ELECTRONICS

ELECTRONICS

Market Overview 2

Competitive Advantages 9

Government Regulations and Support 14

Key Domestic and Foreign Players 18

Contact For Information 30

A report by KPMG for IBEF

 Market Overview

The global electronics industry is growing rapidly. From an

estimated size of US$ 950 billion in 2005, it is estimated
E
to grow to nearly US$ 2100 billion by 2010. The market is
L dominated by Asian countries such as China, Taiwan,
E Singapore and South Korea. The industry is characterised
C by rapid innovation and speed to market, short product life
T cycle, highly automated manufacturing to give consistent
R quality at low cost, high volume production, continuous
improvement in capabilities for reducing costs and profit
O
accrual through volumes.
N
I India’s electronics industry is nascent by global standards.
C Despite a population of over one billion, India has a relatively
S small electronics market. It is ranked twenty-sixth worldwide
in terms of sales and twenty-ninth in terms of production.
The total size of the industry in 2004-05 was US$11 billion.

2 India’s Electronics sector has six key segments

The Indian electronic industry is divided into six segments:

Consumer electronics, Industrial electronics, Computers,
Strategic electronics, Communication and Broadcasting
equipment and Electronic components. The consumer
electronics sector dominates the industry with 33.8 per cent
share and has benefited from a large and expanding market.
The industrial electronics and computer sector each has a share
of over 15 per cent.

Electronics Production(2004-05)
Strategic
Commn. & Broad. Electronics
Eqpt. 6%
9%

Computers Components
18% 18%

Industrial
Electronics
15%

Consumer
Electronics
34%

Source: http://www.mit.gov.in/dbid/eproduction.asp#2

Consumer electronics

Consumer electronics consists of products that are directly

consumed by end-users, such as televisions, VCD/MP3 players,
microwave ovens, etc. This segment has a large manufacturing base, and is
quite competitive, with presence of several global players in India.

Industrial Electronics

The Industrial electronics segment includes products that are used by other
industries, such as process control instrumentation, automation systems, Test
and measuring (T&M) instruments and medical instruments.

Computers

This segment includes personal computers, servers, workstations,

supercomputers, data processing equipment and peripherals such as monitors,
keyboards, disk drives, printers, plotters, digitisers, SMPS, modems, networking
products and add-on cards.

Strategic Electronics

The strategic electronics segment covers Ssatellite base communications,

navigation and surveillance, underwater electronics and infra red based
detection, disaster management and GPS based Vehicle tracking systems.
The segment has a number of manufacturing units both in the public and
private sectors.

Communication and Broadcasting Equipment

The communication and broadcasting equipment segment includes digital

exchanges (EPABX, RAX, TAX and MAX), Transmission equipment such as
HF/VHF/Microwave trans-receivers, satellite communication terminals, optical
fibre communication equipment, troposcatter equipment, two-way radio
communication equipment, etc.

Electronics Components

The electronics components segment caters to the requirements of

consumer electronics, telecom, defense and information technology sectors.
The components in production in India at present include TV picture tubes
(black & white and colour), monitor tubes, diodes and transistors, power
devices, ICs, hybrid microcircuits, resistors, capacitors (plastic film, electrolytic,
tantalum, ceramic), connectors, switches, relays, magnetic heads, DC micro
motors and tape deck mechanism, PCBs, crystals, loudspeakers and hard and
soft ferrites. The consumer electronic sector in general and the colour
television (CTV) industry in particular is the growth engine for electronic
components.
 The sector has been growing steadily across most
segments

India’s electronics industry has been growing at approximately

E 11 per cent CAGR over the past 5 years, and was worth
L US$ 11 billion in 2004-05.
E
The following sections discuss the growth and current status of
C
each of the six segments comprising the sector.
T
R
O Electronics Production
N 12
I 10
C
8
US$ billion

