India Symposium IBEF Sectoral Reports Electronics

8/6/2019 India Symposium IBEF Sectoral Reports Electronics

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E L E C T R O N I C S


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ELECTRONICS

Market Overview 2

Competitive Advantages 9

Government Regulations and Support 14

Key Domestic and Foreign Players 18

Contact For Information 30

A report by KPMG for IBEF


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Market Overview

The global electronics industry is growing rapidly. From an

estimated size of US$ 950 billion in 2005, it is estimatedto grow to nearly US$ 2100 billion by 2010. The market is

dominated by Asian countries such as China, Taiwan,

Singapore and South Korea. The industry is characterised

by rapid innovation and speed to market, short product life

cycle, highly automated manufacturing to give consistent

quality at low cost, high volume production, continuous

improvement in capabilities for reducing costs and profit

accrual through volumes.

Indias electronics industry is nascent by global standards.

Despite a population of over one billion, India has a relatively

small electronics market. It is ranked twenty-sixth worldwide

in terms of sales and twenty-ninth in terms of production.

The total size of the industry in 2004-05 was US$11 billion.

Indias Electronics sector has six key segments

The Indian electronic industry is divided into six segments:

Consumer electronics, Industrial electronics, Computers,

Strategic electronics, Communication and Broadcastingequipment and Electronic components. The consumer

electronics sector dominates the industry with 33.8 per cent

share and has benefited from a large and expanding market.

The industrial electronics and computer sector each has a share

of over 15 per cent.

Electronics Production(2004-05)

Consumer

34%

Electronics

Industrial

Electronics

15%

Computers

18%

Commn. & Broad.

Eqpt.

9%

Strategic

Electronics6%

Components

18%

Source: http://www.mit.gov.in/dbid/eproduction.asp#2

Consumer electronics

Consumer electronics consists of products that are directly

consumed by end-users, such as televisions, VCD/MP3 players,

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microwave ovens, etc. This segment has a large manufacturing base, and is

quite competitive, with presence of several global players in India.

Industrial Electronics

The Industrial electronics segment includes products that are used by other

industries, such as process control instrumentation, automation systems, Test

and measuring (T&M) instruments and medical instruments.

Computers

This segment includes personal computers, servers, workstations,

supercomputers, data processing equipment and peripherals such as monitors,

keyboards, disk drives, printers, plotters, digitisers, SMPS, modems, networking

products and add-on cards.

Strategic Electronics

The strategic electronics segment covers Ssatellite base communications,

navigation and surveillance, underwater electronics and infra red based

detection, disaster management and GPS based Vehicle tracking systems.

The segment has a number of manufacturing units both in the public andprivate sectors.

Communication and Broadcasting Equipment

The communication and broadcasting equipment segment includes digital

exchanges (EPABX, RAX, TAX and MAX), Transmission equipment such as

HF/VHF/Microwave trans-receivers, satellite communication terminals, optical

fibre communication equipment, troposcatter equipment, two-way radio

communication equipment, etc.

Electronics Components

The electronics components segment caters to the requirements of

consumer electronics, telecom, defense and information technology sectors.

The components in production in India at present include TV picture tubes

(black & white and colour), monitor tubes, diodes and transistors, power

devices, ICs, hybrid microcircuits, resistors, capacitors (plastic film, electrolytic,

tantalum, ceramic), connectors, switches, relays, magnetic heads, DC micro

motors and tape deck mechanism, PCBs, crystals, loudspeakers and hard and

soft ferrites. The consumer electronic sector in general and the colour

television (CTV) industry in particular is the growth engine for electronic

components.


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The sector has been growing steadily across mostsegments

Indias electronics industry has been growing at approximately11 per cent CAGR over the past 5 years, and was worthUS$ 11 billion in 2004-05.

The following sections discuss the growth and current status of

each of the six segments comprising the sector.

Consumer electronics

The Consumer electronics industry contributes about 33.80 percent of the total electronics production in India. The totalproduction of consumer electronics was US$ 3.74 billion in2004-05, registering a growth of 13 per cent over production inthe previous year. The growth has been primarily powered bycolour televisions (CTV), which grew from 8.9 million units in2003-04 to over 10 million in 2004-05. CTV growth in turn isdriven by growth in Flat Screen TVs (FST) that is estimated to

constitute nearly 20 per cent of the CTV market. Other growthsegments in consumer electronics include microwave ovens andVCD/MP3 players - the microwave oven industry is estimated to

be growing at the rate of 25-30 per cent.


