ELECTRONICS November 2010 ELECTRONICS November 2010 Contents Advantage India Market overview Industry Infrastructure Investments Policy and regulatory framework Opportunities Industry associations 2 ADVANTAGE INDIA Electronics November 2010 Advantage India India has several research-oriented institutes such as the Indian Institute of Science (IISc) and the Indian Institutes of Technology (IITs), which focus on creating innovative products. Strong India has a large pool of technically skilled Out of 579 SEZs in India, more research workforce driven by the presence of 15 than 60 per cent are devoted to support IITs, 20 National Institutes of Technology IT, semiconductors and Robust (NITs), and 2,872 engineering colleges. Large pool of electronic hardware sector. infrastructure skilled development — workforce SEZs Advantage India Growth in per Significant With an annual growth rate of 20 capita income export India exports around 20 per per cent in per capita income, the and corporate potential cent of its total electronics demand for electronics hardware is spending production. projected to increase to US$ 400 Conducive billion in 2020 from the present regulatory demand of US$ 45 billion. environment India has investor-friendly and pro-investment norms for electronics manufacturing such as Export Promotion Capital Goods Scheme (zero duty to exporters of electronic products) and Duty Exemption and Remission Schemes. Source: EY research; Ministry of Human Resource Development, GoI 2009–10 annual report; Indian Electronics industry – overview; www.mit.gov.in; ―SEZ Approvals granted under the SEZ Act, 2005‖, SEZ India website, http://sezindia.nic.in, accessed on 03 December 2010 SEZs: Special economic zones 3 ELECTRONICS November 2010 Contents Advantage India Market overview Industry Infrastructure Investments Policy and regulatory framework Opportunities Industry associations 4 MARKET OVERVIEW Electronics November 2010 Market overview … (1/4) • The electronics industry is categorised into the following segments: • Consumer electronics • Industrial electronics • Computers • Communication and broadcasting equipment • Strategic electronics • Electronic components • Electronic hardware production in 2009–10 was US$ 22.90 billion as compared to US$ 20.26 billion in the previous year. • Demand in consumer electronics and mobile segment has increased by 5 per cent in 2009–10 . With the increase in local production in this segment, the import have declined by 26 per cent. • Increasing demands because of relatively higher growth rate in the Indian economy and increasing disposable income with middle class has given India a lucrative chance to increase its electronic hardware production. Source: Department of Information Technology (DIT) 2009–10 annual report. 5 MARKET OVERVIEW Electronics November 2010 Market overview … (2/4) • The production of the electronic component Sales — segment-wise share (2008–09) (per cent) segment for 2009–10 is estimated to be US$ 2.78 billion with a growth rate of 11 per cent. Communication and Broadcasting sector 7 • 10 Consumer electronics The total production of consumer electronics in 28 2009–10 is estimated to be US$ 6.28 billion, indicating a growth of 18 per cent over the Computer industry previous year. Among consumer electronics, 21- 14 Control Instrumentation and inch colour TV continues to dominate the market Industrial sector with a 65 per cent share. 14 Electronic Components 27 Strategic Electronics Sources: ―Indian Electronics industry – overview,‖ Electronic Industries Association of India website, www.elcina.com, Indian Electronics industry – overview; www.mit.gov.in 6 MARKET OVERVIEW Electronics November 2010 Market overview … (3/4) During 2005–10, communications and broadcast has witnessed the highest growth. Production growth rate per segment (CAGR 2005–10) (per cent) Electronic components 8.7 Strategic electronics 18.4 Communication and broadcast sector 45.6 Computer industry 10.4 Control instrumention & industrial sector 10.4 Consumer electronics 12.4 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% Sources: ―Indian Electronics industry – overview,‖ Electronic Industries Association of India website, www.elcina.com, Indian Electronics industry – overview; www.mit.gov.in 7 MARKET OVERVIEW Electronics November 2010 Market overview … (4/4) The market has witnessed consistent growth over the past years. Electronics industry production 25.00 22.90 20.26 20.00 CAGR: 17% 17.59 15.00 13.75 11.79 10.52 10.00 (in US$ (in billion) 5.00 - 2004-05 2005-06 2006-07 2007-08 2008-09 2009-2010 Source: Department of Information Technology (DIT) 2009–10 annual report. 