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  Date: 23/01/2013

Indian ESDM Industry: The forecast is bad to worse for local companies

As per the latest study by the India Semiconductor Association (ISA) in partnership with Frost and Sullivan, the Indian Electronic System Design and Manufacturing (ESDM) and Semiconductor industry is growing big, but the percentage of domestic production is growing further smaller. The report forecasts CAGR of 9.9% for ESDM (which is basically the electronic device/equipment designing and manufacturing) from USD 64.6 billion in 2011 to an estimated USD 94.2 billion in 2015. By 2015 only 6.7% of this is to be made by local domestic companies, according to ISA and Frost and Sullivan report.

The report points out: High Value Added Manufacturing to decline to 6.7% in 2015 resulting in a cumulative opportunity loss of USD 200 Billion during 2011-2015.

When it comes to the most important part of electronics, i.e. semiconductor devices, the ISA and Frost and Sullivan report forecasts total Semiconductor Market grows from USD 6.03 Billion in 2011 to USD 9.7 Billion by 2015. Local demand and sourcing grows from USD 2.9 Billion in 2011 to USD 3.6 Billion in 2015, due to heavy reliance on imported electronic products.

This trend can be reversed by extremely smart, very practical, very-fast implemented government policies. Government is in the process of implementing new policies. Some of the important policies/initiatives include preferential market access for domestic products, creation of electronics manufacturing clusters, special incentive package, electronics development fund, and semiconductor fab. Only time can tell how effective are these policies/initiatives going to be.

To give you one more latest news on implementation side, Shri Kapil Sibal, Union Minister of Communications & IT chaired a round table on the Electronics System Design and Manufacturing in this week. At the round table, Shri Sibal received the first MSIPS application of over Rs 550 crore investment from Head of Bosch Electronics India.
Author: Srinivasa Reddy N
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