Electronics India The Second Sunrise

Vandana Srivastava 27-02-32013

Electronics Industry: World Scenario

• Largest and fastest growing manufacturing industy in the world.

• Reported at USD 1.75 Trillion and expected to reach USD 2.4 Trillion by 2020.

Electronics Industry: Indian Scenario

Huge Market : Rapid increase in domestic demand due to-

Growth in income levels leading to higher off take of

Electronics products

Automation demands of corporate sectors

Government’s focus on e-governance.

Why India ?

1. Huge Market

2. Large Talent Pool

3.Conducive Policy

4. Low Operating Costs

4 Big Reasons

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-200.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

450.0

32.5

99.5

69.6

400

Dem

and

& P

rod

uct

ion

Year

Demand CAGR – 24.4%

CAGR – 37%

CAGR – 15%

Values in US$ Bil

Demand & Production Trends for 2020

Electronics Market in IndiaBurgeoning Needs, Emerging Opportunities

| Semiconductors

Cost of semiconductor design (US$ Mil, 2010)

Projected semiconductor design market in 2020

US$ 60-80 Bil

Projected semiconductor market in 2020

US$ 60-80 Bil

8

Demand in 2010

~ US$ 11 BilProjected demand 2020

~ US$ 34 Bil

•Broadband on Demand by 2015, 600 Mil connection by 2020 at min. 2 Mbps speed

•NOFN : US$ 4 Bil project to provide broadband connectivity to panchayats

•NKN : US$ 1.2 Bil Infra project to connect educational and research institutes

|Telecom equipment

• Total telephone subscribers ~ 950 Mil, teledensity 77%

9

• The consumer durables market recorded revenues of USD6.3 billion in FY10

• During FY03-10, the industry expanded at a CAGR of 11.7 per cent

• Urban markets lead the revenues, accounting for two-thirds of the total sales in India

• Refrigerators , Air conditioners (ACs) , Washing Machine & Televisions Driving Growth

| Consumer Durable Market

10

•Consumer Electronics (CE) represents one of the largest segments of the overall electronics industry in India.

•The market is anticipated to grow at a CAGR of around 17% during 2012-2015 to reach over US$ 15 Billion by the end of 2015

| Consumer Electronics

11

• Value of electronics in automobiles ~ 20%-40%, increasing rapidly

• Production of nearly 18 Mil Automotive vehicles in 2010-11

| Automotive Electronics

•Digitization of controls and expanding inclusion of safety and sophistication features.

•Evolving trend of localization in product procurement by Auto OEMs

12

• Size of medical electronics equipment market by 2020 ~ US$ 5 Bil

• GoI committed to development of • Affordable medical electronic device

industry

• Devices typical to the environmental & infrastructural condition prevalent in India

| Medical Electronics

Adapted from Indian Medical Electronics Industry Outlook 2020 , Deloittee & FICCI , December 2011

13

• India has had significant scope in solar cell and module manufacturing.

• The disability due to lack of presence in the upstream sectors, such as polysilicon and wafer is getting addressed

• Government in the advanced stage of getting a Fab setup in India.

• Jawaharlal Nehru National Solar Mission

• Enabling policy framework for the deployment of 20,000 MW of solar power by 2022.

• Ramp up capacity of grid-connected solar power generation to 1000 MW within three years – by 2013

• An additional 3000 MW by 2017 through the mandatory use of the renewable purchase obligation by utilities backed with a preferential tariff.

| Solar Power

14

Aviation• Passenger and cargo movement has

increased by a CAGR of 19.14% and 9.91% during the period from 2003-04 to 2007-08.

• The fleet size has grown by 23.77%. • The civil aviation market is expected

to register more than 16 per cent CAGR during 2010-2013.

• The Indian commercial aerospace market is estimated to absorb about 1,100 commercial jets worth Rs.585,000 crore over the next 20 years.

| Aerospace Sector

Defense• Major defence acquisition and

development programmes comprising Medium Multi Role Combat Aircraft (MMRCA), Fifth Generation Fighter Aircraft (FGFA), Multirole Transport Aircraft (MTA), Medium Lift Helicopters (MLH) and Light Utility Helicopters (LUH).

Space• Indigenous suppliers provide an

estimated 70 per cent of the technology content.

• The current major space programmes are PSLV, GSLV, INSAT and IRS.

