According to research by MarketsAndMarkets, the Indian semiconductor market’s worth is forecast at USD 32.35 Bn by 2025 — growing at a CAGR of 10.1 percent between 2018 and 2025. India is currently developing an electronics system design manufacturing (ESDM) industry, with a base of more than 120 units. About 2,000 chips are designed every year in India, per the Department of Electronics and Information Technology (DeitY), with more than 20,000 engineers working on different aspects of chip design and verification.
With the launch of Make in India, a government initiative for job creation and skill enhancement in 25 sectors of the economy, the ESDM industry is expected to benefit with investment proposals worth Rs 10,000 crore (USD 1.5 Bn) within the next couple of years.
The Indian government, in collaboration with the semiconductor sector, has increased its support of the ESDM industry. Initiatives outlined in the National Electronics policy and the National Telecom policy are now in the process of completion, including the Electronics Manufacturing Clusters (EMC), Preferential Market Access (PMA), and Modified Special Incentive Package Scheme (M-SIPS).
The government recently announced several subsidies and incentives for establishing electronics manufacturing companies in India. The goal is to achieve a higher degree of self-sufficiency in electronics in the country. According to one survey, the ESDM market is expected to grow from USD 76 Bn in 2013 to USD 400 Bn by 2020. The semiconductor market is also expected to grow, which means there will be a need to fill this manufacturing gap in the electronics arena.
The Indian government has granted 100 percent Foreign Direct Investment (FDI) as part of the automatic route in the ESDM sector. The FDI in electronic manufacturing reached an all-time high of Rs 1,23,000 crore (USD 18.34 Bn) in 2016 from about Rs 11,000 crore (USD 1.64 Bn) in 2014.
Additionally, India has signed an MoU with Singapore Semiconductor Industry Association (SSIA) to develop trade and technical collaboration between the two country’s electronics and semiconductor industries.
Companies are now recognizing the potential of the sector in India and investing heavily in manufacturing. For example, Panasonic Corporation is incorporating a new plant in Haryana, which will produce refrigerators and build a research and development (R&D) center for appliances for the Indian market.
Numerous reports indicate that India is an ideal location for global R&D centers because of the skilled yet low-cost workforce compared to that found in the U.S. and Western European countries. India ranks third, globally, for its abundance of scientists and technicians.
Bangalore is quickly emerging as a hub for innovating start-ups in the semiconductor arena. The government’s initiatives are supporting access to funds, training, and partnerships — including domestic and international market networks.
The state government of Karnataka is also working with the India Electronics and Semiconductor Association (IESA) to develop an ecosystem that fully supports the ESDM sector and semiconductor manufacturing throughout India.
Additionally, the Indian government is developing “electronics manufacturing clusters” throughout the country to offer world-class infrastructure and facilities. For example, it has received applications from two consortia (Jaypee Group, IBM, TowerJazz and ST Microelectronics, HSMC) to establish a couple of semiconductor wafer fabrication units in Gujarat and Noida. The goal is to operate a 20-nm process node within two years of preliminary operations, reaching a capacity of at least 40,000 WSPM at a minimum of 300 mm.
The growth of digitalization and rising disposable incomes in India are spurring consumer demand for electronics — and the need for local electronic production capacities. However, nearly 75 percent of consumer demand is met through imports.
India is strongly dependent on importing electronics hardware. The country’s total electronics hardware production in 2014-15 was about USD 32.46 Bn, with domestic consumption at about USD 63.6 Bn, which means 58 percent of the feeding was completed with imports.
According to Assocham-NEC 2017, the increased demand for electronics is expected to leave the domestic production stagnant, which means an increase in imports of about USD 300 Bn by 2020. The need for electronic products in India is expected to reach USD 400 billion, growing at a CAGR of 41 percent by the year 2020. Domestic production is developing at a CAGR of 27 percent.
However, thanks to government subsidies and the manufacturing capabilities in India, the country has the potential to achieve a large degree of self-sufficiency in electronics.
Filed Under: Blog entry, Featured, Tech Articles