Annual Plan
FY14
Annual Plan
FY15
Annual Plan
FY16
Annual Plan
FY 17(1)
Project based
support to PSUs29.1 4.3 0.0 5.4 1.3 5.81 2.30 6.11
Support to
autonomous
bodies19.2 0.1 0.2 8.3 23.80 16.79 16.60 10.08
Other ongoing
schemes44.2 165.8 183.4 292.8 167.32 5.7 2.78 8.25
New schemes
initiated
in XI plan
25.0 17.9 10.1 - - - - -
Total 117.5 188.1 193.7 306.5 224.7 28.3 21.68 24.44
2828Updated on October 14, 2016 For updated information, please visit www.ibef.org
Source: Department of Chemicals and Petrochemicals, TechSci Research
Note: (1) - As on December 31, 2015,(2) – Budget Estimate
GOVERNMENT SUPPORT TO THE SECTOR IS INCREASING … (2/2)
CHEMICALS
All figures are in USD million
Name of the
scheme
Non-plan
outlay
(FY10)
Non-plan
outlay
(FY11)
Non-plan
outlay
(FY12)
Non-plan
outlay
(FY13)
Non-plan
outlay
(FY14)
Non-plan
outlay
(FY15)
Non-plan
outlay
(FY16(1))
Non-plan
outlay
(FY17(2))
Assam Gas Cracker
Project130.48 127 254.17 16 0 0 0.0015
Secretariat 2.21 2.52 2.79 2.3 2.4 2.30 1.74 2.58
Central Institute of
Plastics Engg. &
Technology
(CIPET)
0.63 0.10 0.10 0 0 0 0 0
Bhopal Gas Leak
Disaster0 0 0 17.5 23.3 4.37 2.43 3.84
Institute of Pesticide
Formulation
Technology (IPFT)0 0 0 0.6 0.6 0.59 38.11 0.0015
Others 0.50 0.54 0.63 0 0 0 3.77 0.06
Total 3.34 133.64 130.52 274.57 42.3 7.26 46.05 6.42
2929Updated on October 14, 2016 For updated information, please visit www.ibef.org
Source: EXIM Bank of India, TechSci Research,
Note: PCPIR - Petroleum, Chemicals and Petrochemicals Investment Regions
The government has announced a number of measures to
improve competitiveness in the sector
Share of manufacturing approved by the Cabinet as per the
erstwhile Planning Commission would contribute 25 per cent
of the GDP by 2025
Approval is granted for FDI up to 100 per cent in the chemicals
sector, excise duty reduced from 14 per cent to 10%, strong
laws on anti-dumping to further promote the industry
Cumulative FDI inflows into chemical industry reached
USD11,900.29 million, during April 2000-March 2016
Policies that have been initiated to set up integrated
Petroleum, Chemicals and Petrochemicals Investment
Regions (PCPIR) are revised by the end of 2015-2016. The
land requirement for a PCPIR would go down from 250 square
kilometers to 50 square kilometers.
The capital and technology intensive projects under PCPIR
that are likely to be operational within 10-15 years are
estimated to draw an investment of USD116.54 billion.
Kerala, Karnataka and Maharashtra are new applicants for
PCPIR
For setting up of PCPIRs, the government approved states
including Odisha (Paradip), Gujarat (Dahej), Tamil Nadu
(Cuddalore- Nagapattinam) and Andhra Pradesh
(Vishakhapatnam-Kakinada).
