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ELECTRONICS ELECTRONICS COMPONENT INDUSTRY PERSPECTIVE
BY: PARESH VASANI
Current global & Indian Electronic Component Industry Electronic Component Industry Scenario
PCB
Challenges and Future
GLOBAL ELECTRONICS INDUSTRY
Gl b l El t i I d t US$ 1700
GLOBAL ELECTRONICS INDUSTRY
Global Electronics Industry - US$ 1700 Billion in 2009 – the largest & fastestgrowing manufacturing industry
Global Electronics is projected to to ch Global Electronics is projected to touch US$2000 Bn by 2014 and US$ 2400 Bn by 2020
3Sources: Dept of IT Task Force Report 2009
INDIAN ELECTRONICS INDUSTRY INDIAN ELECTRONICS INDUSTRY
Current Indian market US$ 45Bn; Growing by ~ 22%+y
India would exceed US$ 135 Bn by 2014;
US$ 400 Bn by 2020 !US$ 400 Bn by 2020 !
Sources: Dept of IT Task Force Report 2009
Continue…
Present Production @23 Bn (2009) -about 50% of domestic demand and about 50% of domestic demand and 1.3% of global production
M f t i th t 12 15% Manufacturing growth at 12-15% per annum; Demand Supply Gap widening
Share of Electronics Hardware Mfg in GDP ~ 2%; Much below other Asian countries
Sources: Dept of IT Task Force Report 2009
Continue…
India Signatory to ITA-1 and many FTAs allowing duty free import of s a o g du y ee po o almost all components and ICT products
Still Focus is on Finished Product Still Focus is on Finished Product Strategy (Sourcing)
Sources: Dept of IT Task Force Report 2009;
Continue…
Recent encouraging trend in i t t i h d N ki investments in hardware - Nokia, Flextronics, Jabil, Foxconn; LG, Samsung Panasonic Sharp Sanyo Samsung, Panasonic, Sharp, Sanyo, Denso etc
Major players …. but still low value addition activityaddition activity
Sources: Dept of IT Task Force Report 2009;
Current Trends & Potential
(all figures in US$ Bn) Actuals Forecast
2009 2014 2020
Indian Demand of Electronics 45 135 400
Prod. of Electronics H/W & Components in INDIA 23
@ 15% Growth Rate annually 46 135
I t f El t i H d i t I di 22 89 277Import of Electronics Hardware into India 22 89 277
We must grow @ 25%+ to reduce the i t bill import bill.
Present average growth is 15% and g g %at this rate gap between Demand and Production gap is widening
8Sources: ISA-Frost & Sullivan Report; Ministry of IT, Govt of India Annual Report 2005-06
Continue…
Production Target Growth is above 25% to meet projected demand of p jUS$ 135 Bn by 2014 and US$ 400 Bn by 2020.
Demand Supply Gap would be a massive US$ 296 Bn if present $ pproduction growth scenario persists !
It could surpass India’s total Oil It could surpass India’s total Oil Import !
Sources: ISA-Frost & Sullivan Report; Ministry of IT, Govt of India Annual Report 2005-06
INDIAN PCB INDUSTRY
GLOBAL PCB PRODUCING /COUNTRIES/REGIONS
India1%
Europe12%
Others1%
China33%North America
12%
Taiwan 12%
Korea10%
Japan 19%
12%
Market Share (USD) FY’10Market Share (USD) FY 10
Source Indian Printed Circuit Board Association
INDIAN PCB MARKET SIZE
All figures in USD MillionFY’10
ImportsUSD
Domestic (Excluding Exports
USD 600
Million
( gExports)
USD 320 Million
USD 90 Million
Total Indian PCB Market Size = USD 920 MilliMillion
Source Indian Printed Circuit Board Association
Continue…
Imports
Imports come mainly from China, Taiwan, Hong Kong, Koreaand the US. The import prices are at almost at par with domestic
i i h diff i d j 5 8% ThImports prices with difference narrowing down to just 5-8%. Theimports are largely due to huge demand-supply gap.
Exports
India is exporting about 30 percent of its production to the US,Germany, Malaysia, Austria, Belgium, Netherlands, the UK,Italy, Spain, Thailand and New Zealand. India exports single-
D i
side, double-side, and multilayer PCBs.
PCB manufacturers in India mostly cater across electronicsDomestic applications in India except motherboards, mobiles and high-
end telecom equipment.
DEMAND-SUPPLY GAP IN INDIAN PCB INDUSTRY AN OPPORTUNITY !!! INDUSTRY – AN OPPORTUNITY !!!
