Electronics & IT Production
Consumer electronics sector is estimated to achieve a production level of Rs. 18,000 crore during 2005-06, as compared to Rs. 16,800 crore in the year 2004-05. The fast growing segments during the year were colour TV, DVD players, home theatre systems. The colour TV production has shoot up to over 11 million units during the year 2005-06. VCD/MP3 player sales have witnessed impressive growth and have crossed 10 million mark during the year.
Indian colour TV picture tube could not sustain production level achieved during last year and was 11 million numbers during 2005, as against 11.2 million numbers during the year 2004. The sale of personal computers is likely to touch 47 lakhs numbers during the year 2005-06. The communication sector has shown a growth of about 45 per cent. Prices of colour TV and computers have also come down in consonance with the worldwide trend.
The production and growth trends during the last 5 year have been as follows:
|
Year
|
Production
(Rs. Crores)
|
Growth
(%)
|
| 2000-01 |
68,850
|
31.3
|
| 2001-02 |
80,124
|
16.4
|
| 2002-03 |
97,000
|
21.1
|
| 2003-04 |
118,290
|
18.2
|
| 2004-05 |
152,420
|
28.8
|
| 2005-06 |
186,260
|
22.2
|
Consumer Electronics
The total production of consumer electronics is expected to increase to Rs.18,000 crore during the year 2005-06, registering a growth of over 7% over production in the previous year. Consumer electronics sector continues to be the main stay of the Indian electronic industry contributing about 32% of the total electronic hardware production. Colour TV remains the largest contributor to this segment. During 2005-06, the domestic market of colour TVs is expected to cross 10 million units. The total production of colour TV sets is expected to be more than 11 million. Flat screen TVs accounts for 45 percent of the total domestic TV sales.
During the year, the prices of colour TV sets have fallen by 8-10%, due to severe competition in domestic market inspite of the increase in input prices. The DVD player market has seen exponential growth in the domestic market because the prices of these products have experienced a sharp drop and also because of falling prices of software, i.e. recorded DVDs.
Hi-end products such as Plasma Display Panels (PDP) and Liquid Crystal Display (LCD) TVs have registered more than 200% growth, though on a smaller base in 2005-06, because of sharp drop in price of these Hi-end products. This trend is expected to continue as the prices would continue to fall. Presently, manufacturing of LCD and Plasma TVs is not taking place in the country, but it is expected that as the volumes pick-up, these will start getting manufactured here.
Computer Industry
With sound macroeconomic condition and buoyant buying sentiment in the market, PC sales are expected to touch 47 lakhs (4.7 million) units during the year 2005-06. The high growth in PC sales is attributed to increased consumption by Industry verticals such as Telecom, Banking and Financial Services, Manufacturing, Education, Retail and BPO/IT-enabled services as well as major e-Governance initiatives of the Central and State Governments. Significant consumption in the small and medium enterprises and increased PC purchase in smaller towns and cities was witnessed during the year. It is expected that increased Government focus on pan-India deployment of broadband at one of the lowest costs in the world will soon lead to accelerated PC consumption in the home market.
The southward trend in pricing continued during the year due to technological reasons and other initiatives of the industry, including the sub-Rs.10,000/- PC. The Notebook market is expected to grow by 100% as prices of notebooks have also come down significantly. Entry level notebooks are available in the range of Rs.30,000/-.
The growing domestic IT market has now given impetus to manufacturing in India . The year witnessed not only capacity expansion by the existing players, but also newer investments in hardware manufacturing. India is also high on the agenda of electronics manufacturing services companies.
Software and Services
Global trade in services has entered a new era, with the growing and widespread acceptance of the IT-based global delivery model. International bandwidth and powerful workflow management IT software and services sector today is more easily penetrating into the fabrics of the society than ever before. IT is now possible to disaggregate any business process, execute the sub-processes in multiple centers around the world, and reassemble it, in near –real time, at another location. India has already registered its mark on the globe in ITES-BPO sector.
Worldwide spending on IT-ITES witnessed steady growth in 2005, on the back of healthier spending across key markets of the US and Western Europe , and strong growth in emerging markets. Outsourcing continued to be the primary growth engine with global delivery forming an integral part of the strategies adopted by customers as well as service providers.
Global sourcing is now a key element of corporate boardroom agency. The Indian IT-enabled and Business Services (ITES-BPO) have demonstrated superiority, sustained cost advantage and fundamentally-powered value proposition in ITES. Indian companies are expanding their service offerings, enabling customers to deepen their offshore engagements; the shift from low-end business processes to higher-value, knowledge-based processes is having a positive impact on the overall industry growth.
Buying decisions are witnessing a clear shift from the cautious tone of the past few years, in which cost reduction and regulatory compliance dominated senior management agendas, to more revenue growth-oriented initiatives. Over the past few quarters, IT-ITES spending across industries has been increasingly focused towards improving customer services, sales performance, performance tracking, employee productivity, and product development and innovation, as well as increasing the responsiveness of the IT organization and efficiency improvement. Newer technology applications such as web services and service-oriented architecture that help reduce complexity and increase flexibility in an organisation's IT infrastructure, have witnessed increasing levels of adoption.
