Indian electronics and hardware sector to reach $112bn by 2018

The Indian electronics and hardware industry is expected to grow at a CAGR of 13–16% during 2013–18 to reach US$112–130 billion from the current level of $75 billion, according to an ASSOCHAM-EY study. This growth is expected on the back of rising consumer demand, growing disposable incomes, the declining prices of electronics and numerous government initiatives.

With the electronics sector expected to grow rapidly in the coming years, avenues will open for manufacturers to invest in the Indian market, says the report. Companies are looking at increasing their manufacturing base in India to serve domestic markets and also the Middle East, Africa and SAARC countries.

“The Make in India initiative, combined with global manufacturers looking to relocate their manufacturing base from China to alternate locations such as India, Vietnam and Indonesia due to mounting labour costs, provides a strong impetus to the Indian electronics and hardware industry,” said Milan Sheth, partner and leader – technology, EY. “It presents an opportunity to become a manufacturing-led sector in India from being predominantly consumption driven.”

The study also highlights the demand- and supply-side challenges faced by companies in the sector. Although the government has undertaken steps to promote India as a manufacturing hub in the last two budgets, certain areas are yet to be addressed — such as the ease of doing business, taxation-related issues, skilled labour unavailability and infrastructure bottlenecks in the country.

The report indicates that growing reliance on imports for electronic components, and rapidly increasing demand for electronic products, makes it crucial to enhance and strengthen India’s electronics manufacturing capabilities. Industry and government need to work together to make the Indian electronics industry highly competitive, the report concludes.