Demand = USD 1700 Million
GAP USD 950 MillionConservative Growth Rates have been considered
With 11% CAGR
Supply = USD 750 Million
Demand = USD 920 MillionWith 15% CAGR
(Write full name)
GAP USD 600 Million
Demand = USD 920 Million
Supply = USD 320 Million
Realistic Growth rates have been considered
2009-10 2014-15
Source – IPCA
Continue…
The market demand is expected to grow to about 45Mn Sqm by o g o o abou 5 Sq by 2015 from current 17.7 Mn Sqm
The increasing Demand-Supply Gap gives enough opportunity for new manufacturing plants in I diIndia
NEED-GAPS IN PCB INDUSTRY –CONVERT THIS FOR ELECTRONICA INDUSTRY
Dependency on imports of raw material (Laminates, Dry Film, etc.)
Technological capabilities - not been able to scale their technology and business models to serve a larger number of customers due to the inherent lack of technical and to the inherent lack of technical and delivery capabilities.
Continue…
Inability to scale operations - access to capital, mentorship, technology o cap a , e o s p, ec o ogy partners and lack of go-to-market expertise
Productivity – Lack of automation
Environmental friendly manufacturing - CSR
Exposure to overseas market
Continue…
Local manufacturing without or limited FDIed
Integrated plant (Backward, Forward) Total Solutions short Forward) – Total Solutions – short of offering core manufacturing solutionssolutions
Innovation
Eco System is missing Completely
CHALLENGES IN ELECTRONICS MANUFACTURING INDUSTRY MANUFACTURING INDUSTRY
Lack of component base
Possibly the biggest challenge to the Possibly the biggest challenge to the growth of electronics manufacturing
I f t t b ttl kInfrastructure bottlenecks
High costs of Power, transport & g , plogistics, Finance; poor availability of power
19
Continue…
Economics of scale lacking due to ll f t i bsmall manufacturing base
Lagging in implementing environmental gg g p gmeasures - RoHS, WEEE, EuP, REACH, etc.
Resulting in dumping of non-standard imports
E-Waste Legislation
Continue…
Zero import Tariff on most itemsp
ITA-1, FTA regime – leaves little ITA 1, FTA regime leaves little scope to cover disability costs
Complex tax regime (GST from 1st April 2012)1st April 2012)
DRIVERS FOR MANUFACTURING COMPETITIVENESS - GLOBALLY
Talent – Drives Innovation
COMPETITIVENESS GLOBALLY
Productivity Labor & Material Costs Energy
Steady Supply of highly skilled workers R&D, Manufacturing via world class practices,
After sales – Value AddAfter sales Value Add Network of Suppliers, Customers Effective Management
Policy support
Industry
Policy support Infrastructure Cost of Finance
Industry /Government
Government
Reducing Labor and material costs is the key to manufacturing competitiveness
Key Challenges
1) Infrastructure Related challenge
Poor quality I f Infrastructure
High cost of powerp
High power outage
P i i f h Poor connectivity of the industrial hubs with ports and marketsports and markets
Continue…
2) Funds & Investment Related Challenge
Lack of availability yof cheaper and easily accessible capitalcapital
Continue…
3) Policy related Challenge
Multi-tiers commercial taxation- Central, State and
l b diLocal bodies
Complex procedures and p papproval processes
The ‘Inverted duty The Inverted duty structure’
OTHER CHALLENGES
Skilled labor
Lack of skilled labor especially outside the metros
Lack of domain specific competencies.
R&D F ilitiR&D Facilities
Lack of technological expertise.
Lack of a strong R&D b base.
Continue…
Availability of Raw Materials
Lack of good quality t i lraw materials
Relatively higher t ti f f taxation on a few of Imported raw materials.
DIRECTIONS FOR GROWTH OF INDIGENOUS MANUFACTURINGINDIGENOUS MANUFACTURING
Direction #1: Promote electronic Components that have shown high growth
t ti l potential
Direction #2:
Develop & promote Electronic
Direction #2:
Hardware Technology Park & Electronic Clusters
28
Direction #3:Continue…
Direction #3:
Develop & promote R&D centers across country
Direction #4:
Rationalize tax policies
Continue…
Direction #5:
Improve overall infrastructure in and around major Industrial Hubs and connectivity with major markets & ports
OTHER RECOMMENDATIONS
Develop & Establish/ adopt a technical Standard
D l C h i Develop a Comprehensive developmental plan by setting up a
‘Electronic components mission plan’Electronic components mission plan
Engage in technology transfers/ joint technology partnerships
Continue…
Preferential Access to Indigenous products in Government PSUs and products in Government, PSUs and
Government executed projects
Promote Indigenous production Promote Indigenous production by setting up easier approval
processp oce
32