High demand for electronics could outpace domestic production; imports to touch $300 bn by 2020

The Dollar Business Bureau

A report by Assocham-NEC today predicted that  a high demand for electronics could overtake domestic production, leading to an import of electronic items of $300 bn by 2020.

The report said that the demand for electronics products in India could grow by a CAGR of 41% to reach $400 bn by 2020, while domestic production presently is growing at a CAGR of 27%.

There is a gap in the demand in imports amounting to nearly $300 bn the study said.

India has a burgeoning middle class population with an increasing disposable income, unsatiated appetite for electronics and consumer durable goods like televisions, mobile phones, computers- and this is likely to grow with every passing year.  The government needs to turn the country into a manufacturing hub by encouraging its domestic production the report detailed.

The Indian electronics and hardware market grew by 8.6 per cent year-on-year to reach $75 billion in 2015.

India's total electronics hardware production in 2014-15 is estimated at $32.46 billion while its consumption of electronic hardware in the same year was $63.6 billion out of which 58% was fulfilled through imports.

And adding to the demand is the increasing demand for POS machines, that increased due to demonetisation.

The government had invested around  Rs 1,27,880 crore in 2016 in electronics manufacturing. It was supported by initiatives like Make in India and Digital India as well as schemes like Modified Special Incentive Package Scheme (M-SIPS) and Electronics Development Fund (EDF).

The report says though there are signs of promising growth, the local production of electronic products has to be increased significantly to meet the domestic demand of $400 bn worth of electronic products, the study said.

The report suggested steps like emphasising an increased percentage of local component manufacturing in the country, also simplifying the complex regulatory structure enabling new entrants that could increase domestic production.