S
6

4 0
1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05

Source: http://www.mit.gov.in/dbid/eproduction.asp#2

Consumer electronics

The Consumer electronics industry contributes about 33.80 per

cent of the total electronics production in India. The total
production of consumer electronics was US$ 3.74 billion in
2004-05, registering a growth of 13 per cent over production in
the previous year. The growth has been primarily powered by
colour televisions (CTV), which grew from 8.9 million units in
2003-04 to over 10 million in 2004-05. CTV growth in turn is
driven by growth in Flat Screen TVs (FST) that is estimated to
constitute nearly 20 per cent of the CTV market. Other growth
segments in consumer electronics include microwave ovens and
VCD/MP3 players - the microwave oven industry is estimated to
be growing at the rate of 25-30 per cent.

Consumer Electronics Production

4000

3500

3000
US$ million

2500

2000

1500

1000

500

0
1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05

Source: http://www.mit.gov.in/dbid/eproduction.asp#2
These trends are a reflection of increasing consumption and aspiration levels
among Indian consumers, driven by demographic and lifestyle changes. As
these trends are positive for the future, the outlook for consumer electronics
segment is quite positive.

Industrial Electronics

The production of industrial electronics in 2004-05 was US$ 1716 million as

compared to US$ 1327 million in 2003-04, a growth of 29 per cent.

Growth in industrial production and focus by industry on better controls,

processes and systems are expected to drive growth in this segment in the
future.

Industrial Electronics Production

1800
1600
1400
US$ million

1200
1000
800
600
400
200
0
1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05

Source: http://www.mit.gov.in/dbid/eproduction.asp#2

Computers

The production in computers segment was US$1,961 million during 2004-05 as

compared to US$1479 million during 2003-04, a growth of 33 per cent.

Industrial Electronics Production

1800
1600
1400
1200
US$ million

1000
800
600
400
200
0
1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05
Source: http://www.mit.gov.in/dbid/eproduction.asp#2
 The industry, in the area of PCBs, connectors, diskettes and
CDs, experienced a positive growth.

High corporate consumption and buoyancy in small towns is

E driving sales of Personal Computers. The market for PCs is
L estimated to have touched 3.4 million units in fiscal 2004-05,
E taking the total PC penetration to 14 million in the country.
C
T Strategic Electronics
R
O The production in the strategic electronics sector was US$680
N million in 2004-05 compared to US$588 million in 2003-04, a
growth of 16 per cent.
I
C With the opening of strategic electronics to the private sector,
S there has been an emphasis on attracting private sector
organisations for indigenisation of a variety of products and
technologies. This is expected to fuel growth in this segment.

Strategic Electronics Production

6
700

600

500
US$ million

400

300

200

100

0
1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05
Source: http://www.mit.gov.in/dbid/eproduction.asp#2

Communication & Broadcasting Equipment

The production in the communication and broadcasting

equipment sector was US$1,025 million during 2004-05.

Communication and Broadcasting

Equipment Production

1400
1200
US$ million

1000
800
600
400
200
0
1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05

Source: http://www.mit.gov.in/dbid/eproduction.asp#2
Growth in this segment has been almost stagnant over the past 5 years.

Electronics Components

Electronics components contributed 18 per cent to the overall electronics

production. Production in this sector was US$ 1,961 million during 2004-05
compared to US$ 1,719.3 million in 2003-04; a growth of 14 per cent.

The key product groups that have driven growth in components include CTV
picture tubes, optical discs, PCBs, connectors, ferrites, etc. Growth in this
segment has been primarily due to growth in the user segments, viz, CTVs,
PCs, etc. As such, the outlook is also positive.

Electronic Components Production

2000
1800
1600
1400
US$ million

1200
1000
800
600
400
200
0
1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05

Source: http://www.mit.gov.in/dbid/eproduction.asp#2
Exports

Most of the consumer electronics produced in India is consumed by the

domestic market, with exports forming only 5 per cent of the production.

