Demand for electronics in India to top $400 billion by 2020

Demand for electronics products in India is expected to cross $400 billion annually by 2020, R Chandrashekhar, secretary, ministry of communications and information technology, said in New Delhi.

Addressing a national conference organised by The Associated Chambers of Commerce and Industry of India (Assocham), Chandrashekhar said, "A national strategy has to be formulated through discussions with key stakeholders including existing manufacturers and members of the MSME sector, industry associations, respective government departments and regulatory bodies."

High-volume sourcing of components and final products has, however, hampered the growth of electronics manufacturing base in recent years, he noted. In fact, excessive dependence on imports could involve national security issues in the future, warned the top bureaucrat in the ministry. He also emphasised on the need to create industrial clusters to meet the need for fostering innovation and manufacturing in the electronics sector.

Ajay Shankar, member secretary at the National Manufacturing Competitiveness Council, said domestic manufacturing is essential to sustain GDP growth momentum and generate mass employment. "There is a growing consensus that electronics industry needs a special emphasis," he pointed out. "It will encourage value generation, revenue generation and employment generation."

Assocham secretary-general D S Rawat called for establishing centres of excellence for incentivising collaborative research and development initiatives between MSMEs and MNCs. The absence of feeder industries is the biggest hurdle for electronics manufacturers to set operations, he said. "The government needs to take quick steps to start developing an ecosystem which will attract manufacturing investments," added Rawat.

According to a knowledge paper prepared by Assocham and Frost & Sullivan, the 2020 guidance is expected to catapult India's contribution to the $1.8 trillion global electronics industry to 15 per cent from the current low contribution of 2.5 per cent. The global electronics industry, which is the largest and fastest growing manufacturing sector, is expected to touch $2.4 trillion by 2020.

The past decade has been remarkable for India from a consumption perspective, according to the paper. From 18 million mobile phones in 2003 to 172 million units in 2010, shipment of three million personal computers to over 8.2 million in the same period, and from a non-existent LCD TV market in 2003 to rapidly growing sales of 3.5 million units in 2010.

The Assocham conference also felt that the demand for skilled labour should be addressed through the establishment of specialised training centres with courses in electronics design, surface mount technology and floor automation.