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Fact Sheet of ESDM Industry

India's Strength in this Sector/ reasons to invest

• Huge ESDM market - demand projected at $94.2 billion by 2015.

• Good demand generated due to government schemes - National Knowledge Network (NKN), National Optical Fiber Network (NOFN), tablets for education sector, digitization policy, schemes for broadband etc.

• Adequately developed electronic manufacturing services (EMS) industry - to be a significant contributor to ecosystem development

•  India has the third largest scientific and technical manpower in the world; Economic talent available in semiconductor design and embedded software; Strong design and R&D capability in select product lines like auto electronics and industrial electronics

 

Basic Facts of the Sector (Statistics)

• The Indian ESDM industry was estimated to be $68.31 billion in 2012; anticipated to be $94.2 billion by 2015; CGAR of 9.68% between 2011 and 2015

• ESDM industry in India comprises the four key components: Electronics Products; Electronic Components; Semiconductor Design and Electronics Manufacturing Services (EMS).

•  Top 10 electronic products contributing about 70% by total revenue - Mobile Phones; Flat Panel TVs; Notebooks; Desktops; Digital Camera; Inverters and UPS; Memory Cards & USB Drivers; 4W EMS; LCD Monitors and Servers

 

Growth Drivers

• Significant local demand; Rising manufacturing costs in alternate markets

• 65 percent of the current demand for electronics product is met by imports

• Government polices - Modified Special Incentive Package Scheme (MSIPS) (USD 13.4 bin investment proposal till March 2014), Electronics Manufacturing Cluster Scheme (EMC), Skills Development Scheme

• Export potential - huge consumption market in Middle East; emerging growth markets of North Africa and Latin America

• Existing R&D capabilities can be encouraged to developed 'Made in India' products and generate local IP

• information Technology Investment Regions (ITIR) notified

• Karnataka (42.5 sq.km; near Bengaluru; USD 17.6 bn investment)

• Andhra Pradesh (202 sq. km near Hyderabad; USD 36.4 bn investment)

• Greenfield Electronics Manufacturing Clusters (EMC) are being established across the country by GMR (near Bangalore); Andhra Pradesh Government (2 numbers near Hyderabad); Electronics Industries Association (near Delhi); Madhya Pradesh State Electronics Development Corporation (Bhopal and Jabalpur); Kerala Industrial Infrastructure Development Corporation (near Kochi)

• 35 Brownfield EMCs renamed as Notified EMCs for MSIPS.

• Semiconductor Wafer Fabrication (FAB) facilities being set up in India in Uttar Pradesh and Gujarat; total investment USD 10.5 bn.

• Venture funds, with focus on electronics, planned including Electronics Development Fund; Walden India Fund; KITVEN Fund; SIDBI Fund

•  Electronics Sector Skills Council and Telecom Sector Skills Council set up for establishing an effective and efficient ecosystems for development and imparting of outcome oriented skills for ESDM sector; Skill Development Scheme-90,000 persons are to be supported under the scheme in 6 States/UTs in 5 level of courses

 

•  A scheme to enhance the number of PhDs in Electronics sector to 1500 per annum by 2017-18

 

•  Compulsory Registration of Electronic goods: The mandatory requirement of meeting safety standards for 15 set of electronic products with more products getting included in the list

 

•  Four Incubators to be set up for start-ups in Electronics.

 

•  A new National Centre of Excellence in Large Area Electronics, a joint initiative of industry and academia, to focus on research on problems of the industry in areas like flexible electronics, print electronics, LEDs, etc.

 

•  International collaborations: A Joint Working group, involving both industry and the Government, has been set up between India and Japan to foster greater collaboration between the two countries. A Sub Group for promoting manufacturing in hi-tech sector has been constituted as part of the Joint Working Group between India and US. A proposal to set up Joint Working Group between India and Israel is under discussion. An MoU has been signed between TEEMA of Taiwan and STPI of India to promote the electronics sector. Taipei Computer Association (TCA) has opened its first office in India in Bengaluru.

