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Why do we need our Electronic Product Industry

December 2, 2017

The post was originally written on 10 July 2015.


India has constantly been under a varying but injurious nature of foreign exchange deficit or trade deficit, as the imports have always outweighed the exports. In recent past, the considerable surge in trade deficit has been due to electronic items only. India imported $31 billion worth of electronic items in 2013-14; $10.9 billion of this was accounted for by phones. India imports 65% of its current demand for electronic products. If the situation is left unchanged, the country’s electronics import bill may well surpass its oil import expenses by 2020.Hence in order that India could become an economy of $20 Trillion, it is now very pertinent to explore the ways and means to minimize this trade deficit or foreign exchange deficit, and the it can be done simply by employing reverse engineering in trade behavioral patterns. Needless to say that only technology, nay, information technology, nay, information and communication technology has to play the pivotal role in this mammoth job.In fact, there are three items on which the imports are heavily bent upon. The first one is crude oil, the import of which is very impossible to be reduced. The second is gold and is difficult to curb its imports looking at the cultural and societal value of gold and pearls in Indian household unless new vistas are discovered in indigenous gold mining sector. The third is ESDM (Electronics System Design and Manufacturing) industry, and it is the sector which may bring about revolutionary vicissitudes and topple over the present trends of imports and exports thereof.Over the last couple of decades India has been the epicenter of consumer demand fuelled by a phenomenal GDP growth. While demand increased across all sectors, demand for technology products, specifically electronic products has registered significant growth and going by current estimates, the demand for electronics hardware in the country is projected to increase from USD 45 billion in 2009 to USD 400 billion by 2020 (Source: estimated production will reach USD 104 billion by the year 2020, creating a gap of USD 296 billion in demand and production. This creates a unique opportunity for companies in the ESDM (Electronic System Design and Manufacturing) sector to look at India as their next destination to cater to the domestic Indian demand as well as act as an exports hub. Thus, in line of ideology "Make in India", in line with making India a $ 20000 Billion (20 Trillion) Economy, in line with reducing the trade deficit, in line with ameliorating the foreign exchange scenario, the Indian ESDM industry is required to propel into one of the critical GDP contributors in the near future. The Indian electronics system design and manufacturing industry is one of the fastest growing sectors in the country. Witnessing uninterrupted growth, the ESDM industry in India is globally renowned for its consumption potential. Changing global landscapes in electronics design and manufacturing capabilities, and cost structures have turned the attention of global companies towards India. Hence, it is time to explore opportunities to materialize concept of Make in India in this sector too.With the Indian ESDM industry is expected to touch the USD 400 billion mark by the year 2020, and thus being instrumental in making India a $ 20000 Billion (20 Trillion) Economy by contributing 20% thereof, the Government of India has to identify the electronics hardware manufacturing sector as a major thrust area for the country. Taking cognizance of the d


emands of the economy and the industry, the Government of India has taken a number of steps to promote the Indian ESDM industry. In 2012-13, the GDP of India was $1858 Billion (Source: IMF Report). The ESDM Industry contributed less than $75 Billion, i.e. a meagre 4.0%. On the other hand, the overall trade deficit in this financial year was $ 191.6 Billion, out of which trade deficit contributed by ESDM was 12% ($ 23 Billion). Hence there is a need of not only reducing imports of ESDM but also to increase the exports thereof, which will ultimately ameliorate our trade balance and add to strengthening of our country's micro-economy.Hence, this is the sector which must be given priority looking not only at the lessening of trade deficit, but also at the employment, direct and indirect, generation; and all states must come ahead to explore untapped potential in this area of Make in India.












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