ELECTRONIC SYSTEMS

  • Expand all
SUMMARY
  • The Electronics System Design & Manufacturing (ESDM) industry includes electronic hardware products and components relating to information technology (IT), office automation, telecom, consumer electronics, aviation, aerospace, defense, solar photovoltaic, nano electronics and medical electronics. The industry also includes design-related activities such as product designing, chip designing, Very Large-Scale Integration (VLSI), board designing and embedded systems.
  • The Indian electronics market is one of the largest in the world and is expected to value $400 Bn in 2020.1
  • India’s digital base is the second largest in the world and is growing at the second-fastest rate among the 17 leading economies.2
  • The Digital India Program has been transforming the Country into a digitally empowered society and knowledge economy since its launch in July 2015.3
  • India is the third biggest start-up hub in the world.4 In 2018 alone, 1200 new tech start-ups were added.5
REASONS TO INVEST
  • India is home to considerable talent for electronic chip design and embedded software.
  • Electronic Manufacturing Services (EMS) industry is expected to be a significant contributor to the entire industry’s development.
  • India has strong design and R&D capabilities in auto electronics and industrial economics.
  • The Government is promoting the development of Electronics Manufacturing Clusters (EMCs) throughout the Country to provide world-class infrastructure and facilities.
  • India’s mobile gaming market is expected to be worth $1.1 Bn by 2020 and the number of users is projected to reach $628 Mn by 2020.6
  • Major Government initiatives such as ‘Digital India’, ‘Make in India’ and supportive policies including favourable FDI Policy for electronics manufacturing have simplified the process of setting up manufacturing units in India.
  • India is the second fastest digitizing economy amongst the 17 leading economies of the world.7
  • The domestic demand for electronic goods is rising. This coupled with rising disposable income levels provides a huge market for electronic goods.
  • There is a huge demand for electronic goods in the Middle-Eastern countries and in emerging markets such as North Africa and Latin America. This provides an export market for ‘Made in India’ electronic goods.
STATISTICS
  • The FDI inflows in electronics in India for 2018-19 were valued at $451.9 Mn8 compared to $196.9 Mn in 2017-18.9
  • India currently has 560 mn internet subscribers and 354 mn smartphone devices (February 2019).10
  • The Indian smartphone market has witnessed the fastest growth among major markets (such as China and US), growing by 10% in 2018.11
  • India holds second place in the global handsets market (feature phones and smartphones) which is projected to grow to 302 mn handsets in 2019.12
  • The mobile-gaming industry in India is one of the top five in the world and is already worth $890 Mn13 (as of February 2017).
  • The Internet of Things (IoT) market in India is expected to be worth $15 Bn by 2020, accounting for nearly 5% of the global market.14
  • Expected market size for major electronics sub-sectors in India by 2020:
    • Telecom equipment - $34 Bn
    • Laptops, desktops, tablets - $34 Bn
    • LED - $35 Bn
    • Consumer electronics - $29 Bn
    • Set-top boxes - $10 Bn
    • Automotive electronics - $10 Bn
    • Medical electronics – $8.5 Bn
FDI POLICY
  • 100% Foreign Direct Investment (FDI) is allowed under the Automatic Route in the ESDM industry.15
  • For defence electronics, up to 100% FDI is allowed, subject to industrial license. Under the Automatic Route, up to 49% FDI is allowed. Above 49% is allowed under the Government Route on a case to case basis, wherever it is expected to result in access to modern and ’state-of-the-art’ technology in the country.16
  • The Government allows 100% FDI in the medical devices via the Automatic Route. Investors are no longer required to take the Foreign Investment Promotion Board’s permission to acquire an existing company or set up a new manufacturing unit in the medical devices sector. The investor, however, will need to comply with the reporting requirements of the Reserve Bank of India (RBI) and comply with all other relevant Central and State laws and regulations.17
SECTOR POLICY

National Policy on Electronics 

The National Policy on Electronics (NPE) 2019 envisions to position India as a global hub for ESDM by encouraging and driving capabilities in the Country for developing core components, including chipsets and by creating an enabling environment for the industry to compete globally.

The NPE 2019 replaces the NPE 2012, which has successfully built the foundation for a competitive Indian ESDM value chain. The NPE 2019 targets to promote domestic manufacturing and export in the entire value chain of ESDM and achieve a turnover of $400 Bn by 2025.18 

For more details on the NPE 2019, please refer to NPE 2019.

