2
Contents
Advantage India
Market overview
Industry Infrastructure
Investments
Policy and regulatory framework
Opportunities
Industry associations
ELECTRONICS November 2010
3
Advantage India
Advantage
India
Strong
research
support
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.
Large pool of
skilled
workforce
India has a large pool of technically skilled
workforce driven by the presence of 15
IITs, 20 National Institutes of Technology
(NITs), and 2,872 engineering colleges.
Significant
export
potentialIndia exports around 20 per
cent of its total electronics
production. Conducive
regulatory
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.
Growth in per
capita income
and corporate
spending
With an annual growth rate of 20
per cent in per capita income, the
demand for electronics hardware is
projected to increase to US$ 400
billion in 2020 from the present
demand of US$ 45 billion.
Robust
infrastructure
development —
SEZs
Out of 579 SEZs in India, more
than 60 per cent are devoted to
IT, semiconductors and
electronic hardware sector.
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
Electronics November 2010
ADVANTAGE INDIA
4
Contents
Advantage India
Market overview
Industry Infrastructure
Investments
Policy and regulatory framework
Opportunities
Industry associations
ELECTRONICS November 2010
5
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.
MARKET OVERVIEW
Electronics November 2010
6
Market overview … (2/4)
• The production of the electronic component segment for 2009–10 is estimated to be US$ 2.78 billion with a growth rate of 11 per cent.
• The total production of consumer electronics in 2009–10 is estimated to be US$ 6.28 billion, indicating a growth of 18 per cent over the previous year. Among consumer electronics, 21-inch colour TV continues to dominate the market with a 65 per cent share.
Sales — segment-wise share (2008–09) (per cent)
Sources: ―Indian Electronics industry – overview,‖
Electronic Industries Association of India website,
www.elcina.com, Indian Electronics industry –
overview; www.mit.gov.in
MARKET OVERVIEW
28
2714
14
10
7
Communication and Broadcasting sector
Consumer electronics
Computer industry
Control Instrumentation and Industrial sector
Electronic Components
Strategic Electronics
Electronics November 2010
7
Sources: ―Indian Electronics industry – overview,‖ Electronic Industries Association of India website, www.elcina.com, Indian Electronics
industry – overview; www.mit.gov.in
Market overview … (3/4)
Production growth rate per segment (CAGR 2005–10) (per cent)
MARKET OVERVIEW
12.4
10.4
10.4
45.6
18.4
8.7
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0%
Consumer electronics
Control instrumention & industrial sector
Computer industry
Communication and broadcast sector
Strategic electronics
Electronic components
During 2005–10, communications and broadcast has witnessed the highest growth.
Electronics November 2010
8
10.52 11.79
13.75
17.59
20.26
22.90
-
5.00
10.00
15.00
20.00
25.00
2004-05 2005-06 2006-07 2007-08 2008-09 2009-2010
Source: Department of Information Technology (DIT) 2009–10 annual report.
The market has witnessed consistent growth over the past years.
Market overview … (4/4)
Electronics industry production
CAGR:
17%
(in U
S$ b
illio
n)
MARKET OVERVIEW
Electronics November 2010
9
39
34
14
85 Communication and
broadcast sector
Electronic components
Control instrumention & industrial sector
Consumer electronics
Computer industry
1.67
6.51
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
2004-05 2009-10
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.
Source: Department of Information Technology (DIT) 2009–10 annual report.
CAGR
31%
(in U
S$ b
illio
n)
Electronics industry exports Segment-wise exports (2008–09) (per cent)
MARKET OVERVIEW
Electronics November 2010
10
Bharat Electronics Ltd
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
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.
Videocon
International Ltd
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
electronic products. Videocon is now a global player and the first Indian company to win the
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.
LG Electronics India
Limited
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
recognised as a leading technology innovator in the IT and mobile communications business.
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.
MARKET OVERVIEW
Key players … (1/3)
Electronics November 2010
11
HCL Infosystems Ltd
HCL Infosystems Ltd manufactures and markets PCs, PC servers, storage solutions and display
products, among other electronic products. HCL’s computer hardware manufacturing plants
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
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,
home appliances, IT and telecom products in the country. Samsung India has set up
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
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
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.