Electronics Exports

1800
1600
1400
US$ million

1200
1000
800
600
400
200
0
1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05

Source: http://www.mit.gov.in/dbid/eproduction.asp#2
 However, exports of electronic goods from India have been
growing consistently and constituted about 2.64 per cent
of India’s overall exports in 2003-04. For the year ending
March 2005, the export of electronic goods from India
E
increased by 16 per cent to US$1,950 million as compared
L to US$1,675 million in the year ending March 2004.
E
C
T Segment-wise Exports
R
Electronic components segment contributes the highest towards
O
the total electronics exports. The major export items include
N
passive components, such as capacitors and resistors; wound
I components; CD-ROMs; connectors; color picture tubes and
C computer components/assemblies, such as head stacks;
S memory modules and RFID products. In 2003-04 India
exported US$ 817 million worth of electronics components,
which formed 48 per cent of the total electronics export.
Other key segments that contributed to exports include
industrial electronics, computers and consumer electronics,
8 with exports of US$ 329 million, US$ 313 million, and US$ 179
million respectively in 2003-04.

Electronics Exports(Segment-wise)
1000

800

600
US$ million

400

200

0
1999-2000 2000-01 2001-02 2002-03 2003-04
Consumer Electronics Industrial Electronics Computers Components

Source: http://www.mit.gov.in/dbid/eproduction.asp#2

The main destinations for India’s exports are the European

Union, ASEAN countries and the United States.

The major export opportunities are in the area of innovative

new products, contract manufacturing (OEM and ODM) and
design services. It is estimated that India will export OEM
(Original Equipment Manufacturer) and ODM (Original Design
Manufacturing) worth US$11billion by 2010.
Competitive Advantages

While the Electronics sector in India is currently small, there are several
advantages that India offers that can be effectively leveraged to achieve higher
growth. These can be categorised under four heads:
• Manpower
• Market Demand
• Supporting institutions and
• Policy and Regulatory Support

These areas are further discussed below

Availability of skilled human resources in India at competitive cost is a

key advantage for the electronics sector

India’s human resources advantage derives from three key features – Availability
in terms of numbers, Capability in terms of the right skills and Low costs.

India has the potential to ensure adequate availability of manpower to

support the electronics industry well into the future

India’s population is predominantly young – in 2001, nearly 54 per cent of the

population was less than 25 years of age. By 2013, nearly 200 million more
people will join the nation’s productive age bracket representing a quantum
growth in the consumption class. This implies that India will have a large pool
of productive manpower well into the future.

India’s manpower is trained and has a good mix of capabilities

India produces over 500 PhDs, 200,000 engineers, 300,000 non-engineering

postgraduates and 2,100,000 other graduates each year. The Indian Institute
of Technology (IITs) and The Indian Institute of Management (IIMs) produce
graduates and post graduates with best-in-class skills and capabilities in
technical and management fields. India’s capabilities in IT and engineering make
it an attractive location for sourcing engineering services such as R&D and
design.

Labour costs in India extremely competitive when compared to other

developing countries

India’s cost of skilled labour is among the lowest in the world. For example,
average labour rate per employee in the electronics sector is about
$3,000 per year. Labour cost as a percentage of value added is only
 21 per cent in India as compared to 23 per cent in China and
30 per cent in Taiwan. Taking advantage of this many MNCs
have set up manufacturing bases in India for domestic
consumption as well as exports.
E
L
Many multinational companies in the electronics sector have
E leveraged India’s manpower advantage to grow in the domestic
C marke, as well as source products and services from India.
T Examples include:
R
O
N Kodak
I
Kodak has a camera manufacturing and assembly plant near
C
Bangalore, which produces over four million units per year.
S
Around 60 -70 per cent of this centre’s products are exported
to the US, Europe, West Asia and the Far East in 2003.

10 Siemens

Production cost arbitrage has prompted the company to

increase production and hence exports from the Goa factory.
Siemens Goa plant is used as a manufacturing hub for catering
to the international market. The Goa factory will become the
hub for manufacturing X-ray tubes as it can save 30 per cent of
the cost.