FINANCIAL SUPPORT

Modified Special Incentive Package Scheme (M-SIPS) 

THE M-SIP Scheme, launched in 2012, provides capital subsidy of 25% for electronics industry located outside of Special Economic Zones (SEZs). Electronics industry located inside SEZs are provided 20% subsidy.19 

Under M-SIPS, 419 investment proposals involving investment worth $16.2 Bn have been received till 31 December 2018. Out of these, 197 applications with proposed investments of approximately $ 6 Bn have been approved, of which 134 have already started commercial production. These units have reported total sales of $10 Bn, of which goods worth $2.3 Bn have been exported. The revenue paid by these companies to the Government stands at around $1.3 Bn.20 These companies are also generating direct and indirect employment.

19 applications under M-SIPS with proposed investment of around $2.1 Bn have been recommended by the Appraisal Committee for approval. 203 applications with proposed investment of around $8 Bn are still under appraisal.21

Electronics Development Fund (EDF) 

This Scheme helps promote start-ups and innovation. The EDF is a fund of funds that invests in venture funds, which in turn invest in innovation ventures/ start-ups in electronics, nano-electronics and IT. The EDF will be investing in 13 daughter funds. The total targeted collection of these 13 daughter funds is $994.1 Mn, of which $122.6 Mn is being provided by the EDF.22

Electronics Manufacturing Clusters (EMC)

The Scheme, launched in 2012, encourages entities including State Government entities to provide good quality infrastructure within a cluster.

Under the Scheme, 50% of the project cost for greenfield EMC and 75% for brownfield EMC is given as grant. As of February 2019, 20 greenfield and 3 brownfield EMC projects have been sanctioned with the project investment outlay of $557.6 Mn. Out of this, the Government of India is providing $225.6 Mn as Grant-in-aid.

Electronic Manufacturing Clusters, spread over 1,442.7 ha. of land, are being developed. The likely investment by manufacturers for the Project stands at $7.8 Bn.23

Export Incentives

Export incentives of 2-3% are available under the Merchandise Export from India Scheme (MEIS). Products such as air conditioning parts and compressors, refrigerating equipment compressors, fully automatic washing machines, colour televisions, and set top boxes for accessing files are included in the list of products that get export incentives.

State Incentives 

Apart from the incentives mentioned above, India offers additional incentives for industrial projects, while some states offer separate incentives for the industry.

  • ELECTRONICS POLICY FOR THE STATE OF GUJARAT (2016-21)
    • The Government of Gujarat provides assistance of up to 25% of the project cost to greenfield EMCs, subject to a ceiling of $1.43 Mn.
    • The Government also offers a special incentive package for two anchor units (with investment of more than $ 14.3 Mn) in each of the greenfield EMCs.
  • ELECTRONICS, IT AND ITES INVESTMENT POLICY OF CHHATTISGARH
    • Electronics, IT and ITES units are entitled to an interest subsidy up to 75% of the total interest paid annually up to the period of 8 years with a maximum limit of $158,746.5 per annum. The subsidy is on a reimbursement basis.
    • Units established in the State shall be reimbursed 50% of the fixed capital investment, excluding the cost of the land, with a maximum limit of $216,473.6.

SUPPORT FOR INTERNATIONAL PATENT PROTECTION IN E&IT

To encourage filing of international patents, a scheme to Support International Patent Protection in Electronics & IT (SIP-EIT) has been commissioned. The Scheme provides financial support to Small and Medium Enterprises (SMEs) and tech start-ups by supporting international patent protection in electronics and IT.

Reimbursement is limited to a total of around $21,650 per invention or 50% of the total expenses incurred in filing and processing of patent application up to Grant, whichever is lesser.24