Electronics Production

0

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1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05

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Consumer Electronics Production

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These trends are a reflection of increasing consumption and aspiration levels

among Indian consumers, driven by demographic and lifestyle changes. Asthese trends are positive for the future, the outlook for consumer electronics

segment is quite positive.

Industrial Electronics

The production of industrial electronics in 2004-05 was US$ 1716 million ascompared to US$ 1327 million in 2003-04, a growth of 29 per cent.

Growth in industrial production and focus by industry on better controls,processes and systems are expected to drive growth in this segment in thefuture.

Computers

The production in computers segment was US$1,961 million during 2004-05 as

compared to US$1479 million during 2003-04, a growth of 33 per cent.


US$million

Industrial Electronics Production

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Industrial Electronics Production

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Communication & Broadcasting Equipment

The production in the communication and broadcasting

equipment sector was US$1,025 million during 2004-05.


Strategic Electronics Production

0

100

200

300

400

500

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700

1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05

US$m

illion


US$million

Communication and Broadcasting

Equipment Production

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1400

1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05

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The industry, in the area of PCBs, connectors, diskettes and

CDs, experienced a positive growth.

High corporate consumption and buoyancy in small towns isdriving sales of Personal Computers. The market for PCs is

estimated to have touched 3.4 million units in fiscal 2004-05,

taking the total PC penetration to 14 million in the country.

Strategic Electronics

The production in the strategic electronics sector was US$680

million in 2004-05 compared to US$588 million in 2003-04, a

growth of 16 per cent.

With the opening of strategic electronics to the private sector,

there has been an emphasis on attracting private sector

organisations for indigenisation of a variety of products and

technologies. This is expected to fuel growth in this segment.


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Growth in this segment has been almost stagnant over the past 5 years.

Electronics Components

Electronics components contributed 18 per cent to the overall electronics

production. Production in this sector was US$ 1,961 million during 2004-05

compared to US$ 1,719.3 million in 2003-04; a growth of 14 per cent.

The key product groups that have driven growth in components include CTV

picture tubes, optical discs, PCBs, connectors, ferrites, etc. Growth in this

segment has been primarily due to growth in the user segments, viz, CTVs,

PCs, etc. As such, the outlook is also positive.

Exports

Most of the consumer electronics produced in India is consumed by the

domestic market, with exports forming only 5 per cent of the production.


US$million

Electronic Components Production

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US$million

Electronics Exports

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However, exports of electronic goods from India have been

growing consistently and constituted about 2.64 per cent

of Indias overall exports in 2003-04. For the year ending

March 2005, the export of electronic goods from Indiaincreased by 16 per cent to US$1,950 million as compared

to US$1,675 million in the year ending March 2004.

Segment-wise Exports

Electronic components segment contributes the highest towards

the total electronics exports. The major export items include

passive components, such as capacitors and resistors; wound

components; CD-ROMs; connectors; color picture tubes and

computer components/assemblies, such as head stacks;

memory modules and RFID products. In 2003-04 India

exported US$ 817 million worth of electronics components,

which formed 48 per cent of the total electronics export.

Other key segments that contributed to exports include

industrial electronics, computers and consumer electronics,

with exports of US$ 329 million, US$ 313 million, and US$ 179

million respectively in 2003-04.

The main destinations for Indias exports are the European

Union, ASEAN countries and the United States.

The major export opportunities are in the area of innovative

new products, contract manufacturing (OEM and ODM) and

design services. It is estimated that India will export OEM

(Original Equipment Manufacturer) and ODM (Original Design

Manufacturing) worth US$11billion by 2010.


US$million

Electronics Exports(Segment-wise)

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2000-01 2001-02 2002-03 2003-041999-2000

Consumer Electronics Industrial Electronics Computers Components

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Competitive Advantages

While the Electronics sector in India is currently small, there are several

advantages that India offers that can be effectively leveraged to achieve highergrowth. These can be categorised under four heads:

Manpower

Market Demand

Supporting institutions and

Policy and Regulatory Support

These areas are further discussed below

Availability of skilled human resources in India at competitive cost is akey advantage for the electronics sector

Indias human resources advantage derives from three key features Availability

in terms of numbers, Capability in terms of the right skills and Low costs.

