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Indian consumers more fascinated by imported electronic equipment
India recorded its worst GDP in the last nine years with a 5.3% growth during the fourth quarter. Mirroring this, the Indian electronics industry also suffered a minor slowdown but managed to record a y/y growth of 10%.
The country ranks very low regarding electronic equipment manufacturing, at 1.5% of the total world production. According to Department of Electronics and Information Technology (DeitY), more than 50% demand for electronics in the country was met through imports and the figure is expected to rise to 75% by 2020. Government of India is undertaking several initiatives to promote domestic manufacturing of electronic equipment. Under the Draft National Policy on Electronics (NPE), the Government has targeted for creation an eco-system for a globally competitive electronic system design and manufacturing sector in the country, in order to achieve a production turnover of about USD 400 Bn by 2020. The policy also targets investment of about USD 100 Bn and employment to around 28 mn people at various levels of the industry.
All six major sub-sectors of Indian electronics industry saw growth in production turnover during the fiscal year 2012. Highest growth was recorded by the electronic components and communication equipment sub-sector, while consumer electronics was slightly subdued compared to past few years. However, rising costs of raw materials and persistent inflation was negatively affecting the profitability of the sector. Major domestic players in the industry recorded a significant decline in their profit margins during the year.
The outlook for Indian electronics is positive owing to the huge domestic demand and supply gap and double digit production growth rate in almost all of its sub-sectors. The increasing population and growing per capita income will increase the size of this industry in the years to come.