New initiatives are likely to attract large investments, both
domestic and foreign, with requisite improvements in
infrastructure and competition
GROWTH, COMPETITIVENESS AND PROCESS INITIATIVES
CHEMICALS
Industry-level initiatives
• The Indian Chemical Council (ICC ) is the nodal
agency/signatory representing India under the ‘Responsible
Care Initiative’
• ICC has prepared codes and guidance for implementation
of process safety, employee health and safety, pollution
prevention, emergency response, and product safety
• Member companies of ICC are encouraged to interact with
local communities and groups such as students, teachers,
fire/police personnel
Firm-level initiatives
• Indian chemical firms have strived to increase their
market share through global presence
• They have in place technical agreements with
multinational firms to keep abreast of technological
progress in the global chemical industry
3030Updated on October 14, 2016
MILESTONES PROPOSED FOR 12TH FIVE-YEAR PLAN
For updated information, please visit www.ibef.org
Source: TechSci Research
Note: PCPIR - Petroleum, Chemicals and Petrochemicals Investment Regions
CHEMICALS
• Make PCPIRs a
reality
• Provide
infrastructure support
to the industry by
constructing roads,
ports and other
similar facilities
• Implementation of
strategy for sourcing
and allocation of
feedstock
• Setting up of
technology up-
gradation fund of
USD100 million
• Allocation of 10 per
cent share of the
USD1 billion
National Innovation
Fund to chemicals
• Development of the
first set of chemical
usage standards for
the industry
addressing key
issues related to
water supply,
environmental
impact, raw materials
supply, safety over
lifecycle, and energy
use
• Committee to frame
regulatory structure
and eliminate
redundancies
• Setting up of a
national chemical
inventory
• Government has
rationalised and
removed various tax
exemptions and
incentives to improve
the administration
and to reduce tax
disputes
Infrastructure Feedstock R&D and technology Sustainability Regulations
3131Updated on October 14, 2016Source: Department of Chemicals and Petro Chemicals, TechSci Research
RECENT MAJOR M&A DEALS IN THE INDIAN CHEMICAL INDUSTRY …
CHEMICALS
Acquirer Target/ JV partner Valuation Synergies/ drivers
Inbound
Jun-15 Evonik Industries Monarch Catalyst Pvt. Ltd. - Global leader in catalysts
April-14 Yanmar Ltd/ Mitsui Ltd Coromandel International Ltd - Manufactures rice transplanters and harvesters
April-14 Axiall LLC Shriram Vinyl Polytech Pvt Ltd USD6 million Launched new-generation polymer compounds
December-13 Multiplast Polymer Soft Clad Laminates - Manufacturer of plastic products
Outbound
September-14 Brenntag Pioma Chemicals NA Specialty chemicals
April-14 Asian Paints Ltd Kadisco Chemical Industry PLC - Sells paints, coatings & adhesives in Ethiopia
For updated information, please visit www.ibef.org
In April 2016, AkzoNobel (leading player in monochloroacetic acid market) and Atul Limited (leading supplier of crop
protection chemicals using MCA) planned to set up a manufacturing joint venture to install monochloroacetic acid (MCA)
plant in Gujarat.
As of April 2016, Pidilite Industries Limited and Industria ChimicaAdriatica Spa (ICA), entered into a joint venture, wherein
Pidilite announced to have 50 per cent of the shareholding in the Joint Venture Company (JVC), Wood Coat Private Limited.
In October 2016, Gujarat Narmada Valley Fertilizers and Chemicals (GNFC) is entering into a JV with Belgian firm Ecophos
SA to set up a 2,00,000 MTPA di-calcium phosphate (DCP) project at Dahej in Gujarat at an estimated cost of US$ 80.35
million.