MARKET OVERVIEW
Key players … (2/3)
Electronics November 2010
12
Jabil
• 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 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
• Flextronics ventured into India in 2001.
• The company offers high-value, high-margin design services for mobile phones and telecom/networking software.
• Flextronics has a 692,457 sq ft manufacturing facility in Chennai.
Elcoteq
• Inaugurated in 2005, Elcoteq Bengaluru’s main businesses in India include wireless
communication terminal products, wireless communications, network equipment and after-
sales services.
• The Bengaluru plant is one of Elcoteq’s four volume manufacturing plants in the Asia-Pacific
region and the first in India.
• The company’s plant (100,000 sq ft) in Bengaluru is equipped with the latest manufacturing
technologies, including surface mount technology (SMT), testing and electrostatic discharge
(ESD) control to support its modernised manufacturing process.
MARKET OVERVIEW
Key players … (3/3)
Electronics November 2010
13
Contents
Advantage India
Market overview
Industry Infrastructure
Investments
Policy and regulatory framework
Opportunities
Industry associations
ELECTRONICS November 2010
14
Industry infrastructure — SEZs … (1/4)
Developer Type Size in hectares
Andhra Pradesh Industrial Infrastructure Corporation Ltd (APIIC) Electronic hardware 111.00
Stargaze Properties Private Ltd (Andhra Pradesh) Electronic hardware, IT/ITeS 68.96
S2tech.com India Private Ltd (Andhra Pradesh) Electronic hardware, IT/ITeS 10.12
Chandigarh administration Electronic hardware, IT/ITeS 31.49
Gujarat Industrial Development Corporation (GIDC) Electronic products 28.00
Mexus Corporation private Ltd (Gujarat) Electronic hardware, IT/ITeS 11.11
Ireo Investment Holding III Ltd (Haryana) Electronic hardware, IT/ITeS 40.00
GP Realtors Pvt Ltd Phase II (Haryana) Electronic hardware, IT/ITeS 11.03
GP Realtors Pvt Ltd Phase III (Haryana) Electronic hardware, IT/ITeS 17.18
Sohna Buildcon Private Ltd (Haryana) Electronic hardware, IT/ITeS 10.00
Wellgrow Buildcon Private Ltd (Haryana) Electronic hardware, IT/ITeS 24.29
Progressive Buildestate Private Ltd (Haryana) Electronic hardware, IT/ITeS 34.41
INDUSTRY INFRASTRUCTURE
Note: This is an indicative list.
Electronics November 2010
15
Industry infrastructure — SEZs … (2/4)
Developer Type Size in hectares
Mikado Realtors Private Ltd (Haryana) Electronic hardware, IT/ITeS 11.02
Ittina Properties Private Ltd (Karnataka) Electronic hardware, IT/ITeS 15.73
Opto Circuits India Ltd (Karnataka) Electronic hardware park 12.23
Opto Infrastructure Ltd (Karnataka) Electronic hardware, IT/ITeS 100.00
Karnataka State Electronics Development Corporation Ltd(KEONICS) Electronic hardware, IT/ITeS 14.5
Gopalan E-Park Electronic hardware, IT/ITeS 11.35
Kerala Industrial Infrastructure Development Corporation (Kerala) Electronic industries 12.14
Magarpatta Township Development and Construction Co Ltd (Maharashtra) Electronic hardware, IT/ITeS 11.98
Kumar Builders Township Ventures Private Ltd (Maharashtra) Electronic hardware, IT/ITeS 49.10
City Parks Private Ltd (Maharashtra) Electronic hardware, IT/ITeS 30.00
Siddhivinayak Knowledge City Developers Private Ltd (Maharashtra) Electronic hardware, IT/ITeS 12.14
Pride Infrastructure & SEZ private Ltd (Maharashtra) Electronic hardware, IT/ITeS 12.34
INDUSTRY INFRASTRUCTURE
Note: This is an indicative list.