Key Points in Union Budget 2019-20

  • Ministry of Electronics and Information Technology has been allocated $951.8 Mn.25
  • Out of the 951.8 mn budget allocation, the revenue expenditure allocation is $902 Mn and capital expenditure budget is $49.8 Mn.26
  • The total budget allocation towards the Digital India Program is $536.5 Mn.27
INVESTMENT OPPORTUNITIES
  • Mobile phone manufacturing28
  • Semi-conductor wafer fabrication manufacturing29
  • Light Emitting Diode (LED) manufacturing30
  • Wearable devices manufacturing31
  • Solar cells and modules manufacturing32
  • LED and Liquid Crystal Display (LCD) manufacturing33
  • Research, innovation and skill development support in emerging technology areas such as Augmented Reality (AR), Virtual Reality (VR), drones, robotics, additive manufacturing, etc34
  • Medical electronic devices manufacturing35
  • Research and development of automotive electronics and power electronics for mobility36
FOREIGN INVESTORS
  • Qualcomm (US)
  • Samsung (South Korea)
  • LG (South Korea)
  • GE (USA)
  • Bosch (Germany)
  • Amphenol (US)
  • Motherson Sumi system (Japan)
  • Nidec (Japan)
  • Magneti Marelli (Italy)
  • Continental (Germany)
  • Delphi (USA)
  • Mando Hella (South Korea)
  • Mitsubishi (Japan)
  • Harman (USA)
  • Perto (Brazil)
  • Giesecke and Deverient (Germany)
  • Haier (China)
  • Philips (Netherland)
  • Panasonic (Japan)
  • Huawei (China)
SOURCES
  1. “Ministry of Finance”, The Union Finance Minister holds Pre-Budget Consultative Meeting with the Representatives of IT Industry, http://pib.nic.in/newsite/erelcontent.aspx?relid=155267, accessed on 31 May 2019
  2. “Ministry of Electronics and Information Technology”, Report on India’s Trillion Dollar Digital Opportunity Released, http://pib.nic.in/PressReleaseIframePage.aspx?PRID=1565669, accessed on 31 May 2019
  3. “Ministry of Electronics and IT”, Report on India’s Trillion Dollar Digital Opportunity Released, http://pib.nic.in/PressReleaseIframePage.aspx?PRID=1565669, accessed on 31 May 2019
  4. “NASSCOM”, Indian Tech Start-up Ecosystem, https://www.nasscom.in/knowledge-center/publications/indian-tech-start-ecosystem-2018-approaching-escape-velocity, accessed on 31 May 2019
  5. “NASSCOM”, Indian Tech Start-up Ecosystem, https://www.nasscom.in/knowledge-center/publications/indian-tech-start-ecosystem-2018-approaching-escape-velocity, accessed on 31 May 2019
  6.  “Forbes”, How Digital Gaming in India is Growing Up Into a Billion-Dollar Market, https://www.forbes.com/sites/suparnadutt/2018/03/09/how-online-gaming-in-india-is-growing-fast-into-a-billion-dollar-market/#4105c66355b6, accessed on 31 May 2019
  7. “Ministry of Electronics and IT”, Report on India’s Trillion Dollar Digital Opportunity Released, http://pib.nic.in/PressReleaseIframePage.aspx?PRID=1565669, accessed on 31 May 2019
  8. “Department for Promotion of Industry and Internal Trade”, FDI Fact Sheet, https://dipp.gov.in/publications/fdi-statistics, accessed on 31 May 2019
  9. “Department for Promotion of Industry and Internal Trade”, FDI Fact Sheet, https://dipp.gov.in/publications/fdi-statistics, accessed on 31 May 2019
  10. “Ministry of Electronics and IT”, Report on India’s Trillion Dollar Digital Opportunity Released, http://pib.nic.in/PressReleaseIframePage.aspx?PRID=1565669, accessed on 31 May 2019

  11. “Business Standard”, India smartphone mkt grows fastest among major peers at 10% in 2018: Study, https://www.business-standard.com/article/pti-stories/india-smartphone-mkt-expands-10-in-2018-fastest-among-major-mkts-counterpoint-119012501320_1.html, accessed on 31 May 2019

  12. “Business Standard”, India’s handset industry may go past the 300-mn unit mark in 2019, https://www.business-standard.com/article/companies/india-s-handset-industry-may-go-past-the-300-mn-unit-mark-in-2019-119010401162_1.html, accessed on 31 May 2019

  13. “Forbes”, How Digital Gaming in India is Growing Up Into A Billion-Dollar Market, https://www.forbes.com/sites/suparnadutt/2018/03/09/how-online-gaming-in-india-is-growing-fast-into-a-billion-dollar-market/#4105c66355b6, accessed on 31 May 2019

  14. “NASSCOM”, IoT in India, The Next Big Wave, https://www.nasscom.in/knowledge-center/publications/iot-india-next-big-wave, accessed on 31 May 2019

  15. “Ministry of Electronics and Information Technology”, FAQs on Foreign Direct Investment & Electronic System Design & Manufacturing (ESDM), https://meity.gov.in/writereaddata/files/FAQ_FDI_ESDM.pdf, accessed on 1 June 2019

  16. “Ministry of Electronics and Information Technology”, FAQs on Foreign Direct Investment & Electronic System Design & Manufacturing (ESDM), https://meity.gov.in/writereaddata/files/FAQ_FDI_ESDM.pdf, accessed on 1 June 2019

  17. “Ministry of Electronics and Information Technology”, FAQs on Foreign Direct Investment & Electronic System Design & Manufacturing (ESDM), https://meity.gov.in/writereaddata/files/FAQ_FDI_ESDM.pdf, accessed on 1 June 2019