Motorola

Motorola’s Global Telecom Solutions Sector (GTSS) designs,

develops, manufactures and supplies infrastructure equipment for
wireless communications systems worldwide. GTSS India
operates a “Centre of Excellence” for providing network
services for customers in India as well as in the Asia Pacific
Region. Motorola India Electronics Ltd. develops software for
Motorola’s worldwide businesses.

Motorola Global Software Group (GSG), the Research &

Development arm is involved in all the major developments of
the company. Motorola India’s operations are established as a
source of software and chip design and as a source of excellent
capital for Motorola globally. Motorola’s two chip designing units
around Delhi and a third one in Hyderabad are 100 per cent
export units meeting the company’s global requirements.
Solectron

Solectron is looking at using its Bangalore factory to contract manufacture

low-priced machines for Advanced Micro Devices.

Electrolux

Electrolux has set up Research and Development (R&D) centre with an

investment of US$ 8.6 million. It is the headquarters of its South Asian
Association for Regional Cooperation (SAARC) countries, excluding Sri Lanka.
This centre will be the regional hub for developing new technologies and
products.

Philips

Several Philips India employees are working on key regional/ global Philips
projects, committees and assignments. Several managers who started as
employees of Philips in India are now based in Philips organisations across the
world.

Samsung

Samsung invested US$ 11 million in setting up an R&D in India. Samsung R&D

Centre at Noida helps the company customise its CTV range as per the
preference of Indian customers.

Indian market provides favourable demand conditions for the elec-

tronics sector to grow

India has been experiencing a strong growth in the demand of consumer

products and durables in recent years, driven by consumer demographic
trends. This has facilitated growth in the electronics sector both directly and
indirectly.

Growth in demand of consumer durables such as CTVs, VCD / MP3 players

and PCs directly benefits the sector. Also the demand for products such as
automobiles, white goods, air-conditioners, textiles, etc, leads to growth in the
electronics sector as these products contain a significant number of electronic
components. At the same time, consumer demand has boosted growth in
India’s overall manufacturing sector as well, which, in turn, has a positive
impact on industrial electronics.

On the whole the domestic market in India is very attractive from the point
of view of the electronics sector, and current trends indicate high growth
potential for the sector in the future.
 Some of the key trends that have a positive impact on the
sector are:
• Growing consuming class (defined as people having annual
E income of
US$ 980 (INR 45000) or above) that has greater disposable
L
income and propensity to spend. It has been estimated by
E
NCAER that this group will constitute over 80 per cent of
C the population of India by 2009-10
T
• Lifestyle changes such as greater exposure to global trends
R
and increasing affinity for convenience and lifestyle products
O
• Increasing urbanisation, emergence of nuclear double income
N
families
I
C • Low penetration levels of most consumer durables. For
example, in 2002, only 66 per cent of middle-income
S
households had a TV set, only 28 per cent of the urban
households possessed a refrigerator, while just a little over
15 per cent owned an air cooler. Despite a population of
more than 1 billion people, only 16 million computers were
12 used in India in March 2005.
• Increased government and private industry spending on
sectors such as defence and aerospace. The Indian aviation
sector, for example, has placed orders for more than 350
aircrafts with a list price of about US$ 26 billion.

In recognition of India’s domestic market potential, Samsung

has selected India as one of the top six strategic markets
in the world along with the US, China, Russia, Germany and
Thailand.

Presence of supporting industries in India is a source of

strength for the electronics sector

Educational and Research Institutes

India has a well-developed technical and tertiary education

infrastructure of over 250 universities, 1500 research institutions
and over 10,000 higher education centres. Indian Institutes of
Technology (IIT) and Indian Institute of Science (IISc) are the
premier institutes of education and research.