Electronics November 2010
16
Industry infrastructure — SEZs … (3/4)
Developer Type Size in hectares
Modern India Property Developers Ltd (Maharashtra) Electronic hardware, IT/ITeS 14.77
Benchmark Realty Private Ltd (Maharashtra) Electronic hardware, IT/ITeS 10.0
Lark Projects Private Ltd (Punjab) Electronic hardware, IT/ITeS 10.9
Somani Worsted Ltd (Rajasthan) Electronic hardware, IT/ITeS 20.0
Flextronics Technology India Private Ltd (Tamil Nadu) Electronic hardware and related services 101.0
Arun Excello IT SEZ Private Ltd (Tamil Nadu) Electronic hardware, IT/ITeS 10.9
State Industries Promotion Corporation of Tamil Nadu Ltd Electronics hardware 140.7
Foxconn India Developers Ltd (Tamil Nadu) Electronic hardware 11.0
Coimbatore Hi-tech Infrastructure Private Ltd (Tamil Nadu) Electronic hardware, IT/ITeS 60.7
KPR Developers (Tamil Nadu) Electronic hardware, IT/ITeS 20.5
True Developers Private Ltd (Tamil Nadu) Electronic hardware, IT/ITeS 11.6
Best and Crompton Engineering Ltd (Tamil Nadu) Electronic hardware, IT/ITeS 10.8
Note: This is an indicative list.
INDUSTRY INFRASTRUCTURE
Electronics November 2010
17
634
34
4
22
IT/ITES/Electronics Hardware/Semiconductors
Pharma
Textile
Multi Product
Biotech
Others
Industry infrastructure — SEZs … (4/4)
Developer Type Size in
hectares
Hall Marc Techno Park
Private Ltd (Tamil Nadu)
Electronic
hardware, IT/ITeS11.6
Uppals IT Projects Private
Ltd (Uttar Pradesh)
Electronic
hardware, IT/ITeS30.8
Uppal Housing Ltd
(Hyderabad, Andhra
Pradesh)
Electronic
hardware, IT/ITeS10.5
Sarv-Mangal Realtech
Private Ltd (Noida, Uttar
Pradesh)
Electronic
hardware, IT/ITeS10.0
Oval Developers Private
Ltd (West Bengal)
Electronic
hardware, IT/ITeS12.1
Videocon Realty and
Infrastructure
Development Private Ltd
(West Bengal)
Electronic
hardware, IT/ITeS10.0
Note: According to SEZ Act, 2005.
Source: www.sezindia.nic.in
SEZs — sector composition (2009–10) (per cent)
INDUSTRY INFRASTRUCTURE
Note: This is an indicative list.
Electronics November 2010
18
Contents
Advantage India
Market overview
Industry Infrastructure
Investments
Policy and regulatory framework
Opportunities
Industry associations
ELECTRONICS November 2010
19
Investment … (1/2)
Cumulative FDI inflows
April 2000 to August 2010
SectorAmount of FDI
(US$ million)
Electronics 826.1
Computer software
and hardware10,330.5
Source: ―Fact Sheet – August 2010 on Foreign Direct Investment (FDI),‖ Department of Industrial Policy and Promotion website, www.dipp.nic.in,
accessed on 28 November 2010
Foreign technology transfers (FTTs)
August 1991 to December 2009
SectorNumber
Total number of FTTs 8,106
Electrical equipment, including
computer software and electronics1,263
INVESTMENTS
Electronics November 2010
20
Key deals (2010)
Deal date Target name AcquirerDeal value (US$
million)
September 28, 2010 Tyco Electronics Ltd-Energy Business Raychem RPG Ltd NA
September 21, 2010 Citigroup Inc-Datacenter Buederich Wipro Technologies NA
August 26, 2010 Venture Infotek Global Pvt Ltd Atos Origin SA NA
September 20, 2010 Micromax Informatics Ltd Investor Group 43.8
October 14, 2010 A Little World Pvt Ltd SBI 18.1
July 9, 2010 In2Soft GmbH KPIT Cummins Infosystems Ltd 3.8
October 18, 2010 El Corp Ltd Yam Keong Chee 1.0
June 30, 2010 MMG India Pvt Ltd Delta Magnets Ltd NA
April 12, 2010 Dynamic Test Solutions Inc Tessolve Services Pvt Ltd NA
March 5, 2010 Undisclosed Electronic Security Co Schneider Electric India Pvt Ltd NA
March 1, 2010Zicom Electronic Security Systems Ltd-
Electronic Security SystemSchneider Electric SA 48.89
February 24, 2010Home Solutions Retail(India) Ltd-
Consumer Durable,Furniture BusinessPantaloon Retail(India)Ltd NA
February 24, 2010 Wavetel Mobiles Sangeetha Mobiles Pvt Ltd 2.81
February 22, 2010 TexTech International Pvt Ltd Jouve 5.41
February 17, 2010 SEI Cable Accessories(India)P vt Ltd Sumitomo Electric Industries Ltd 0.13
January 21, 2010 MIC Electronics Ltd Investor Group NA
January 21, 2010 Global Access Spice Retail Ltd NA
January 13, 2010 BA Systems India Private Ltd OneAccess Networks SA NA
January 12, 2010 Micromax Informatics Ltd TA Associates Inc 45.00
Source: Thomson ONE Banker
Investment … (2/2)
Electronics November 2010
INVESTMENTS
21
Contents
Advantage India
Market overview
Industry Infrastructure
Investments
Policy and regulatory framework
Opportunities
Industry associations
ELECTRONICS November 2010
22
Policy and regulatory framework
Key policy initiatives
• There is no customs duty on ITA-1 items (217 items).