The software and ITES exports from India grew from US$ 12.9 billion in the year 2003-04 to US$ 17.7 billion in 2004-05. It is estimated that total software and ITES exports from India will exceed US$ 23.4 billion during the year 2005-06. Software and services exports are estimated to grow at 32 per cent in dollar terms during the year 2005-06.
Strong demand over the past few years has placed India amongst the fastest-growing IT markets in the Asia-Pacific region. The Indian software and ITES industry has grown at a CAGR of 28 per cent during the last 5 years. The industry's contribution to the national GDP has risen from 1.2 per cent during the year 1999-2000 to a projected 4.8 per cent during 2005-06.
Indian ITES-BPO exports are estimated to have grown from US $ 3.1 billion in the year 2003-04 to US $ 4.6 billion in 2004-05, recording a growth of nearly 48 per cent, and are estimated to reach US $ 6.3 billion by the end of the current fiscal year 2005-06.
Recognising the advantages of multi-country service delivery capabilities to better manage evolving customer requirements and execute end-to-end delivery of some new services, Indian companies are enhancing their global service delivery capabilities through a combination of green-field initiatives, cross-border M&A, partnerships and alliances with local players. Global software product giants such as Microsoft, Oracle, SAP, etc., have established their captive development centres in India .
The Indian IT-enabled and Business Services (ITES-BPO) have demonstrated superiority, sustained cost advantage and fundamentally-powered value proposition in ITES. Indian companies are expanding their service offerings, enabling customers to deepen their offshore engagements; the shift from low-end business processes to higher-value, knowledge-based processes is having a positive impact on the overall industry growth. Demonstrated process quality and expertise in service delivery has been a key factor driving India 's sustained leadership in global service delivery.
Several global players are now sourcing their engineering and R&D services from Indian third-party providers and/or through their captive engineering and R&D units in India . Indian IT-ITES export revenues from these segments (engineering and R&D services, offshore product development and made-in-Indian software products) are estimated to have grown ten-fold – from a little over US $ 300 million in 2001-02 to over US $ 3.1 billion in 2004-05, and are projected to reach US $ 3.9 billion by the end of the current fiscal year 2005-06.
India 's record on information security ranks better than most locations. The authorities in India are maintaining a keen emphasis on further strengthening the information security environment in the country. Specific initiatives underway include enhancing the legal framework through proposed amendments to the IT Act 2000 – currently under review by the government – increasing interaction between industry players and enforcement agencies to help create greater awareness about information security issues and facilitate mutual support as and when required.
Today, a majority of the companies in India have already aligned their internal processes and practices to international standards such as ISO, CMM, Six Sigma, etc., which has helped establish India as a credible sourcing destination. As of December 2005, over 400 Indian companies had acquired quality certifications with 82 companies certified at SEI CMM Level 5 – higher than any other country in the world.
The total number of IT and ITES-BPO professionals employed in India is estimated to have grown from 284,000 in 1999-2000 to 1,287,000 in 2005-06, growing by over 230,000 in the last year alone. In addition, Indian IT-ITES is estimated to have helped create an additional 3 million job opportunities through indirect and induced employment. Indirect employment includes expenditure on vendors including telecom, power, construction, facility management, IT transportation, catering and other services. Indirect employment includes expenditure on vendors including telecom, power, construction, facility management, IT transportation, catering and other services. Induced employment is driven by consumption expenditure of employees on food, clothing, utilities, recreation, health and other services.
Control, Instrumentation and Industrial Sector
This is now a matured industry sector in the country at least as far as various application segments are concerned. State-of-art and reliable SCADA, PLC/Data Acquisition systems are being applied across various sections of the process industry. Latest AC drive systems from smaller to very high power levels also find application in large engineering industries like steel plants and/or metal industries. World class UPS systems are being manufactured in the country to cater to the need of the emerging digital economy. However, it appears there is really no manufacturing base in the country for the whole range of the latest test and measuring instruments which are invariably procured from outside. A good number of Indian companies in the control and instrumentation sector are able to acquire orders for export systems through international competitive bidding.
However, the creation of knowledge base in the country through industrial R&D in this critical sector has not been improving as desired. There is still lack of needed R&D activities by the industry looking at the global market. On the part of Department of Information Technology some of the latest technology development and applications in this area include Intelligent SCADA Systems for monitoring and control of Mini Hydel plants, Advanced Traffic Control System for urban transportation, Intelligent Power Controllers for improvement of quality of electric power, etc. These systems have been successfully developed and applied in real field conditions.
Communication & Broadcasting Sector
The telecommunication industry has gained tremendous recognition as the key driver for all round development and growth. With about 125 million telephone subscribers (as on 31 st Dec.'05 ) India has emerged as one of the largest in the world and second largest in Asia . As many as 32 million connections were given during the year 2005. More than 8,00,000 Broadband connections have been provided in more than 100 towns in the country.
The share of private sector in telecom industry has increased to more than 48% and the contribution of mobile telephony has gone upto 55%. A target of 250 million telephones (teledensity of about 22%) and broadband connectivity to 10 million subscribers have been set to achieve by end 2007. Broadband connectivity is holding tremendous potential in the country. It is expected that the number of broadband subscribers would reach 20 million by 2010.