These institutions provide not only a steady supply of trained

and qualified manpower to support the electronics sector,
but also support for research and analysis, testing and
development.
IT Industry

India’s capabilities and infrastructure in the IT sector are well recognised. The
presence of a mature service industry in India can accelerate the growth of
the electronics sector.

Examples of companies that have been leveraging the supporting institutions in

India include:

Flextronics

Flextronics is the first EMS (Electronics Manufacturing Services) provider to

offer embedded and application software development for telecom
infrastructure customers. Flextronics acquired a 55 per cent controlling
interest in Hughes Software Systems (HSS), an Indian provider of software
products and services to telecom infrastructure companies. The company is
positioning itself as a complete outsourcing solution to telecom OEMs. This
partnership offers significant opportunities to cross-sell respective products and
services to a very complementary telecom customer base.

Canon India

Canon India set up its Software Development Centre (SDC) in Delhi, which is
one of the six such cutting edge technology centres of its kind. It is ISO
9001:2000 certified with CMM level 3 status. Software Development Centre
undertakes contract software development from Canon Inc., Canon
Development Americas and Canon Information Systems Research, Australia.
For example it was involved in developing software for Office Imaging
Products division of Canon Inc., Japan.
 Government Regulations and Support

India has made the transition from being a sort of controlled

economy to a free market. Foreign investment up to 100 per
E cent is possible in the Indian electronics industry to set up units
L exclusively for exports. It is now possible to import duty-free all
E components and raw materials, manufacture products and
C export it.
T
EHTP (Electronic Hardware Technology Park) is an initiative to
R
provide benefits to companies that are replacing certain imports
O with local manufacturing. EHTP benefits include export credits,
N no duties on imported components or capital equipment,
I business tax incentives, and an expedited import-export process.
C
S The government, in an attempt to encourage manufacture of
electronics in India has changed the tariff structure significantly.
• Customs duty on ITA-1 items (217 items) has been abolished
from March 2005. All goods required in the manufacture of
ITA-1 items are exempt from customs duty.
14
• Customs duty on specified raw materials / inputs used for
manufacture of electronic components or optical fibres /
cables has been removed.
• Customs duty on specified capital goods used for
manufacture of electronic goods has been abolished.
• Excise duty on computers has been removed.
Microprocessors, hard disc drives, floppy disc drives and CD
ROM drives continue to be exempt from excise duty.

Intellectual Property Rights

Protection of Intellectual property rights (IPR) is a prime

requisite for development of R&D and innovation in the
electronics sector. The Government of India has developed a
robust IP act to facilitate innovation, growth and development.
Several amendments to the Copyright Act, creation of a new
Trademark Act, a new Designs Act and amendments to the
Patents Act show India’s continued effort to protect IPR.

The country has already made several changes in its IP acts

over the years.. Several amendments to the Copyright Act,
creation of a new Trademark Act, a new Designs Act and
amendments to the Patents Act show India’s desire to change
and adapt. New acts have also been enacted to cover semi-
conductors and layout designs which will be of considerable
importance to the electronic industry.

In the current WTO regime, India is a party to the “Trade

Related Aspects of the Intellectual Properties (TRIPs)
Agreement” and has accordingly, amended most of its IPR Acts and Rules to
conform to the said Agreement. The Indian Copyright Act 1957 was amended
in 1999; the patent Act 1970 was amended in 1999 & 2003 and Trademarks
and Merchandise Marks Act 1959 was overtaken by a new Trademark Act
1999. The Industrial Design Act 1911 was effectively replaced by The Design
Act 2000, and The Layout Design of Semiconductor integrated Circuit Act
2000 was enacted.

The agreement on TRIPs takes care of the intellectual property rights by

enforcing the patent rights, copy rights and related rights, and the protection
of industrial designs, trade marks, geographical indications, layout designs of
integrated circuits and undisclosed information. Accordingly, the member
nations are asked to modify their existing laws. Once these laws come into
force, unauthorised use of the patented innovations, trade marks, etc. becomes
difficult. Enforcement of the TRIPs agreement makes the production of any
product possible either through internal innovation or through formal transfer
of technologies.