 

Investment Opportunities

• Investment opportunities: A host of opportunities to invest in any area of ESDM right from R&D to Manufacturing such as

• Consumer

• Telecom

• Defence

• Strategic

• Automotive

• Power

• Medical

• Computer Hardware

• Peripherals

• LED

• LCD

• Industrial

• Nano-electronics

• Avionics among others;

• Electronics Components;

• Semiconductor FAB,

• FABLess,

• Semiconductor Design

• Electronics Manufacturing Services (EMS)

• Setting up of Electronics Manufacturing Clusters

• Electronics components

•  Expected electronics market in India by 2020 in major segment; Telecom Equipment (USD 34 bn); Laptops, Desktops, Tablets (USD 34bin); LED (USD 35 bin); Consumer Electronics (USD 29 bn); Set Top Boxes (USD 10 bn); Automotive Electronics (USD 10 bn ); Medical Electronics (USD 8.5 bn)

 

FDI Policy

• 100 % FDI is allowed under the automatic route in Electronics Systems Design & Manufacturing sector subject to all the applicable regulations and laws

•  In case of defence electronics items, FDI up to 26% Is under the government approval route and above 26% is allowed through approval of cabinet committee on security (this is on case to case basis; investments should ensure access to modern and 'state-of-art' technology in the country ).

 

Sector Policy

• National Policy on Electronics (NPE): NPE vision is “To create a globally competitive electronics design and manufacturing industry to meet the country’s needs and serve the international market". The objective of the NPE is to be create an ecosystem for a globally competitive ESDM sector in the country by attracting investment of about USD 100 billion for a projected demand of USD 400 billion by 2020 and generating employment for around 28 million people at various levels. The ultimate aim of the policy is for the Indian ESDM sector to develop core competencies in all three arms of the electronics industry i.e. R&D, Manufacturing/ Fabrication and Assembly/ATMP.

• A number of State Governments have also defined polices in Electronics.

•  Other important polices - National Telecom Policy National Manufacturing Policy

 

Financial Support (Incentives )

Modified SIPS:

• Capital subsidy up to 20 25% for 10 years on capex

• Reimbursement of CVD/excise for capital equipment in non-SEZ units

• Reimbursement of central taxes and duties for 10 years in select high tech units like FABs and ATMPs

• Available for entire value chain of identified electronics products.

• Incentives available for 10 years from the dare of approval

Preferential Market Access:

• Preference to domestically manufactured electronic products in government procurement

• Extent of government procurement from domestic manufacturing will not be less than 30% of the total procurement

Electronics Manufacturing Clusters:

• Subsidy of 50-75%, up to USD 10 million per 100 acres of land

• Applicable to both Greenfield and brownfield projects

Export Incentives:

• Focus product scheme 2% duty credit scrip.

• Special products scheme 5% duty credit scrip.

Area based Incentives:

• Incentives for units in SEZ/NMIZ as specified in respective acts or setting up project in special area like north east region, Jammu & Kashmir, Himachal Pradesh & Uttarkhand

National Scheme for Supporting MSMEs in ESDM Sector:

• For compliance of the electronics goods with "Indian Standards"

• Testing and certification required for export

• Development of Electronics Manufacturing Cluster by MSMEs

State Incentives:

•  Apart from above each state in India offers additional incentives for industrial projects. Some of the states also have separate polices for electronics

 

A Few Foreign Investors in India

LG

Ericsson

Dell

Nokia-Siemens

Jabil

Siemens

Lenovo

Flextronics

Nokia

Samsung

Foxconn

Bosch

Panasonic

Philips

ABB

Alcatel

HP

Delphi

Vishay Intertechnology

Molex

Amphenol

Schneider

Important Agencies (Ministry / Sectoral chambers with website)

•  Department of Electronics & Information Technology, Ministry of Communications & Information Technology, Government of India (http://meity.gov.in)

 

Electronic Industry Associations:

•  Manufacturers’ Association for Information Technology (MAIT) (www.mait.com)

 

•  Electronics Industries Association of India (ELCINA) (www.elcina.com)

 

•  Consumer Electronics and Appliances Manufacturers Association (CEAMA)(www.ceama.in)

 

•  Indian Cellular Association (ICA) (www.ica-ind.org)

 

•  Indian Electrical & Electronics Manufacturers’ Association (IEEMA) (www.Ieema.org)

 

•  LED Products Manufacturers’ Association (LEDMA) (www.ledma.org)

 

•  Association of Indian Medical Device Industry (AIMED) (www.Aimedindia.com)

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