OPPORTUNITIES
CHEMICALS
3333Updated on October 14, 2016 For updated information, please visit www.ibef.org
GROWTH VALUE PROPOSITION OF THE INDIAN CHEMICAL INDUSTRY
CHEMICALS
Indianchemicals
sector
Critical size of thedomestic market
Customised application development
Availability of reliable and competitivefeedstock supply
Established process know-how and strong R&D capability
Source: KPMG International 2011, TechSci Research
3434Updated on October 14, 2016 For updated information, please visit www.ibef.org
SPECIALTY CHEMICALS: LUCRATIVE OPPORTUNITIES IN THIS SEGMENT
Specialty chemical growth outlook by FY23
(USD billion)
Source: FICCI, Dept. of Chemicals and Petrochemicals, TechSci Research,
Note: (1) - Value is for 2014
Notes (2)- Value is for 2015
E: Estimated Value
Specialty chemicals market has expanded at a CAGR of about 12 per cent over FY07–11; the figure is expected to rise by
9.43 per cent from FY14 to reach USD90 billion by FY23, India is also gaining traction as an outsourcing hub
The Indian middle-class household is expected to grow from 31 million in 2008 to 148 million by 2030, leading to a huge
demand for specialty chemicals in automotives, water treatment and construction
Compared to developed markets, current usage of specialty chemicals in India is very low, with an increased focus on
improving products and usage intensity of specialty chemicals, the industry is poised for strong growth in future
Major sub-segments and their growth outlook by FY17
(USD billion)
CHEMICALS
40
70
90
FY14 FY20F FY23E
CAGR: 9.43%
3.6
1.30.6 0.8 0.6
8.2
5.3
1.4 1.5 1.1
Paints andCoatings
Speciality Polymers⁽²⁾
Construction Chemicals⁽¹⁾
TextileChemicals
WaterChemicals
FY 11 FY 17E
3535Updated on October 14, 2016 For updated information, please visit www.ibef.org
WITHIN SPECIALTY CHEMICALS, CONSTRUCTION CHEMICALS IS LIKELY TO SHINE
Construction chemical growth outlook (USD million)
Source: FICCI, TechSci Research
Note: E-Estimate
India’s construction chemical market stood at USD573.2 million in 2014, which grew to USD649.75 million in 2015.
With the construction sector expected to pace ahead due to strong economic growth, the fundamentals for construction
chemicals are sound
By 2019, the construction chemicals sector is set to touch USD1146.4 million
India’s construction chemical sector consists of a variety of products ranging from admixtures to sealants. Admixtures form
the largest segment with a 42 per cent share, followed by 18 per cent share of adhesives & sealants
Specialty chemicals segments in 2014
CHEMICALS
42%
18%
14%
14%
12%
Admixtures
Adhesives & Sealants
Flooring
Waterproofing
Repair and Rehabilitation
CAGR
13.9%
311.2
573.2649.75
1146.4
FY 09 FY 14 FY 15 FY 19E
3636Updated on October 14, 2016 For updated information, please visit www.ibef.org
KEY GROWTH DRIVERS OF SPECIALTY CHEMICALS
Source: TechSci Research
CHEMICALS
Automotive
Construction
Water
Automotive sector in India has
been expanding at a CAGR of
~12 per cent over the last five
years. Automotive sector growth
will drive demand for automotive
components and consequently
for plastics, paints and coatings
used in their production
Water treatment chemicals
are widely used in purification
of water and also in large
power plants, refineries and
fertiliser factories
Construction industry in India has
been registering a CAGR of about 17
per cent over the last few years and is
likely to gather momentum in the near
future. Adoption of advanced coating,
ceiling and polymer-based reinforcing
material in construction will drive the
demand for related chemicals
3737Updated on October 14, 2016 For updated information, please visit www.ibef.org
Polymer chemical growth outlook (USD million)
Source: TATA Strategic Analysis, TechSci Research
Notes: E - Estimates, CAGR - Compound Annual Growth Rate,(1) – As of April 15 – September 15)
Polymer chemicals
India is currently the world’s third largest consumer of polymers,
behind China and the US, India’s polymer consumption is 6.2
million tonnes which constitutes 3 percent of the global
consumption
Per capita consumption of polymer in India is 5.2 kg whereas
China’s per capita polymer consumption is 30 kg.
Indian Polymer market has grown at a CAGR of 23.02 per cent
over 2005-15 to USD1310 million
The sector is expected to grow at a higher rate due to growth in
plastic demand resulting from increased usage in packaging,
construction and automotive sectors
Due to increasing environmental concerns and cost, replacement of
wood, metal and glass by plastic will also augment demand
Polymer production in India is around 9 million tonnes and imports
stand at 2.8 million tonnes
In FY 16(1), polymer production in India is stood at around 3.75
million tonnes, witnessing Y-o-Y growth at a rate of 17.9%, over the
previous year.
