India's Electronics System Design and Manufacturing (ESDM) sector is rapidly growing and expanding within the country, making it one of the fastest-growing sectors in the economy. This sector is internationally recognized for its potential for consumption and has been experiencing consistent growth over time. In light of the changing global landscapes in electronics design and manufacturing capabilities and cost structures, multinational corporations are attracted to Indian manufacturers. They aim to develop local capacities not only to serve the domestic market but also to cater to international markets.
In recent years, India has witnessed a significant increase in demand for electronic products, primarily due to its position as the second-largest mobile phone manufacturer worldwide and a surge in internet penetration rates. The Government of India has identified electronics hardware manufacturing as a crucial pillar of its Make in India, Digital India, and Start-up India programmes, and as a result, has assigned it high priority.
The ESDM sector plays a vital role in achieving the government's goal of generating US$ 1 trillion of economic value from the digital economy by 2025. The government has initiated various schemes aimed at boosting domestic manufacturing, leading to an increase in production and assembly activities across products such as mobile phones and other consumer electronics.
INDIA ESDM MARKET:
The Indian electronics manufacturing industry is expected to reach US$ 520 billion by 2025, with demand for electronic products projected to rise to US$ 400 billion by that year, up from US$ 33 billion in FY20. The electronics market has grown significantly, with a 14% CAGR from 2016-19, increasing market size from US$ 145 billion in FY16 to US$ 215 billion in FY19. The electronics system market is expected to grow 2.3 times its current size (FY19) to reach US$ 160 billion by FY25, with the highest CAGR products being IT/OA at 54%, industrial electronics at 38%, and automotive electronics at 10%.
In India, smartphone shipments surpassed 168 million units in CY 2021 and are expected to reach approximately 190 million in 2022. 5G device shipments are projected to increase by 129% YoY, from 28 million in CY 2021 to around 64 million in CY 2022. The electronics design segment, which grew at 20.1%, accounted for 22% of the ESDM market size in FY19 and is expected to increase to 27% of the ESDM market size in FY25.
FUTURE FOR ESDM:
The Indian electronics industry is benefiting from increased domestic consumption, changes in the global supply chain, and various policy initiatives aimed at promoting domestic manufacturing. The successful implementation of these initiatives and the reversal of restrictive laws will boost international business confidence in India's business environment and attract manufacturing investments.
Leading companies in the ESDM sector in India include Sony, Samsung, LG Electronics, Panasonic, and others, with the government focusing on bridging the digital divide through projects like "Digital India," "Smart Cities," "ePanchayats," and "National Optical Fiber Network." The middle class in India is rapidly expanding, making electronic goods more affordable and increasing demand for smart technology and innovative designs.
With robust policy support, significant investments from public and private stakeholders, and a surge in demand for electronic products, the ESDM sector in India has a promising future and is projected to reach US$ 220 billion by 2025, with a growth rate of 16.1% CAGR between 2019 and 2025.
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