India has the potential to ensure adequate availability of manpower tosupport the electronics industry well into the future

Indias population is predominantly young in 2001, nearly 54 per cent of the

population was less than 25 years of age. By 2013, nearly 200 million more

people will join the nations productive age bracket representing a quantum

growth in the consumption class. This implies that India will have a large pool

of productive manpower well into the future.

Indias manpower is trained and has a good mix of capabilities

India produces over 500 PhDs, 200,000 engineers, 300,000 non-engineering

postgraduates and 2,100,000 other graduates each year. The Indian Instituteof Technology (IITs) and The Indian Institute of Management (IIMs) produce

graduates and post graduates with best-in-class skills and capabilities in

technical and management fields. Indias capabilities in IT and engineering make

it an attractive location for sourcing engineering services such as R&D and

design.

Labour costs in India extremely competitive when compared to otherdeveloping countries

Indias cost of skilled labour is among the lowest in the world. For example,

average labour rate per employee in the electronics sector is about

$3,000 per year. Labour cost as a percentage of value added is only


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21 per cent in India as compared to 23 per cent in China and

30 per cent in Taiwan. Taking advantage of this many MNCs

have set up manufacturing bases in India for domestic

consumption as well as exports.

Many multinational companies in the electronics sector have

leveraged Indias manpower advantage to grow in the domestic

marke, as well as source products and services from India.

Examples include:

Kodak

Kodak has a camera manufacturing and assembly plant nearBangalore, which produces over four million units per year.

Around 60 -70 per cent of this centres products are exported

to the US, Europe, West Asia and the Far East in 2003.

Siemens

Production cost arbitrage has prompted the company to

increase production and hence exports from the Goa factory.

Siemens Goa plant is used as a manufacturing hub for catering

to the international market. The Goa factory will become the

hub for manufacturing X-ray tubes as it can save 30 per cent of

the cost.

Motorola

Motorolas Global Telecom Solutions Sector (GTSS) designs,

develops, manufactures and supplies infrastructure equipment for

wireless communications systems worldwide. GTSS India

operates a Centre of Excellence for providing network

services for customers in India as well as in the Asia Pacific

Region. Motorola India Electronics Ltd. develops software for

Motorolas worldwide businesses.

Motorola Global Software Group (GSG), the Research &

Development arm is involved in all the major developments of

the company. Motorola Indias operations are established as a

source of software and chip design and as a source of excellent

capital for Motorola globally. Motorolas two chip designing units

around Delhi and a third one in Hyderabad are 100 per centexport units meeting the companys global requirements.

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Solectron

Solectron is looking at using its Bangalore factory to contract manufacture

low-priced machines for Advanced Micro Devices.

Electrolux

Electrolux has set up Research and Development (R&D) centre with an

investment of US$ 8.6 million. It is the headquarters of its South Asian

Association for Regional Cooperation (SAARC) countries, excluding Sri Lanka.

This centre will be the regional hub for developing new technologies and

products.

Philips

Several Philips India employees are working on key regional/ global Philips

projects, committees and assignments. Several managers who started as

employees of Philips in India are now based in Philips organisations across the

world.

Samsung

Samsung invested US$ 11 million in setting up an R&D in India. Samsung R&DCentre at Noida helps the company customise its CTV range as per the

preference of Indian customers.

Indian market provides favourable demand conditions for the elec-tronics sector to grow

India has been experiencing a strong growth in the demand of consumer

products and durables in recent years, driven by consumer demographic

trends. This has facilitated growth in the electronics sector both directly and

indirectly.

Growth in demand of consumer durables such as CTVs, VCD / MP3 players

and PCs directly benefits the sector. Also the demand for products such as

automobiles, white goods, air-conditioners, textiles, etc, leads to growth in the

electronics sector as these products contain a significant number of electronic

components. At the same time, consumer demand has boosted growth in

Indias overall manufacturing sector as well, which, in turn, has a positive

impact on industrial electronics.

On the whole the domestic market in India is very attractive from the pointof view of the electronics sector, and current trends indicate high growth

potential for the sector in the future.


