The Electronics Systems Design and Manufacturing (ESDM) market in India is expected to grow to $94.2 billion by 2015.

However, these findings, according to Indian Semiconductor Association (ISA) and Frost and Sullivan, are highly optimistic in the backdrop of ground realities – right from government policy to India’s economic situation. Further, the report states that Indian domestic manufacturing can contribute 50 per cent or $42 billion by 2015. India also continues to rely on imports for majority of electronics demand, according to the report.

“It is ambitious. While the debate is shifting in the right direction, in the current economic climate, this is questionable,” said Shiv Putcha, Principal Analyst, Ovum.

Other industry watchers agree. “There is a perception that imports of electronic products exceed the oil import bill. However, if you increase your domestic production to 50 per cent, the reliance on oil imports would exceed and not go down,” said the India sales head of a billion dollar multinational who did not wish to be named. In other words, this would continue to add to the widening fiscal deficit.

In the 2012 fiscal, India's oil import was Rs 726,386 crore. There are also concerns around a decline in demand for high value-added manufacturing by 6.7 per cent till 2015, said the report.

“India will miss the boat of value-added manufacturing if conducive policies are not speeded up,” said P.V.G. Menon, President, ISA. The government has unfolded the new policy framework for creating an ecosystem of ESDM and it specifically covers sectors such as avionics, automotive electronics, medical electronics and LEDs.

Domestic manufacturing can spur employment demand and according to the report, if 50 per cent of the domestic electronics demand is met locally, it would create 200,000 jobs.

Already, some initiatives have been launched in the country to set up electronic manufacturing. In June, industry body ELCINA partnered with Vittal Innovation City (VIC) to launch an Electronic Systems Design and Manufacturing (ESDM) cluster in Karnataka.

venkatesh.ganesh@thehindu.co.in

(This article was published on January 23, 2013)
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