The electronics sector is expected to continue to benefit from supportive

policies and become globally competitive.

Regulations

Free Trade Agreement

WTO regime which came in force in 2005, results in zero customs duty on
imports of all telecom equipment. 217 IT/electronic items were covered under
the Information Technology Agreement (ITA) of the WTO for complete
customs tariff elimination by 2005.

Out of these 217 items, several items were already at NIL customs duty. In
fact, IT/electronics was the first sector in India to face complete customs tariff
elimination. The ITA-1 would result in intensifying competition as more
imported products will be easily available at lower prices.

Foreign Investment Policy

FDI

Foreign investment up to 100 per cent is allowed in Indian electronics

industry set up exclusively for exports. The units set up under these
programmes are bonded factories eligible to import, free of duty,
their entire requirements of capital goods, raw materials and components,
spares and consumables, office equipment etc. Deemed export benefits are
available to suppliers of these goods from the Domestic Tariff Area (DTA).
A part of the production from such units is permitted to be sold in
the DTA depending upon the level of the value addition achieved.
 The FDI approval for electrical equipment (including computer
software and electronics) from January 1991 to March 2004 was
US$ 7.29 billion, which was 9.94 per cent of the total foreign
direct investment (FDI) approved. During the same period the
E
FDI inflow for electrical equipment (including computer software
L and electronics) was US$ 3.32 billion.
E
C Procedure for approval
T
• Once the investment in equity has been approved, the
R import of capital goods, components and raw materials or
O the engagement of foreign technicians for short duration
N does not require any additional approvals.
I
• Approval of Ministry of Home Affairs is not needed for hiring
C foreign nationals holding valid employment visa.
S
• Approval for setting up units in Export Processing Zones
(EPZs) is given by the Board of Approvals in the Ministry of
Commerce.

• Approval for setting up export-oriented units (EOUs) outside

16
the zones is given by the Ministry of Industry.

• Approvals for setting up Electronic Hardware Technology

Park (EHTP) and Software Technology Park (STP) units are
cleared by the Inter Ministerial Standing Committee (IMSC)
set-up under the Chairmanship of the Secretary, Department
of Information Technology.

• Proposals involving foreign direct investment not covered

under the automatic route are considered by the Foreign
Investment Promotion Board (FIPB).

FDI/ Foreign Technology Collaboration Agreement

The government facilitates FDI and investment from Non-

Resident Indians (NRIs) including Overseas Corporate Bodies
(OCBs), predominantly owned by them, to complement and
supplement domestic investment. Foreign technology induction is
encouraged through FDI and foreign technology collaboration
agreements. FDI and foreign technology collaborations are
approved through automatic route by the Reserve Bank of India
(RBI) or otherwise by FIPB.

Automatic FDI Approval

In pursuance of government’s commitment to early

implementation of the second phase of the economic reforms
and with a view to further liberalising the FDI regime, all items
and activities are placed under the automatic route for FDI/NRI and OCB
investment except:

• All proposals that require an Industrial License include (i) items requiring an
Industrial Licence under the Industries (Development and Regulation) Act,
1951; (ii) more than 24 per cent foreign equity investment for units
manufacturing items reserved for small scale industries; and (ii) all items
which require an Industrial Licence in terms of the locational policy notified
by government under the New Industrial Policy of 1991.

• All proposals in which the foreign collaborator has a previous venture/tie-

up in India.

• All proposals relating to acquisition of shares in an existing Indian company

in favour of a Foreign/NRI/OCB investor.

• All proposals falling outside notified sectoral policy/caps or sectors

for which FDI is not permitted and/or whenever any investor chooses
to make an application to the FIPB and not to avail of the automatic
route.