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Some of the key trends that have a positive impact on the

sector are:

Growing consuming class (defined as people having annual

income of

US$ 980 (INR 45000) or above) that has greater disposable

income and propensity to spend. It has been estimated by

NCAER that this group will constitute over 80 per cent of

the population of India by 2009-10

Lifestyle changes such as greater exposure to global trends

and increasing affinity for convenience and lifestyle products

Increasing urbanisation, emergence of nuclear double income

families

Low penetration levels of most consumer durables. Forexample, in 2002, only 66 per cent of middle-income

households had a TV set, only 28 per cent of the urban

households possessed a refrigerator, while just a little over

15 per cent owned an air cooler. Despite a population of

more than 1 billion people, only 16 million computers were

used in India in March 2005.

Increased government and private industry spending on

sectors such as defence and aerospace. The Indian aviation

sector, for example, has placed orders for more than 350

aircrafts with a list price of about US$ 26 billion.

In recognition of Indias domestic market potential, Samsung

has selected India as one of the top six strategic markets

in the world along with the US, China, Russia, Germany and

Thailand.

Presence of supporting industries in India is a source ofstrength for the electronics sector

Educational and Research Institutes

India has a well-developed technical and tertiary education

infrastructure of over 250 universities, 1500 research institutions

and over 10,000 higher education centres. Indian Institutes of

Technology (IIT) and Indian Institute of Science (IISc) are the

premier institutes of education and research.

These institutions provide not only a steady supply of trained

and qualified manpower to support the electronics sector,

but also support for research and analysis, testing anddevelopment.

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IT Industry

Indias capabilities and infrastructure in the IT sector are well recognised. The

presence of a mature service industry in India can accelerate the growth ofthe electronics sector.

Examples of companies that have been leveraging the supporting institutions in

India include:

Flextronics

Flextronics is the first EMS (Electronics Manufacturing Services) provider to

offer embedded and application software development for telecom

infrastructure customers. Flextronics acquired a 55 per cent controlling

interest in Hughes Software Systems (HSS), an Indian provider of softwareproducts and services to telecom infrastructure companies. The company is

positioning itself as a complete outsourcing solution to telecom OEMs. This

partnership offers significant opportunities to cross-sell respective products and

services to a very complementary telecom customer base.

Canon India

Canon India set up its Software Development Centre (SDC) in Delhi, which is

one of the six such cutting edge technology centres of its kind. It is ISO

9001:2000 certified with CMM level 3 status. Software Development Centre

undertakes contract software development from Canon Inc., Canon

Development Americas and Canon Information Systems Research, Australia.

For example it was involved in developing software for Office Imaging

Products division of Canon Inc., Japan.


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Government Regulations and Support

India has made the transition from being a sort of controlled

economy to a free market. Foreign investment up to 100 percent is possible in the Indian electronics industry to set up units

exclusively for exports. It is now possible to import duty-free all

components and raw materials, manufacture products and

export it.

EHTP (Electronic Hardware Technology Park) is an initiative to

provide benefits to companies that are replacing certain imports

with local manufacturing. EHTP benefits include export credits,

no duties on imported components or capital equipment,

business tax incentives, and an expedited import-export process.

The government, in an attempt to encourage manufacture of

electronics in India has changed the tariff structure significantly.

Customs duty on ITA-1 items (217 items) has been abolished

from March 2005. All goods required in the manufacture of

ITA-1 items are exempt from customs duty.

Customs duty on specified raw materials / inputs used for

manufacture of electronic components or optical fibres /

cables has been removed.

Customs duty on specified capital goods used for

manufacture of electronic goods has been abolished.

Excise duty on computers has been removed.

Microprocessors, hard disc drives, floppy disc drives and CD

ROM drives continue to be exempt from excise duty.

Intellectual Property Rights

Protection of Intellectual property rights (IPR) is a prime

requisite for development of R&D and innovation in the

electronics sector. The Government of India has developed a

robust IP act to facilitate innovation, growth and development.Several amendments to the Copyright Act, creation of a new

Trademark Act, a new Designs Act and amendments to the

Patents Act show Indias continued effort to protect IPR.

The country has already made several changes in its IP acts

over the years.. Several amendments to the Copyright Act,

creation of a new Trademark Act, a new Designs Act and

amendments to the Patents Act show Indias desire to change

and adapt. New acts have also been enacted to cover semi-

conductors and layout designs which will be of considerable

importance to the electronic industry.

In the current WTO regime, India is a party to the Trade

Related Aspects of the Intellectual Properties (TRIPs)

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Agreement and has accordingly, amended most of its IPR Acts and Rules to

conform to the said Agreement. The Indian Copyright Act 1957 was amended

in 1999; the patent Act 1970 was amended in 1999 & 2003 and Trademarks

and Merchandise Marks Act 1959 was overtaken by a new Trademark Act1999. The Industrial Design Act 1911 was effectively replaced by The Design

Act 2000, and The Layout Design of Semiconductor integrated Circuit Act

2000 was enacted.

