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, defence, 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.
India’s digital base is the second largest in the world and is growing at the second-fastest rate among the 17 leading economies. The Digital India Program has been transforming the Country into a digitally empowered society and knowledge economy since its launch in July 2015.India is the third biggest start-up hub in the world. In 2019 alone, 1300 new tech start-ups were added according to Make in India portal.
India – The Investment Destination
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. 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 currently has 687.63 mn internet subscribers and 354 mn smartphone devices (February 2019). Smart users are expected to rise by 84% and reach 859 mn by 2022.
Consumer Electronics and Appliances Industry in India is expected to become the fifth-largest in the world by 2025. PM Modi in March announced incentives that make niche firms – electronics manufacturers – eligible for a payment of 4%-6% of their incremental sales over the next five years.
The Modi Mantra
Prime Minister Narendra Modi’s government in March announced incentives that make niche firms — electronics manufacturers — eligible for a payment of 4%-6% of their incremental sales over the next five years. The result: about two dozen companies pledged $1.5 billion of investments to set up mobile-phone factories in the country. Besides Samsung, those that have shown interest are Hon Hai Precision Industry Co., known as Foxconn, Wistron Corp. and Pegatron Corp. India has also extended similar incentives to the pharmaceutical sector, and plans to cover more sectors, which may include automobiles, textiles, and food processing under the program. The government expects the program for electronics alone could lead to $153 billion worth of manufactured goods over the next five years and create about one million jobs directly and indirectly.
This would bring an additional investment of $55 billion over five years, adding 0.5% to India’s economic output, according to analysts led by Neelkanth Mishra at Credit Suisse Group AG. This could shift an additional 10% of global smart-phone production to India in five years, most of it from China, they wrote in a report Aug. 10.
That complements Modi’s goal to grow the share of manufacturing in the economy to 25% from the current around 15% as part of his ‘Make in India’ program. His government has already lowered taxes on companies to among the lowest in Asia, seeking to attract new investments in an economy headed for its first contraction in more than four decades this year.
What The Leaders Think?
Setting up a Rs 4,000 crore fabless seed fund with the goal of creating and supporting 100 successful fabless companies in the next five years is needed to make the country self-reliant on semiconductor chip products, industry body India Electronics and Semiconductor Association (IESA) said.
From smartphones and computers to autonomous cars and other industrial equipment, semiconductors enable a broad gamut of products which are key to functioning of the economy. And in today’s geo-political situation where data security has become a major concern, self-reliance in the semiconductor chip products is strategically very critical.
IESA, an industry body representing the Electronics System Design and Manufacturing (ESDM) and intelligent electronics industry in India, believes that it is a critical “need” to develop indigenous capabilities in electronics system products design and design-led manufacturing, especially for the products which are in the critical networking infrastructure.
Gupta said that in devices like smartphones, base stations, switches, routers, etc., the data security has to be safeguarded both at the chip level and at the electronics system level.”Government should put a strategic plan similar to incentive plan for manufacturing to incentivise domestic product design and design-led manufacturing of electronics systems to ensure the adequate control and regulation of data,” Gupta told IANS.
“Global synergies and partnerships are essential to achieve this goal of developing a self-reliant (aatmanirbhar) electronics system products ecosystem,” he added. Indian electronics products market segment consumes substantial amount of semiconductor components and as per IESA ESDM Market study report 2020, the total semiconductor component market is estimated to be about $20 billion in FY 2019 growing to $45 billion by 2025.
Although India is one of the leaders in semiconductor design, Indian companies’ share of the semiconductor product market is considerably small — less than five per cent, IESA said, adding that along with the key stakeholders and partners, the industry body envisages creating 100 domestic fabless companies in the next five years.
IESA, an industry body representing the Electronics System Design and Manufacturing (ESDM) and intelligent electronics industry in India, believes that it is a critical “need” to develop indigenous capabilities in electronics system products design and design-led manufacturing, especially for the products which are in the critical networking infrastructure.
Gupta said that in devices like smartphones, base stations, switches, routers, etc., the data security has to be safeguarded both at the chip level and at the electronics system level.”Government should put a strategic plan similar to incentive plan for manufacturing to incentivise domestic product design and design-led manufacturing of electronics systems to ensure the adequate control and regulation of data,” Gupta told IANS.
“Global synergies and partnerships are essential to achieve this goal of developing a self-reliant (aatmanirbhar) electronics system products ecosystem,” he added. Indian electronics products market segment consumes substantial amount of semiconductor components and as per IESA ESDM Market study report 2020, the total semiconductor component market is estimated to be about $20 billion in FY 2019 growing to $45 billion by 2025.
Although India is one of the leaders in semiconductor design, Indian companies’ share of the semiconductor product market is considerably small — less than five per cent, IESA said, adding that along with the key stakeholders and partners, the industry body envisages creating 100 domestic fabless companies in the next five years.
EMC 2.0 Scheme and The Way Ahead
To offset the disabilities faced by industries for quality infrastructure and to develop a robust electronics manufacturing ecosystem in the country to make India an Electronics Manufacturing Hub; Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme has been notified vide Gazette Notification No.CG-DL-E-01042020-218991 dated April 01, 2020 with the objective to address the disabilities, by providing support for creation of world class infrastructure along with common facilities and amenities, including Ready Built Factory (RBF) sheds / Plug and Play facilities for attracting major global electronics manufacturers along with their supply chain to set up units in the country.
This Scheme will fortify the linkage between domestic and international market by strengthening supply chain responsiveness, consolidation of suppliers, decreased time-to-market, lower logistics costs, etc.
The EMC 2.0 Scheme provides financial assistance for setting up of both EMC projects and Common Facility Centres (CFCs) across the country. The Scheme is open for receipt of applications for a period of 3 years from the date of notification. Further period of 5 years is available for disbursement of funds to the approved projects. An application shall be made by Project Implementing Agency (PIA) which can be State Government or State Implementing Agency (SIA) or Central Public Sector Unit (CPSU) or State Public Sector Unit (SPSU) or Industrial Corridor Development Corporation (ICDC) such as DMICDC, etc.