Automatic Approval by RBI for Foreign Technology Collaboration

Agreements

RBI grants automatic permission for foreign technology agreement in all areas
of electronics and IT provided:

• Lump sum payment of the price of the technology

does not exceed US$2 million

• Royalty payments do not exceed 5 per cent of domestic sales and 8 per
cent of exports. (The royalty rates are net of taxes).

• The payments are subject to an overall ceiling of 8 per cent of total sales
over a period of 10 years from the date of agreement or over 7 years
period from the date of commencement of commercial production,
whichever is earlier. Application for investment under the automatic
process is to be made to the RBI and approval is generally granted
within three weeks.

FIPB Approvals

The FDI/Foreign technology collaboration agreement proposals that do not

conform to the guidelines for automatic approval require government approval
through the FIPB. The Government has set up a special FIPB as a fast track
mechanism to invite and facilitate foreign investments in large projects in India,
which are considered beneficial to the Indian economy but are not covered by
the automatic approval process and norms under which SIA is authorised to
grant investment approvals.
 Key Domestic and Foreign Players

Philips
E
Philips in India is a subsidiary of Royal Philips Electronics of
L the Netherlands. It is promoted by Koninklijke Philips
E Electronics N V.
C
T Philips India Limited (PIL) is a leader in lighting, consumer
R electronics, semiconductors, domestic appliances and personal
care with an unmatched range of products backed by superior
O
design and technology. PIL also has an excellent distribution and
N
after-sales service network. Philips has a plant each in Thane,
I Pune, Loni-Kalbhor, Mohali and Baroda and three plants in
C Kolkata. The revenue in the year 2004 was US$ 524 million
S and the net profit was
US$ 22 million.

Videocon International Ltd.

18
In 1985, through a technical tie-up with Toshiba Corporation of
Japan, Videocon International

Limited launched India’s first world class Colour Television.

Today, Videocon International Ltd. the flagship company of the
Videocon Group, is India’s
leading manufacturer of consumer electronic products.

Videocon is now a global player, the first Indian company to win

the prestigious CE approval for exporting its colour TV to
Europe. Videocon is now entering world market with its
operations in the Middle East, Europe, Indonesia and South
Africa.

It currently manufactures colour TVs, black & white TVs and

audio products - a range of home audio systems, stereo radio,
recorders and personal stereos. At its plant at Chitegaon and
Aurangabad it has also undertaken complete backward
integration to manufacture all critical and important components
of its products, such as electronic yuners, FBTs, ATDMs
and Deflection Yokes. The company had revenues of
US$ 873 million in 2004.

Mirc Electronics

MIRC makes and markets the Onida brand of products. Today,

apart from being a leading player in the CTV market, it also
manufactures other household appliances including air-conditioners, washing
machines, DVDs, plasma television and home theatre systems. For office use,
Onida has also introduced state-of-the-art multi-media presentation products.
Its plant is located at Thane, Maharashtra. In the year 2005 the company had
revenues of US$ 243 million and made a net profit of US$ 8 million.

HCL Infosystems Ltd.

HCL Infosystems manufactures and markets personal computers, PC servers

and RISC/UNIX servers. It offers IT consulting, technology integration services,
turnkey software development and functional consulting and implementation
services for Enterprise Resource Planning. The company made a net profit of
US$ 29 million with revenues of US$ 429 million in 2005.

Samsung

Samsung India Electronics Ltd., a subsidiary of the US$56 billion Samsung

Electronics Co. Ltd., has been operating in India since 1995. It is a leading
provider of high tech consumer electronics, home appliance, IT and telecom
products in the country. Samsung India has set up manufacturing facilities for
colour televisions, microwave ovens, washing machines, airconditioners, colour
monitors and more recently, refrigerators in the country. It has a plant in
Noida. The revenue in 2003 was US$ 715 million.