The agreement on TRIPs takes care of the intellectual property rights by

enforcing the patent rights, copy rights and related rights, and the protection

of industrial designs, trade marks, geographical indications, layout designs of

integrated circuits and undisclosed information. Accordingly, the member

nations are asked to modify their existing laws. Once these laws come into

force, unauthorised use of the patented innovations, trade marks, etc. becomes

difficult. Enforcement of the TRIPs agreement makes the production of anyproduct possible either through internal innovation or through formal transfer

of technologies.

The electronics sector is expected to continue to benefit from supportive

policies and become globally competitive.

Regulations

Free Trade Agreement

WTO regime which came in force in 2005, results in zero customs duty on

imports of all telecom equipment. 217 IT/electronic items were covered under

the Information Technology Agreement (ITA) of the WTO for complete

customs tariff elimination by 2005.

Out of these 217 items, several items were already at NIL customs duty. In

fact, IT/electronics was the first sector in India to face complete customs tariff

elimination. The ITA-1 would result in intensifying competition as more

imported products will be easily available at lower prices.

Foreign Investment Policy

FDI

Foreign investment up to 100 per cent is allowed in Indian electronics

industry set up exclusively for exports. The units set up under these

programmes are bonded factories eligible to import, free of duty,

their entire requirements of capital goods, raw materials and components,

spares and consumables, office equipment etc. Deemed export benefits are

available to suppliers of these goods from the Domestic Tariff Area (DTA).A part of the production from such units is permitted to be sold in

the DTA depending upon the level of the value addition achieved.


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The FDI approval for electrical equipment (including computer

software and electronics) from January 1991 to March 2004 was

US$ 7.29 billion, which was 9.94 per cent of the total foreign

direct investment (FDI) approved. During the same period theFDI inflow for electrical equipment (including computer software

and electronics) was US$ 3.32 billion.

Procedure for approval

Once the investment in equity has been approved, the

import of capital goods, components and raw materials or

the engagement of foreign technicians for short duration

does not require any additional approvals.

Approval of Ministry of Home Affairs is not needed for hiring

foreign nationals holding valid employment visa.

Approval for setting up units in Export Processing Zones

(EPZs) is given by the Board of Approvals in the Ministry of

Commerce.

Approval for setting up export-oriented units (EOUs) outside

the zones is given by the Ministry of Industry.

Approvals for setting up Electronic Hardware Technology

Park (EHTP) and Software Technology Park (STP) units are

cleared by the Inter Ministerial Standing Committee (IMSC)

set-up under the Chairmanship of the Secretary, Department

of Information Technology.

Proposals involving foreign direct investment not covered

under the automatic route are considered by the Foreign

Investment Promotion Board (FIPB).

FDI/ Foreign Technology Collaboration Agreement

The government facilitates FDI and investment from Non-

Resident Indians (NRIs) including Overseas Corporate Bodies(OCBs), predominantly owned by them, to complement and

supplement domestic investment. Foreign technology induction is

encouraged through FDI and foreign technology collaboration

agreements. FDI and foreign technology collaborations are

approved through automatic route by the Reserve Bank of India

(RBI) or otherwise by FIPB.

Automatic FDI Approval

In pursuance of governments commitment to early

implementation of the second phase of the economic reforms

and with a view to further liberalising the FDI regime, all items

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and activities are placed under the automatic route for FDI/NRI and OCB

investment except:

All proposals that require an Industrial License include (i) items requiring an

Industrial Licence under the Industries (Development and Regulation) Act,

1951; (ii) more than 24 per cent foreign equity investment for units

manufacturing items reserved for small scale industries; and (ii) all items

which require an Industrial Licence in terms of the locational policy notified

by government under the New Industrial Policy of 1991.

All proposals in which the foreign collaborator has a previous venture/tie-

up in India.

All proposals relating to acquisition of shares in an existing Indian company

in favour of a Foreign/NRI/OCB investor.

All proposals falling outside notified sectoral policy/caps or sectors

for which FDI is not permitted and/or whenever any investor chooses

to make an application to the FIPB and not to avail of the automatic

route.