  18. “Cabinet”, Cabinet approves the proposal of National Policy on Electronics 2019, http://pib.nic.in/PressReleaseIframePage.aspx?PRID=1565285, accessed on 1 June 2019

  19. “Ministry of Electronics and Information Technology”, National Policy on Electronics 2019, https://www.meity.gov.in/writereaddata/files/eGazette_Notification_NPE%202019_dated%2025022019.pdf, accessed on 1 June 2019

  20. “Ministry of Electronics and Information Technology”, National Policy on Electronics 2019, https://www.meity.gov.in/writereaddata/files/eGazette_Notification_NPE%202019_dated%2025022019.pdf, accessed on 1 June 2019

  21. “Ministry of Electronics and Information Technology”, National Policy on Electronics 2019, https://www.meity.gov.in/writereaddata/files/eGazette_Notification_NPE%202019_dated%2025022019.pdf, accessed on 1 June 2019

  22. “Ministry of Electronics and Information Technology”, National Policy on Electronics 2019, https://www.meity.gov.in/writereaddata/files/eGazette_Notification_NPE%202019_dated%2025022019.pdf, accessed on 1 June 2019

  23. “Ministry of Electronics and Information Technology”, National Policy on Electronics 2019, https://www.meity.gov.in/writereaddata/files/eGazette_Notification_NPE%202019_dated%2025022019.pdf, accessed on 1 June 2019

  24. “Ministry of Electronics and Information Technology”, Support for International Patent Protection in Electronics and Information Technology, http://www.ict-ipr.in/sipeit/SIPEITForm, accessed on 1 June 2019

  25. “India Budget”, Ministry of Electronics and Information Technology, https://www.indiabudget.gov.in/doc/eb/sbe24.pdf, accessed on 04 September 2019

  26. “India Budget”, Ministry of Electronics and Information Technology, https://www.indiabudget.gov.in/doc/eb/sbe24.pdf, accessed on 04 September 2019

  27. “India Budget”, Ministry of Electronics and Information Technology, https://www.indiabudget.gov.in/doc/eb/sbe24.pdf, accessed on 04 September 2019

  28. “Government of Gujarat”, Electronic System Design & Manufacturing (ESDM) – Sector Profile, https://cdn.vibrantgujarat.com/website/writereaddata/images/pdf/VG2019_ESDM_Sector_Profile.pdf, accessed on 1 June 2019

  29. “Government of Gujarat”, Electronic System Design & Manufacturing (ESDM) – Sector Profile, https://cdn.vibrantgujarat.com/website/writereaddata/images/pdf/VG2019_ESDM_Sector_Profile.pdf, accessed on 1 June 2019

  30. “Government of Gujarat”, Electronic System Design & Manufacturing (ESDM) – Sector Profile, https://cdn.vibrantgujarat.com/website/writereaddata/images/pdf/VG2019_ESDM_Sector_Profile.pdf, accessed on 1 June 2019

  31. “Government of Gujarat”, Electronic System Design & Manufacturing (ESDM) – Sector Profile, https://cdn.vibrantgujarat.com/website/writereaddata/images/pdf/VG2019_ESDM_Sector_Profile.pdf, accessed on 1 June 2019

  32. “Government of Gujarat”, Electronic System Design & Manufacturing (ESDM) – Sector Profile, https://cdn.vibrantgujarat.com/website/writereaddata/images/pdf/VG2019_ESDM_Sector_Profile.pdf, accessed on 1 June 2019

  33. “Ministry of Electronics and Information Technology”, National Policy on Electronics 2019, https://www.meity.gov.in/writereaddata/files/eGazette_Notification_NPE%202019_dated%2025022019.pdf, accessed on 1 June 2019

  34. “Ministry of Electronics and Information Technology”, National Policy on Electronics 2019, https://www.meity.gov.in/writereaddata/files/eGazette_Notification_NPE%202019_dated%2025022019.pdf, accessed on 1 June 2019

  35. “Ministry of Electronics and Information Technology”, National Policy on Electronics 2019, https://www.meity.gov.in/writereaddata/files/eGazette_Notification_NPE%202019_dated%2025022019.pdf, accessed on 1 June 2019

  36. “Ministry of Electronics and Information Technology”, National Policy on Electronics 2019, https://www.meity.gov.in/writereaddata/files/eGazette_Notification_NPE%202019_dated%2025022019.pdf, accessed on 1 June 2019

 

 

 

 

 

 


 

  • Print

Related Posts:
Load more