POLYMER CHEMICALS WILL BE YET ANOTHER KEY SEGMENT OF SPECIALTY CHEMICALS
CHEMICALS
CAGR: 23.02%
165
300
1310
2005 2010 2015
3838Updated on October 14, 2016 For updated information, please visit www.ibef.org
AGROCHEMICALS: THE FUTURE LOOKS BRIGHT… (1/2)
Agrochemical industry growth outlook (USD billion)
Source: FICCI, India Chem, TechSci Research
Notes: E - Estimates, CAGR - Compound Annual Growth Rate
Note: (1) - Data is of 2014
India is the third largest producer of agrochemicals, globally, and ranks fourth in terms of production of crop protection
chemicals. The market for crop protection chemicals in India is expected to reach to USD7.5 billion by FY19, registering an
exports of about 50 per cent of Indian crop protection industry.
Agrochemical industry in India is set to grow at a significant pace; increasing population, decreasing per capita availability of
arable land and focus on increasing agricultural yield will fuel the demand for agrochemicals
India's per hectare agrochemical consumption is set to rise in the coming years, given the above-mentioned factors
In 2015, India has become one of the largest exporters of agrochemicals globally
Insecticides India Ltd launched a mobile app for its customers, to provide them important updates and information about
products offered by the company. Insecticides India Ltd, a leading agrochemical company plans to invest USD22.9 million in
the next two years to expand its production capacity
Pesticide consumption(1) (kg/ha)
CHEMICALS
CAGR: 11.7%
4.3
7.5
FY14 FY19E
0.6
5 57 7
1213
17
India UK France Korea USA Japan China Taiwan
3939Updated on October 14, 2016 For updated information, please visit www.ibef.org
AGROCHEMICALS: THE FUTURE LOOKS BRIGHT… (2/2)
Exports of Agrochemicals in India (USD Billion)
Source: FICCI, TechSci Research
Note: F-Forecast,
AP – Andhra Pradesh, MP – Madhya Pradesh(1) - Provisional data for April - March 2016
The seven states including Andhra Pradesh (AP), Maharashtra, Punjab, Madhya Pradesh & Chhattisgarh, Gujarat, Tamil
Nadu and Haryana account for usage of over 70 per cent crop protection chemicals in India; wherein Andhra Pradesh is a
leading consumer of agrochemicals with a market share of 24%.
State Wise Agrochemical Consumption in 2015
CHEMICALS
CAGR
13.18%
24%
13%
11%8%
7%
7%
5%
5%
5%
15%
AP
Maharashtra
Punjab
MP &ChattisgarhKarnataka
Gujarat
Tamil Nadu
Haryana
West Bengal
Others
1.05 1.151.38
1.661.92 1.95 1.96
6.30
FY10 FY11 FY12 FY13 FY14 FY15 FY16⁽¹⁾ FY20F
SUCCESS STORIES
CHEMICALS
4141Updated on October 14, 2016 For updated information, please visit www.ibef.org
Revenue breakup of TATA chemicals (FY16)
Source: Company Annual Report, TechSci Research
Notes: STPP (1) - Sodium Tripolyphosphate
IMACID - Indo Maroc Phosphore S.A.
Tata Chemicals Limited (TCL) is one of the leading
chemical companies in India, with significant operations
in India and Africa
Second-largest soda ash producer in the world and the
largest in India
A market leader in edible salt; largest STPP player in the
country
Most energy-efficient urea fertiliser manufacturer in India;
amongst the most efficient globally
1/3rd stake holder in IMACID, Morocco, assured supply of
key inputs
Soda Ash market holds the maximum share of 38 per
cent followed by Complex Fertilizers and Urea with 21
per cent and 13 per cent respectively; Soda ash market
in India saw a growth of 10 per cent during the period
2014-15
TATA CHEMICALS: DIVERSIFYING THEIR WAY TO SUCCESS … (1/3)
CHEMICALS
36%
22%
12%
7%
1%
20%
2%
Soda Ash
Complex Fetrilizers
Urea
Vaccum and IodisedSalt
Cement
Others
Other Income
4242Updated on October 14, 2016 For updated information, please visit www.ibef.org
Source: Company website, TechSci Research
CHEMICALS
• Acquires
controlling
stake in
Rallis India
Limited
• Acquires
South
Africa’s
Grown
Energy
• Tata
Chemicals
Europe Ltd
acquires
British Salt,
producing
approximat
ely half of
the UK’s
pure salt
• Tata
Chemicals
wins two
awards at the
Brand
Leadership
Award 2013 for
‘Emerging
Brand’ and '50
Most Talented
Brand Leaders
of India'
2009
2010
2011
2012
2013
• India's first
iodine plus
iron fortified
salt
launched by
Tata
Chemicals
TATA CHEMICALS: DIVERSIFYING THEIR WAY TO SUCCESS … (2/3)
• Tata Chemicals was
awarded 'Dun &
Bradstreet
Corporate Awards
2015' in the
fertilizer’s sector
• Tata Chemicals
announced the
launch of a new
brand “Tata
Sampann for
providing quality
food products
2014-15
2015-16
• Tata Chemicals was
awarded India's
Best Employer
Award 2016, by Aon
• Tata Chemicals in
2016 launched crop
nutrition product
“Tata Paras
Farmoola Foliar” for
apple crop
production.
