Information Communication Technology & Electronics (ICTE)

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Content

Sectoral Snapshot The Potential Advantage India Major Challenges faced

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Sectoral Snapshot

2% Contribution to global

production(~USD 31 Billion)

2% Sector’s

Contribution to GDP

100% FDI allowed under

automatic route; sector delicensed barring

strategic electronics

~12% Sector’s

Contribution to Manufacturing GDP

~3.3%of total FDI captured by ICTE Sector in 2014-15

~3.3 Millionemployment generated

by sector

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Advantage India

Reason 1

Large market potential and growing purchasing power; Mobiles leapfrogging PCs.

Reason 2Government initiatives on Digital India, Smart cities, expansion of broadband network, increasing emphasis on online delivery of services and growing market for e-commerce.

Reason 3With rising costs of manufacturing in the neighbouring countries in South East and Far East Asia, large investors are looking for alternate destinations closer to major markets.

Reason 4Large pool of engineering and managerial manpower, strong design and R&D capabilities

Potential*

The National Policy on Electronics (NPE) 2012 aimed at creating an eco-system for achieving a turnover of ~USD 400 billion by 2020 involving investment of about USD 100 billion and additional employment of around 28 million people, across all segments of the industry.- Average growth last 5 years: 9% (in USD) - Average growth next 5 years: 30% (in USD)

*Source : DeitY, Ministry of Communications and IT

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Current Growth Drivers

Policy and Eco-system National Policy on Electronics 2012 A Modified Special Incentive Package Scheme (M-

SIPS) Approval of two Semiconductor Wafer Fabrication

facilities Preference to Domestically Manufactured Electronic

Products (DMEP) in Government procurement, Incentives for setting up of Electronic Manufacturing

Clusters (EMCs). To safeguard consumer interest, 30 products have

been identified requiring conformity to safety standards.

Policy for setting up of Electronics Development Fund has been notified

Industry Evolution and Capabilities

• Initial focus on consumer electronics but since expanded as follows: Communication sector : 31% Consumer Electronics: 23 % Components : 15% IT Hardware : 14% Instruments, Process Control, Power Electronics

etc : 12% Strategic Electronics : 5%

• Industry distributed in almost all States with large concentrations in Andhra Pradesh, Karnataka, Maharashtra, NCR and Tamil Nadu.

Market Estimated at ~ USD 80 Billion in 2015-16; over 60% of the demand is being met through import. Almost 80% of the demand of components is being met through imports. Product categories driving the market are - Flat Panel TV, Mobile phones, Notebooks, Desktop Computer systems,

LCD Monitors, Inverters/UPS, Power supplies, BTS, Set Top Boxes, LED/CFL lighting. Electronic Manufacturing Services are being leveraged for catering to the market by domestic as well as by foreign

vendors.

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Major Challenges faced by sector

High disabilities on account of high cost of finance, power and transportation/logistics which are estimated to be about 10% for 50% value addition

Impact of zero duty regime ushered in on account of India being signatory to Information Technology Agreement (ITA) - 1

Inverted duty structure due to adverse impact of ITA-1/zero duty (ICTE products)

Domestically manufactured products are general not as competitive Lack of supporting competitive domestic components/supply chains Domestic demand not consistent with the potential-leading to low volumes of

production Insufficient leveraging of IP creation and development of products customized to

domestic market.