Automatic Approval by RBI for Foreign Technology CollaborationAgreements

RBI grants automatic permission for foreign technology agreement in all areasof electronics and IT provided:

Lump sum payment of the price of the technology

does not exceed US$2 million

Royalty payments do not exceed 5 per cent of domestic sales and 8 per

cent of exports. (The royalty rates are net of taxes).

The payments are subject to an overall ceiling of 8 per cent of total sales

over a period of 10 years from the date of agreement or over 7 years

period from the date of commencement of commercial production,

whichever is earlier. Application for investment under the automaticprocess is to be made to the RBI and approval is generally granted

within three weeks.

FIPB Approvals

The FDI/Foreign technology collaboration agreement proposals that do not

conform to the guidelines for automatic approval require government approval

through the FIPB. The Government has set up a special FIPB as a fast track

mechanism to invite and facilitate foreign investments in large projects in India,which are considered beneficial to the Indian economy but are not covered by

the automatic approval process and norms under which SIA is authorised to

grant investment approvals.


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Key Domestic and Foreign Players

Philips

Philips in India is a subsidiary of Royal Philips Electronics of

the Netherlands. It is promoted by Koninklijke Philips

Electronics N V.

Philips India Limited (PIL) is a leader in lighting, consumer

electronics, semiconductors, domestic appliances and personal

care with an unmatched range of products backed by superior

design and technology. PIL also has an excellent distribution and

after-sales service network. Philips has a plant each in Thane,

Pune, Loni-Kalbhor, Mohali and Baroda and three plants in

Kolkata. The revenue in the year 2004 was US$ 524 million

and the net profit was

US$ 22 million.

Videocon International Ltd.

In 1985, through a technical tie-up with Toshiba Corporation of

Japan, Videocon International

Limited launched Indias first world class Colour Television.Today, Videocon International Ltd. the flagship company of the

Videocon Group, is Indias

leading manufacturer of consumer electronic products.

Videocon is now a global player, the first Indian company to win

the prestigious CE approval for exporting its colour TV to

Europe. Videocon is now entering world market with its

operations in the Middle East, Europe, Indonesia and South

Africa.

It currently manufactures colour TVs, black & white TVs and

audio products - a range of home audio systems, stereo radio,

recorders and personal stereos. At its plant at Chitegaon and

Aurangabad it has also undertaken complete backward

integration to manufacture all critical and important components

of its products, such as electronic yuners, FBTs, ATDMs

and Deflection Yokes. The company had revenues of

US$ 873 million in 2004.

Mirc Electronics

MIRC makes and markets the Onida brand of products. Today,

apart from being a leading player in the CTV market, it also

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manufactures other household appliances including air-conditioners, washing

machines, DVDs, plasma television and home theatre systems. For office use,

Onida has also introduced state-of-the-art multi-media presentation products.

Its plant is located at Thane, Maharashtra. In the year 2005 the company hadrevenues of US$ 243 million and made a net profit of US$ 8 million.

HCL Infosystems Ltd.

HCL Infosystems manufactures and markets personal computers, PC servers

and RISC/UNIX servers. It offers IT consulting, technology integration services,

turnkey software development and functional consulting and implementation

services for Enterprise Resource Planning. The company made a net profit of

US$ 29 million with revenues of US$ 429 million in 2005.

Samsung

Samsung India Electronics Ltd., a subsidiary of the US$56 billion Samsung

Electronics Co. Ltd., has been operating in India since 1995. It is a leading

provider of high tech consumer electronics, home appliance, IT and telecom

products in the country. Samsung India has set up manufacturing facilities for

colour televisions, microwave ovens, washing machines, airconditioners, colour

monitors and more recently, refrigerators in the country. It has a plant in

Noida. The revenue in 2003 was US$ 715 million.

Solectron

Solectron Centum Electronics Limited is the leading Indian company offering

state of art solutions for Frequency Control Products (FCP), Electronic

Manufacturing Service (EMS) and Hybrid Micro Circuits (HMC). Solectron has

a manufacturing unit and design centre in Bangalore and a post manufacturing

centre in Mumbai. The EMS operation focuses primarily on the domestic

market. For the year 2005 the revenue

was US$ 10 million with a net profit of US$ 2 million.

Flextronics

Flextronics entered India in 2001 when it purchased a Motorola facility.

Flextronics maintains a Bangalore facility with 18,000 sq ft and 297 employees.