15

Demand in 2010

< US$ 1 BilProjected demand 2020

~ US$ 35 Bil

• Lower carbon emissions by 20-25% by 2020

• Distribution of free LED lights to all Below Poverty Line (BPL) families (20 Mil lights)

• Government initiatives :

• Excise duty reduced to 6% on LED lamps and LEDs

• SAD fully exempted on LEDs used for manufacture of LED Lamps

| LED Market

16

• India PC shipments increase in 2012 ~ 17%; world average ~ 4.4%

• GoI aims to provide 1 tablet to every student under Aakash scheme

• State Government initiatives

• Free laptop to students in Tamil Nadu and Uttar Pradesh

• Other states coming up with similar schemes

Projected Market for laptop, desktop by 2020

US$ 34 Bil

| Computers

17

• Cabinet has approved providing Digital Addressable System (DAS) throughout country by December 2014

• Tamil Nadu state government owned Arasu Cable TV Corporation floated tender for 2 Mil STB

Projected Market for Set Top Box in next 5 years

200 Million units

| Set Top Box

Electronics Market by segment

SegmentMarket Size *

Telecom Equipment 34Laptops, Desktops, Tablets

34LED 35Set Top Boxes 10Automotive Electronics

10Medical Electronics 8.5Consumer Electronics

India: 2020

* US$ Billions

ChallengesInfrastructure gap

Tax Structure

Supply chain and logistics

Inflexible labour laws

Limited R& D focus

Inadequate funding

Limited value addition

Strengths•Chip Designing

•Embedded system software

•Huge market

•Large talent pool

•Low operative costs

•Conducive environment

Conducive Policy Environment Infrastructure, Incentives, Innovation

National Policy on Electronics, 2012

Holistic, Investor-friendly, Market-driven

ELECTRONICS INDIA

Billion Needs, Million Chips

“To create a globally competitive electronics design and manufacturing industry to meet the country's needs and serve the international market”

Investment : US$ 100 BilProduction : US$ 400 BilEmployment : 28 Mil

NPE Vision 2020

ESDM Sector

National Policy on Electronics | Major strategies

• Setting up of Semi-conductor Wafer Fab in IndiaI

• Preferential Market AccessII

• Modified Special Package Incentive Scheme (M-SIPS)III

• Electronics Manufacturing Cluster Scheme (EMC)IV

• Electronics Development Fund (EDF)V

• Mandating Safety StandardsVI

• Human Resource Development VII

• Communication & Brand buildingVIII

Number of strategies identified under

NPE >50

•Subsidy upto ~USD 10 mil per 100 acres of land

•Applicable to both Greenfield and Brownfield projects

•Targeting 10 Clusters in 2013, and 200 by 2020

Electronics Manufacturing Clusters

Infrastructure Development• Roads• Power• Water• ETP’s• Testing facilities• Social Infrastructure

Subsidy of 50-75%

ELECTRONICS INDIA

Billion Needs, Million Chips

•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 date of approval

Substantial CAPEX subsidy

Subsidy of 20-25%

Modified SIPS

ELECTRONICS INDIA

Billion Needs, Million Chips

• India : Latest destination for Chip mfg. based on strength of Chip design

• Global responses sought in the form of EOI to setup Fabs

• Leading players have expressed interest

• Partners for Fab project to be finalized by March 2013

Semiconductor Fab

FAB in India

Decision by March 2013

ELECTRONICS INDIA

Billion Needs, Million Chips

• Preference to domestically manufactured electronic

goods in

• Government procurement

• Electronic goods having security implications

• Extent of Government procurement from domestic manufacturers will not be less than 30 % of the total procurement.

• Enabling framework

• WTO compatible

• No discrimination between foreign and Indian companies

Preferential Market Access (PMA)

ELECTRONICS INDIA

Billion Needs, Million Chips

Electronics Development Fund (Proposed)

Size of EDF

US$ 2 Bil

• Fund to promote Innovation and IP and R&D, product commercialization, etc in ESDM, nano-electronics & IT sectors

• Comprises of “Daughter Funds” of size US$ 20 Mil -100 Mil

• Each fund to have Govt. share from 25% - 75%; remaining from private and financial institutions

ELECTRONICS INDIA

Billion Needs, Million Chips

• 15 electronics products notified under safety standards on October 3, 2012

• Allows Self registration

• BIS accredited labs to test the goods

Mandating standards

Order comes into effect from

April 3, 2013

ELECTRONICS INDIA

Billion Needs, Million Chips

Export Incentives on FOB Value

Export Incentives

2-5%

• Focused Product Scheme -2% duty credit script

• Special Focused Product Scheme-5% duty credit script

• Focused Market Scheme

ELECTRONICS INDIA

Billion Needs, Million Chips

• Electronics and Telecom Sector Skill Council set up

• 31 ICT and Electronics Academies-Scheme under approval

• Skill Development for 1 mn persons

• Special Manpower Development Programme- Phase III for VLSI and chip design for 10,000 students .

HR Initiatives

PhDs in Electronics by 2020

2500 annually

ELECTRONICS INDIA

Billion Needs, Million Chips

Electronics?

Think India !