Electronic System Design and Manufacturing sector to grow 10 %

The Indian Electronic System Design and Manufacturing (ESDM) industry is expected to reach $94 billion by 2015, registering a compound annual growth of 9.9 per cent since 2011, according to a report released by Frost and Sullivan here on Tuesday.

In an exclusive interaction with this correspondent before the release of the report, members of the Executive Committee of the Indian Semiconductor Association, which commissioned the study, highlighted the fact that electronic product imports were likely to account for nearly two-thirds of the consumption in the Indian market in 2015.

“In the absence of policy intervention, it is likely that imports will increase from $28 billion in 2011 to $45 in 2015,” said Satya Gupta, Chairman, ISA.

More ominously, the share of ‘high-value addition manufacturing’ in the overall market for electronics was likely to decline to 6.7 per cent 2015, from 8.9 per cent in 2011. This was likely to result in an ‘opportunity loss’ of $200 billion, observed Dr. Gupta.

Although the semiconductor market was likely to expand from $6.03 billion in 2011 to $9.7 billion by 2015 (61 per cent growth), local sourcing was likely to increase by only 24 per cent, Mr. Gupta pointed out.

Asked about the likely impact of the economic slowdown, he observed that the ESDM sector typically grew at about 1.8-2 times the GDP growth rate.

P. V. G. Menon, President, ISA, said the policy framework announced by the government last year was likely to have a bearing on the way the market develops. He pointed out that the elements of the new policy, including a scheme of preferential pricing, would promote value addition within the country. He pointed out that the condition that Indian companies would have to increase value addition every year to benefit from the scheme “will ensure that only those who have a long-term plan of action to increase value addition remain in business.”

Although the share of mobile phones, especially smartphones, was about 30 per cent of the domestic market, the value addition within the country was still low, Mr. Menon said. He pointed out that most of the domestic capability was is concentrated in a few companies, notably Nokia, which had has a manufacturing facility in Chennai.

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