ESDM industry expected to grow at CAGR of 9.9 percent till 2015
Only a few economies have exhibited the strength to weather the harsh conditions prevailing in the global environment. Such economies are especially remarkable since they are vulnerable to headwinds given the significant size of their GDP.
India, despite its temporary slowdown in the last year, has not only withstood the adverse environment, but has also been witnessing green shoots of recovery. The Electronics Systems Design and Manufacturing (ESDM) sector ranks high among the various segments that have contributed to creating this bulwark. While the industry may not have achieved the exponential growth forecast by experts, its performance in the last few years can be termed an achievement in view of the overall slowdown of the Indian economy.
The ESDM industry is expected to grow at a Compound Annual Growth Rate (CAGR) of 9.9 percent between 2011 and 2015 resulting in an industry size of $94.2 billion by 2015. This was revealed today by the India Semiconductor Association (ISA), a trade body, representing the Indian Electronic System Design and Manufacturing (ESDM) and Semiconductor industry in its 6th ISA - F&S Report on the India ESDM Market (2011-2015).
The report also highlighted that the growing domestic ESDM industry will grow from $64.6 billion in 2011 to an estimated $94.2 billion in 2015.
And although the electronics product market is growing a very fast pace, ironically most of the demand is being fulfilled by imports. The growth potential of the services component will be determined to a great extent by India’s ability to undertake higher value add activities and cost competitiveness. According to the report, reliance on imports continues to be high, with 65% of the demand for electronics products being met by imports. In the absence of policy interventions, imports are likely to grow from $28 billion in 2011 to $42 billion in 2015.
Also the report stated that High Value Added Manufacturing will decline to 6.7% in 2015 resulting in a cumulative opportunity loss of $200 billion during 2011-2015.
Total semiconductor market grows from $6.03 billion in 2011 to $9.7 billion by 2015. The local demand and sourcing will from $2.9 Billion in 2011 to $3.6 billion in 2015, due to heavy reliance on imported electronic products. Achieving 50% total domestic manufacturing by 2015 will create additional direct employment of 2 Lakh, it was stated in the study.
The opportunities in the ESDM ecosystem would also bring to the fore the talent and know-how of small and medium enterprises in India, who could play a crucial, supporting role to global companies, Indian Public Sector Units (PSUs) and Indian multinationals, engaged in the design and manufacture of electronics. The ISA is also working actively to encourage entrepreneurship and innovation in the ESDM sector in India, and believes that these will be crucial to achieve the vision of building the USD 400 Billion ESDM industry in India.
“Growth rate of 9.9% for the Indian ESDM industry is fantastic considering a tough global economic environment. With growing market demand, world class talent and favourable government policies, it is the time for India to seize the opportunity of $94.2 billion market through innovative domestic product development and value added manufacturing - rather than relying on imports and low value add screw driver assembly,” said Satya Gupta, Chairman, India Semiconductor Association.
“The next few years will be crucial for the growth and development of the Indian ESDM industry. The ESDM Industry must focus on the number of areas where India can increase self-reliance and both create and leverage intellectual property assets and the high design capability found in India to develop unique global products for and from India. Examples are areas like computing devices and smart electronics, aerospace and defence and medical electronics,” said PVG Menon, President, India Semiconductor Association.
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