8 MARKET OVERVIEW Electronics November 2010 Exports • Exports from the electronics industry witnessed a CAGR of 31 per cent between 2004–05 and 2009–10. • Communication and broadcast sector constitute 39 per cent electronics exports, followed by electronic components. • Exports in the electronics industry are estimated to grow from US$ 4.4 billion in 2009 to US$ 15 billion in 2014 and US$ 80 billion in 2020, at a CAGR of 33 per cent. Electronics industry exports Segment-wise exports (2008–09) (per cent) 7.00 6.51 5 Communication and 8 6.00 broadcast sector 5.00 CAGR Electronic components 31% 14 39 4.00 Control instrumention & 3.00 industrial sector 1.67 (in US$ (in billion) 2.00 Consumer electronics 1.00 34 Computer industry 0.00 2004-05 2009-10 Source: Department of Information Technology (DIT) 2009–10 annual report. 9 MARKET OVERVIEW Electronics November 2010 Key players … (1/3) The Government of India (GoI) established Bharat Electronics Ltd (BEL) in Bengaluru, India, under the Ministry of Defence in 1954 to meet the specialised electronic needs of the Indian defence services. BEL focusses on contract manufacturing, design and manufacturing Bharat Electronics Ltd services, semiconductor device packaging and software development and quality assurance facilities. The company’s turnover has increased from US$ 0.68 billion (INR 32.71 billion) in 2004–05 to US$ 1.06 billion (INR 50.93 billion) in 2009–2010. In 1985, through a technical collaboration with Japan’s Toshiba Corporation, Videocon International Ltd launched India's first world class colour TV. Today, Videocon International Ltd, Videocon Group’s flagship company, is India's leading manufacturer of consumer Videocon electronic products. Videocon is now a global player and the first Indian company to win the International Ltd prestigious Conformite Europeene (CE) approval for exporting colour TVs to Europe. Videocon also has a presence globally, with operations in the Middle East, Europe, Indonesia and South Africa. Established in 1997, LG Electronics India Limited is a wholly owned subsidiary of LG Electronics, South Korea. In India, LG is the market leader in consumer durables and is LG Electronics India recognised as a leading technology innovator in the IT and mobile communications business. Limited LG Electronics has two manufacturing units in India with the latest technologies at par with international standards. These facilities are among the most eco-friendly units within all LG manufacturing plants in the world. 10 MARKET OVERVIEW Electronics November 2010 Key players … (2/3) HCL Infosystems Ltd manufactures and markets PCs, PC servers, storage solutions and display products, among other electronic products. HCL’s computer hardware manufacturing plants HCL Infosystems Ltd include four facilities spread across the country. In addition, the company offers IT consulting, technology integration services and software solutions. HCL’s revenue has grown from US$ 0.41 billion (INR 19.7 billion) in 2004–05 to US$ 2.52 billion (INR 121.14 billion) in 2009– 2010. Samsung India Electronics Ltd, a subsidiary of US$ 56 billion Samsung Electronics Co Ltd, has been operating in India since 1995. It is a leading provider of high-tech consumer electronics, Samsung India home appliances, IT and telecom products in the country. Samsung India has set up Electronics Ltd manufacturing facilities for color TVs, microwave ovens, washing machines, air conditioners, color monitors and, more recently, refrigerators. The company has a plant in Noida, Uttar Pradesh. Moser Baer India Ltd (MBIL) is the world's second-largest company in the optical storage media segment. MBIL supplies to a number of branded players such as Sony, Verbatim, TDK, Maxell, Imation and Samsung and has collaborative R&D programs as well as reciprocal training programmes with these companies. Further, Moser Baer also has a presence in the Moser Baer India Ltd photovoltaic and home entertainment segments. Moser Baer's products are manufactured at its three state-of-the-art manufacturing facilities. Its revenue has grown from US$ 0.29 billion (INR 14.21 billion) in 2004–05 to US$ 0.43 billion (INR 20.52 billion) in 2009–2010. 11 MARKET OVERVIEW Electronics November 2010 Key players … (3/3) • Jabil has a 176,000 sq ft facility in Ranjangaon near Pune, Maharashtra. • The company offers printed circuit boards, enclosure integration, distribution and repair services with in-region design services support. • Jabil services the instrumentation, networking, peripherals and telecommunications Jabil industries. • The company acquired Celetronix — one of the largest electronic equipment manufacturers in India in 2006. The acquisition gave Jabil an additional 270,000 sq ft of manufacturing space. • Flextronics ventured into India in 2001. • The company offers high-value, high-margin design services for mobile phones