4343Updated on October 14, 2016 For updated information, please visit www.ibef.org
Geographical diversification (FY16)
Source: Tata Chemicals Annual Report, TechSci Research
Note: (1) : Data upto 31st March, 2016
Turnover over the years (USD billion)
CHEMICALS
TATA CHEMICALS: DIVERSIFYING THEIR WAY TO SUCCESS … (3/3)
CAGR: 9.55%
Tata Chemicals Limited (TCL) earned net profit of
USD119.18 million in FY16 (1)
1.5
2.8
2
2.4
2.9 2.82.6
2.8 2.7
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16⁽¹⁾72%
14%
9%
2% 3%
Asia
America
Europe
Africa
Others
4444Updated on October 14, 2016 For updated information, please visit www.ibef.org
Total sales (USD million)
Source: United Phosphorus Limited (UPL) Annual Reports, TechSci
Research
Notes: CAGR - Compound Annual Growth Rate
UPL is mainly engaged in the business of agrochemicals,
other industrial chemicals, and chemical intermediates
Agrochemicals account for 96 per cent of the total sales of
the company, while the industrial chemicals and
intermediates segments together account for 4%
UPL has 28 manufacturing sites – 13 in India and 15
outside India(international)
The company has also strengthened its distribution reach
and access to new markets through strategic alliances with
agrochemical manufacturers in other countries
The company is planning to launch innovative technology,
farming solutions, and new products through its other arms
such as Advanta and Golden Seeds
UPL has been ranked the fifth largest agrochemical
company globally
UNITED PHOSPHORUS LIMITED (UPL): AN AGROCHEMICAL SUCCESS … (1/2)
CHEMICALS
CAGR: 10.83%
9001000
11001200
16001700
18001980.1 2049.04
FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16
4545Updated on October 14, 2016 For updated information, please visit www.ibef.org
Income by region - FY16
Source: Company Annual report, TechSci Research
Notes: EBIDTA - Earnings Before Interest, Taxes, Depreciation and Amortisation
UPL Limited comprises of UPL, Advanta and UEL companies that are listed in the Indian Stock Exchange
In 2015, UPL Mumbai won the Dun & Bradstreet Corporate Award in the agrochemicals sector
EBIDTA (USD billion)
CHEMICALS
UNITED PHOSPHORUS LIMITED (UPL): AN AGROCHEMICAL SUCCESS … (2/2)
CAGR: 11.7%
27%
25%
19%
15%
14%India
Latin America
North America
Europe
Rest of World
0.180.21 0.22
0.26
0.31 0.32
0.360.39
0.15
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16*
4646Updated on October 14, 2016 For updated information, please visit www.ibef.org
ASIAN PAINTS: A COLORFUL GROWTH PATH
Asian Paints geography wise sales (FY16)
Source: Company Annual report, TechSci Research
Notes: KL - Kilo Litre, CAGR - Compound Annual Growth Rate
In 1942, Asian Paints started manufacturing in a Mumbai garage; now, with total installed capacity of nearly 1 million kilo-litre, Asian
Paints is amongst the largest paint manufacturing companies in the world
Asian Paints has grown at an excellent pace over the years; a CAGR of 13.27 per cent from FY09–15 and net profit after tax earned
for FY16 (during April – September 2015) is at USD144.4 million
In 2015, Asian Paints was awarded as the “Most Impactful Companies of the Decade” by CNBC. The company was listed on India’s
Super 50 companies in the July 2015 issue by Forbes India
