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The electronics industry in India was born in the mid 60s with an orientation toward space and defense technologies. This initiative was driven and controlled by the government with the activities almost entirely restricted within the government and public sector enterprises. This was followed by developments in consumer electronics mainly with transistor radios, black and white TVs, calculators and miscellaneous audio products; color TVs followed thereafter. In 1982, a significant year in the history of television in India, the government allowed thousands of color TV sets to be imported into the country to coincide with the broadcast of the Asian Games in New Delhi.

Hard Times
The year 1985 saw the advent of computers and telephone exchanges, which were succeeded by digital exchanges in 1988. The period between 1984 and 1990 was the golden period for electronics during which the industry witnessed continuous and rapid growth. From 1991 onward, there was an economic crisis triggered by the Gulf War, followed by political and economic uncertainties within the country. Pressure on the electronics industry remained during the subsequent years as the policy of liberalization and globalization was rolled out in the early 90s. Growth and developments have continued with digitalization in all sectors, and more recently with the trend toward convergence of technologies. However, it is a known fact that Indian companies have found the going tough with lowering of tariff barriers in an increasingly globalized environment.

After the software boom in the mid 90s, India's focus shifted away from hardware, which took a backseat, as it was the 'difficult' option for entrepreneurs. Consequently, it was treated with indifference by the government as well as investors. The steep fall in custom tariffs made the hardware sector suddenly vulnerable to international competition. In 1997, the ITA agreement was signed at the WTO where India committed itself to total elimination of all customs duties on IT hardware by 2002. This process was delayed to 2005 under pressures from the industry. In subsequent years, a number of companies turned sick and had to shut shop. Only a few exceptions have been able to make a mark and establish themselves as globally competitive players.

Current Scenario
The last few years have seen a change in the fortunes of the electronics industry due to a brisk pace of growth in the market. Electronics output is currently worth about $13 bn against a market of $25 bn. Presently, the largest segment is consumer electronics which is fast losing its primacy to telecom. Today, the market for cell phones alone exceeds $4 bn per annum!

Even with a brisk rate of growth, the electronics industry in India constitutes less than one percent of the global electronics industry miniscule by international standards. Much smaller countries like Malaysia, Singapore, and Thailand boast larger electronics industries. By comparison, demand for electronics hardware in India is growing rapidly and is estimated to be the highest in the world. The growth rate today is even higher than China, though it has a much larger industry. In this situation, if domestic production, which is barely 50% of demand, does not accelerate, India's import bill for electronics may soon exceed our oil imports.

The output of the electronics hardware industry in India is worth $12.7 bn at present.

The Growth Drivers
The growing Indian market for electronics products is over $25 bn, and is growing at about 30% per annum! At this rate, it is projected to exceed $320 bn by 2015.

The growth in demand for telecom products has been the most impressive, and today India is adding 5-6 mn mobile phone users every month! With telecom penetration at around 18%, this growth is expected to continue through the next decade. Penetration levels in other high growth products such as computer/IT products, auto electronics, medical, Internet, and networking, and even consumer electronics are equally low and growth in demand is projected to stay brisk for the next 8-10 years. With the market and the Indian economy growing at an impressive 7-8% per annum, the projection of a $150 bn plus market is quite realistic and offers an excellent opportunity to electronics players worldwide.

One way of accelerating growth, which has been successfully used by many Asian economies such as China, Malaysia, Thailand, and Singapore, is through relocation of manufacturing plants from developed countries where operating costs have become prohibitive. There has been a flood of such relocations over the last 15-20 years, which has yielded huge dividends to Asian economies by increasing their share in world electronics production by leaps and bounds. In fact, more than 60% output now comes from Asia.

Most of these relocations or expansion of manufacturing facilities have taken place from Europe and the US, which in turn have benefited by taking advantage of these low cost production bases, which are also potential markets for them.

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