The products manufactured are engine management Ccrd, TV tuners,

set top box, energy meters, cellular phone, networking cards and

WLL wall sets.

Jabil Circuits

Jabil Circuit operates a 51,000 sq. ft. plant in Pimpri, which the provider took

over from Philips in 2002. The Pimpri plant manufactures TV analog monitor


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cards and certain audio products for Philips. All production

today is for the Indian market. In December 2004,

Jabil Circuit opened a 175,000-square-foot facility in

Ranjangaon that offers printed circuit board assembly,enclosure integration, and distribution and repair services,

along with in-region design service support. The site serves the

consumer, instrumentation, networking, peripherals and

telecommunications industries.

LG

LG Electronics India Pvt. Ltd. (LGEIL) is a wholly owned

subsidiary of LG Electronics, South Korea. It has a plant each

in Noida and Pune. Its products include TV, air-conditioner,refrigerator, washing machine, monitor, vacuum cleaner and

projector. LG India Pvt. Ltd. recorded a growth of 37 per cent

from the consumer electronics division, contributing to

46 per cent of the total turnover in 2003.

India will be a high growth market in the electronicssector in the medium term

Indias entire electronics market, worth $11.5 billion in 2004,

is expected to become one of the fast growing electronics

markets worldwide over the next several years. This market is

expected to grow to $40 billion by 2010 at an annual rate

of over 20 per cent. This growth will be assisted by trends

such as increase in contract manufacturing and increase in

EMS and ODM.

Contract manufacturing, an emerging trend, not only helps

hardware product companies de-risk their business model

but also achieve full utilisation of production facilities.

The market for EMS is projected to be US $ 163 billionby the year 2008, while the market for ODMs is projected

to be US$ 144 billion.

Many key players in the sector have definite plans for their

Indian operations

Samsung

Samsung plans to expand its manufacturing facility in India.

An additional investment of US$ 15 million is planned forexpanding CTV line capacity from 1.5 million units per annum

to 1.8 million units per annum. Samsung plans to invest over

US$ 25 million to expand its Bangalore based R&D centre.

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Canon India

Canon has set itself a revenue target of approximately US$ 150 million by

2007 with a leadership position across all product categories. Canon isbolstering its India marketing efforts with an investment of US$ 4 million in

advertising, market research, retail expansion, in-store branding and training

programmes.

Electrolux

Electrolux is in the process of sourcing components worth US$ 30 million

from Indian manufacturers. It plans to increase the value to US$ 300 million

by 2007.

LG

LG is also planning to invest over US$ 208 million in India in the next three

years to expand the business.

Philips

Philips expects to invest close to US$ 150 million in India over the next few

years.

The confidence expressed by the players in making such growth plans for India

reflects the potential of the Indian electronics sector. This sector is emerging

as one of the most attractive in India, and will be key to Indias emergence as

a global sourcing hub for products and services.


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CONTACT FOR INFORMATION

Information on the market and opportunities for investment in

the electronics sector in India can be obtained from theConfederation of Indian Industry (CII), which works with the

objective of creating a symbiotic interface between industry,

government and domestic and international investors.

Confederation of Indian Industry (CII)

6, Netaji Subhas Road

Kolkata 700 001

India

Tel: + 91 33 2231 5571-4,2261 0575(D)

Fax:+ 91 33 2231 5577

Email: [email protected]

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DISCLAIMER

This publication has been prepared for the India Brand Equity Foundation (IBEF).

All rights reserved. All copyright in this publication and related works is owned by IBEF.

The same may not be reproduced, wholly or in part in any material form (including

photocopying or storing it in any medium by electronic means and whether or not

transiently or incidentally to some other use of this publication), modified or in any

manner communicated to any third party except with the written approval of IBEF.

This publication is for information purposes only. While due care has been taken during

the compilation of this publication to ensure that the information is accurate to the best

of IBEFs knowledge and belief, the content is not to be construed in any manner

whatsoever as a substitute for professional advice.

IBEF neither recommends nor endorses any specific products or services that may have

been mentioned in this publication and nor does it assume any liability or responsibility

for the outcome of decisions taken as a result of any reliance placed on this publication.

IBEF shall in no way, be liable for any direct or indirect damages that may arise due

to any act or omission on the part of the user due to any reliance placed

or guidance taken from any portion of this publication.


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India Symposium IBEF Sectoral Reports Electronics

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