Asian Paints Revenue (USD million)
CHEMICALS
CAGR: 13.27%
1100 12001600
1900 2000 21002322.9 2342
FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16
54.70%
27.90%
11.00%
6.40%
Middle East & Africa(Egypt, Oman,Bahrain, UAE &Wthiopia)
Asia (Bangladesh,Nepal, Sri Lanka,Singapore &Indonesia)
Caribbean (Barbados,Jamaica, Trinidad &Tobago)
South Pacific (Fiji,Solomon Islands,Samoa, Tonga &Vanuatu)
4747Updated on October 14, 2016 For updated information, please visit www.ibef.org
India Glycols Limited sales (USD million)
Source: Company Annual Report, TechSci Research
Notes: CAGR - Compound Annual Growth Rate,
TTM – Trailing Twelve Months
Established in 1983, India Glycols is the only company that
manufactures green technology-based bulk, specialty and
performance chemicals and natural gums, spirits, industrial
gases, sugar and nutraceuticals in India
The company operates in five segments, including
Chemicals which forms the largest segment
The company exports to more than 40 countries including
the US, Japan, and countries in Europe and Latin America
During FY09–16, the company’s sales have increased at a
CAGR of 7.84 per cent to USD380.9 million
The company registered a sales of USD380.9 million in
FY16 against sales of USD418.8 million in FY15
INDIA GLYCOLS LIMITED
CHEMICALS
334.2
224.5252.9
386.9
576.4
632.1
479
418.8380.9
FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16
USEFUL INFORMATION
CHEMICALS
4949Updated on October 14, 2016
INDUSTRY ASSOCIATIONS
For updated information, please visit www.ibef.org
CHEMICALS
Indian Chemical CouncilSir Vithaldas Chambers, 16-Mumbai Samachar Marg,
Mumbai – 400023
Phone: 91 22 22047649/ 22846852
Fax: 91 22 22048057
Website: www.icmaindia.com
Alkali Manufacturers Association of India3rd Floor, Pankaj Chambers, Preet Vihar Commercial Complex,
Vikas Marg, New Delhi – 110092
Phone: 91 11 22432003, 22410150, 55253401
Fax: 91 11 22468249
Website: www.ama-india.org
Indian Specialty Chemical Manufacturers' Association1156, Bole Smruti, Suryavanshi Kshatriya Sabhagriha Marg,
Off. Veer Savarkar Marg, Dadar (West)
Mumbai – 400 028
Tel: 91 22 2446 5003
Website: www.iscma.in
5050Updated on October 14, 2016
GLOSSARY
For updated information, please visit www.ibef.org
OCB: Overseas Corporate Bodies
NRI: Non-Resident Indian
FY: Indian Financial Year (April to March)
So FY10 implies April 2009 to March 2010
NA: Not Available
STPP: Sodium Tripolyphosphate
MT: Metric Tonnes
USD: US Dollar
Wherever applicable, numbers have been rounded off to the nearest whole number
CHEMICALS
5151Updated on October 14, 2016
Exchange rates (Fiscal Year)
For updated information, please visit www.ibef.org
EXCHANGE RATES
Exchange rates (Calendar Year)
CHEMICALS
Year INR equivalent of one USD
2004–05 44.81
2005–06 44.14
2006–07 45.14
2007–08 40.27
2008–09 46.14
2009–10 47.42
2010–11 45.62
2011–12 46.88
2012–13 54.31
2013–14 60.28
2014-15 61.06
2015-16 65.46
2016-2017E 66.95
Source: Reserve bank of India,
Average for the year
Year INR equivalent of one USD
2005 43.98
2006 45.18
2007 41.34
2008 43.62
2009 48.42
2010 45.72
2011 46.85
2012 53.46
2013 58.44
2014 61.03
2015 64.15
2016 (Expected) 67.22
5252Updated on October 14, 2016
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CHEMICALS