Infrastructure problems abound, but as far as electronics manufacturing in India is concerned, the story has just begun, according to industry experts.
India's
electronic equipment consumption is expected to reach US$126 billion by
2010 and US$363 billion by 2015, growing at a CAGR of 29.8%.
Production, however, is expected to reach only US$150 billion.
At the three-day electronicIndia 2008 conference, held in the first
week of September in Bangalore, almost all the company representatives
interviewed indicated that they believe that India's electronics
industry holds considerable promise, but concede that challenges are
aplenty.
"There's no doubt that infrastructure in
India is bad, but I believe that we should not use that as an excuse
for not going ahead with manufacturing. The next five years could be
very promising," said Sachin Saxena, director-Operations, Nokia India.
Saxena said that many investors lack motivation: "Many potential investors harbor misgivings about whether they would be able to survive in India's industrial areas. Nokia has not only survived but has drawn up expansion plans. I do believe that things have changed tremendously in the past five years and will continue to change for the better."
Today, most of the investment is coming in from the private sector, as against ten years ago when more than 80% of investment was from the government. In 2007, private sector investment had touched 72% compared to 21% in 2003. The foreign direct investment (FDI) inflows in telecommunication had also risen to US$1 billion in 2007 (April to October) as against US$150 million in 2004 to 2005.
Not only has India been enjoying a steady flow of investment, but the average output per employee has also been increasing month after month, raising overall productivity. The cost of manufacturing has also been falling substantially, according to industry reports.
According to Krishnan Batta, senior director, Jabil India, India stands to gain a lot through its geographic advantage: "It is strategically located to serve as a low-cost manufacturing hub for regions throughout Asia, Middle East and Europe. Apart from this, its robust economy, which is around 8%, is very encouraging, as well as its healthy foreign exchange reserves of US$165.9 billion. Moreover, the growing middle class (leading to growing domestic consumption) has become an attractive market, with disposable income levels of people in India having multiplied nearly five times over the last decade." The vast market potential is highly attractive to most electronics makers.
India has the largest three-wheeler market and second-largest two-wheeler market in the world. It also has the second-largest jewelry market and is the largest diamond cutting and polishing center in the world. India stands 19th in the production and 16th in the consumption of machine tools globally, while its textile industry is the second-largest in the world in the cotton trade. It ranks 12th by volume in the world for chemical production. It is also the third biggest leather producer after China and Italy and ranks fifth for bauxite reserves, after Australia, Guinea, Brazil and Jamaica.
"In all these different segments, electronics plays a key role in automating processes and enhancing productivity," Batta said.
Added to this is the availability of a skilled and educated labor force, with over 250 universities, 1,500 research institutions and over 10,000 higher education centers turning out over 500 PhDs, 200,000 engineers, 300,000 non-engineering postgraduates and 2,100,000 other graduates each year. Although studies have indicated that a large proportion of the engineering graduates are not readily employable, companies do have training programs in place to address this problem. For instance, Jabil is partnering with local technical institutions and developing coursework for students to prepare them for a career in EMS. Internally, Jabil invests in long-term training and development programs for employees.
Despite this promising scenario where India has the manpower, skill sets, technology, and language skills, it is still lagging behind as an electronics manufacturer.
(Continue to the next page)
Nikkei Electronics |
Nikkei Monozukuri |
Nikkei Automotive Technology |
|---|---|---|
 |
 |
 |
| The magazine for electronics designers and managers. | Design You Won't Regret - How to Reduce the Risk of Accidents | The comprehensive automotive technology magazine. |
Copyright © 1995-2010 Nikkei Business Publications, Inc. All rights reserved.
All editorial content and graphics on this Web site may not be reproduced in whole or in part without the express permission of the copyright owner.