• Excise duty on computers has been removed. Microprocessors, hard disc drives, floppy disc drives and CD ROM drives are exempt from excise duty.
• Foreign equity participation of upto100 per cent is permissible.
• The GoI has decided to set up Information Technology Investment Regions (ITIRs) to provide superior infrastructure support.
• Units undertaking the export of their complete range of goods and services may be set up under the EHTP scheme.
Source: Indian Electronics industry – overview; www.mit.gov.in
ITA-1: Information Technology Agreement
POLICY AND REGULATORY FRAMEWORK
Electronics November 2010
23
Contents
Advantage India
Market overview
Industry Infrastructure
Investments
Policy and regulatory framework
Opportunities
Industry associations
ELECTRONICS November 2010
24
Opportunities … (1/2)
OPPORTUNITIES
Source: Department of Information Technology (DIT) 2009–10 annual report; EY Research
Projected growth in
domestic
consumption
E-governance
GoI investments
Electronics November 2010
• Domestic consumption is expected to grow at a CAGR of 22 per cent for the period 2009–2020.
On the other hand, domestic production comprises less than 45 per cent of the total consumption.
Thus, domestic manufacturing companies have the opportunity to expand the production to US$
100 billion by 2014 and US$ 400 billion by 2020, and in return significantly increase the contribution
to GDP by 2020.
• Electronics facilitates e-governance, developmental schemes and initiatives launched by the
government, such as Sarva Shiksha Abhiyaan (SSA), Restructured-Accelerated Power Development
and Reform Programme (R-APDRP) and Mahatma Gandhi Rural Employment Guarantee Act
(MGREGA).
• The GoI has proposed a minimum investment of US$ 555 million for semiconductor manufacturing
plants and US$ 222 million for ecosystem units. This is considered a major step toward attracting
foreign companies to set up manufacturing facilities in India. The policy covers wafer fabs and
ecosystem units such as LCDs, storage devices, plasmas, photovoltaics, solar cells and
nanotechnology products, and also includes the assembly and testing of such products.
25
Opportunities … (2/2)
OPPORTUNITIES
Source: Department of Information Technology (DIT) 2009–10 annual report; EY Research
Electronic
components
Low penetration in
consumer durables
Electronics November 2010
• With growth engines such as strong demand, availability of skilled labor and increase in GoI spending
in related verticals, electronic component segment production is expected to reach US$ 2.6 billion
in 2014 and US$ 3.4 billion in 2020.
• Low penetration levels in most consumer durables provides an opportunity to manufacturers to
increase demand by reaching for untapped market . According to the National Council for Applied
Economic Research (NCAER), in 2008 penetration levels for white goods stood at 31.9%,
refrigerators at 16.1%, PCs at 0.08% and colour TVs at 21.3%.
26
Contents
Advantage India
Market overview
Industry Infrastructure
Investments
Policy and regulatory framework
Opportunities
Industry associations
ELECTRONICS November 2010
27
Industry associationsElectronics 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
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/
INDUSTRY ASSOCIATIONS
Electronics November 2010
28
Note
Wherever applicable, numbers in the report have been rounded off to the nearest whole number.
Conversion rate used: US$ 1= INR 48.
NOTE
Electronics November 2010
29
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ELECTRONICS November 2010