Solectron

Solectron Centum Electronics Limited is the leading Indian company offering

state of art solutions for Frequency Control Products (FCP), Electronic
Manufacturing Service (EMS) and Hybrid Micro Circuits (HMC). Solectron has
a manufacturing unit and design centre in Bangalore and a post manufacturing
centre in Mumbai. The EMS operation focuses primarily on the domestic
market. For the year 2005 the revenue
was US$ 10 million with a net profit of US$ 2 million.

Flextronics

Flextronics entered India in 2001 when it purchased a Motorola facility.

Flextronics maintains a Bangalore facility with 18,000 sq ft and 297 employees.
The products manufactured are engine management Ccrd, TV tuners,
set top box, energy meters, cellular phone, networking cards and
WLL wall sets.

Jabil Circuits

Jabil Circuit operates a 51,000 sq. ft. plant in Pimpri, which the provider took
over from Philips in 2002. The Pimpri plant manufactures TV analog monitor
 cards and certain audio products for Philips. All production
today is for the Indian market. In December 2004,
Jabil Circuit opened a 175,000-square-foot facility in
Ranjangaon that offers printed circuit board assembly,
E enclosure integration, and distribution and repair services,
L along with in-region design service support. The site serves the
E consumer, instrumentation, networking, peripherals and
C telecommunications industries.
T
R
LG
O
N LG Electronics India Pvt. Ltd. (LGEIL) is a wholly owned
I subsidiary of LG Electronics, South Korea. It has a plant each
C in Noida and Pune. Its products include TV, air-conditioner,
S refrigerator, washing machine, monitor, vacuum cleaner and
projector. LG India Pvt. Ltd. recorded a growth of 37 per cent
from the consumer electronics division, contributing to
46 per cent of the total turnover in 2003.

20
India will be a high growth market in the electronics
sector in the medium term

India’s entire electronics market, worth $11.5 billion in 2004,

is expected to become one of the fast growing electronics
markets worldwide over the next several years. This market is
expected to grow to $40 billion by 2010 at an annual rate
of over 20 per cent. This growth will be assisted by trends
such as increase in contract manufacturing and increase in
EMS and ODM.

Contract manufacturing, an emerging trend, not only helps

hardware product companies de-risk their business model
but also achieve full utilisation of production facilities.
The market for EMS is projected to be US $ 163 billion
by the year 2008, while the market for ODMs is projected
to be US$ 144 billion.

Many key players in the sector have definite plans for their
Indian operations

Samsung

Samsung plans to expand its manufacturing facility in India.

An additional investment of US$ 15 million is planned for
expanding CTV line capacity from 1.5 million units per annum
to 1.8 million units per annum. Samsung plans to invest over
US$ 25 million to expand its Bangalore based R&D centre.
Canon India

Canon has set itself a revenue target of approximately US$ 150 million by
2007 with a leadership position across all product categories. Canon is
bolstering its India marketing efforts with an investment of US$ 4 million in
advertising, market research, retail expansion, in-store branding and training
programmes.

Electrolux

Electrolux is in the process of sourcing components worth US$ 30 million

from Indian manufacturers. It plans to increase the value to US$ 300 million
by 2007.

LG

LG is also planning to invest over US$ 208 million in India in the next three
years to expand the business.

Philips

Philips expects to invest close to US$ 150 million in India over the next few
years.

The confidence expressed by the players in making such growth plans for India
reflects the potential of the Indian electronics sector. This sector is emerging
as one of the most attractive in India, and will be key to India’s emergence as
a global sourcing hub for products and services.
 CONTACT FOR INFORMATION

Information on the market and opportunities for investment in

the electronics sector in India can be obtained from the
E
Confederation of Indian Industry (CII), which works with the
L objective of creating a symbiotic interface between industry,
E government and domestic and international investors.
C
T
R Confederation of Indian Industry (CII)
6, Netaji Subhas Road
O
Kolkata 700 001
N
India
I Tel: + 91 33 2231 5571-4,2261 0575(D)
C Fax:+ 91 33 2231 5577
S Email: subrata.niyogi@ciionline.org

22
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