India has emerged as the second largest market for mobile handsets. Following the unprecedented growth in the mobile market, a number of companies are planning to set up production base for mobile hand sets in the country for meeting local as well as export markets.
Direct to Home (DTH) broadcast service has gained more and more popularity during 2005. DTH service is available through National Broadcaster and private DTH service provider. Better quality digital broadcast reception is now available almost everywhere in the country to the common people on their TV sets through the use of small dish antenna and a Set-Top Box (STB).
Strategic Electronics
The production in the strategic electronics sector during the year 2005-06 is estimated to be Rs. 3,200 crore, as compared to Rs. 3,000 crore during the year 2004-05.
Electronic Components
The total production of components is expected at Rs. 8,800 crore during 2005-06. The colour picture tube production is likely to be around 11 million, a decline from 11.2 million in the last year. The production of B&W picture tubes declined further due to decreased market for B&W TVs.
The components with major share in the export are CD-R, CPTs, PCBs, DVD-R, connectors, semiconductor devices, ferrites, resistors, etc.
Significant developments took place during the year in the area of colour picture tubes and colour glass parts. Another CPT manufacturer successfully launched manufacture of pure flat tubes, leading to availability of flat tubes from three indigenous sources. The CPT units continued expansion of capacities to improve further their global competitiveness. Two more lines were commissioned during the year, one for manufacture of large size flat colour picture tubes and the second for small size. Two more lines are likely to come up next year. Keeping pace with the downward trend in prices of color TVs, the prices of CPTs also fell.
One of the CPT manufacturers successfully developed a prototype of the 42â€Plasma Display Panel. This marked a major achievement of a milestone in the area of developing from green field a Technology development initiative in a Hi Tech area.The focus of development was in optimizing the Plasma Display Cell design to achieve the desired parameters of Contrast and Brightness , achieving high speed response times and parallely designing the Scan and sustain driver boards to match the Panel parameters.A fully functional video Controller was also designed and developed to match the Logic Circuits of the PDP Panel. In the year 2006, the company plans to begin selling commercially the PDP Panels developed completely inhouse and the focus theron will be to create low cost products through Technological breakthroughs.
The color glass parts manufacturer implemented major expansion of its capacity to meet increased local requirement due to substantial growth in CPT production. The unit also started manufacture of glass parts for pure flat tubes as the demand for such tubes increased due to one more unit launching production during the year. Both the existing manufacturers of B/W glass parts continued the production of colour funnels in their existing lines. They were also planning to make large investment to set up manufacturing facilities for colour panels in near future.
A number of existing units imported capital goods under various schemes for expansion of their capacities in PCBs, connectors, cable assemblies, colour picture tubes, compact disc, glass parts for colour picture tubes, etc.
The serviceable market for professional grade components such as PCBs, semiconductor devices, connectors, wound components, antennas, etc., is likely to go up due to launch of manufacture of mobile handsets in the country.
The industry associations/forums related with components have been taking steps to attract investment in component sector through various means like organizing seminars/exhibitions/workshops, sector specific inter-action with equipment manufacturers, etc.
Electronics Production (Calendar Year)
(Rs. Crore)
|
Item
|
2000
|
2001
|
2002
|
2003
|
2004
|
2005
|
|
1. Consumer Electronics
|
11,880
|
12,300
|
13,580
|
14,850
|
16,500
|
17,500
|
|
2. Industrial Electronics
|
3,970
|
4,480
|
5,400
|
5,980
|
8,300
|
8,600
|
|
3. Computers
|
3,350
|
3,520
|
4,180
|
6,600
|
8,680
|
10,500
|
|
4. Communication. & Broadcast Eqpt.
|
4,450
|
4,450
|
4,800
|
5,150
|
4,770
|
6,300
|
|
5. Strategic Electronics
|
1,730
|
1,750
|
2,330
|
2,670
|
2,850
|
3,070
|
|
6. Components
|
5,500
|
5,650
|
6,510
|
7,450
|
8,700
|
8,530
|
|
Sub-Total
|
30,880
|
32,150
|
36,800
|
42,700
|
49,800
|
54,500
|
|
7. Software for Exports
|
27,000
|
34,000
|
44,000
|
55,000
|
75,000
|
96,000
|
|
8. Domestic Software
|
8,800
|
10,600
|
12,000
|
15,500
|
20,500
|
25,000
|
|
Total
|
66,680
|
76,750
|
92,800
|
113,200
|
145,300
|
175,500
|
Opportunities in Software Sector by the Year 2008
( McKinsey Report )
|
Software Sector
|
| |
Total Market |
Exports |
| IT Services |
$ 28-30 billion |
$ 28-30 billion |
| Software Products |
$ 8-11 billion |
$ 8-11 billion |
| IT Enabled Services |
$ 21-24 billion |
$ 21-24 billion |
| Domestic Market |
$13-15 billion |
|
| Total |
$ 70-80 billion |
$ 57-65 billion |
IT Industry by the year 2008
|
Employment Generation Year 2003-04
|
|
IT Exports
- 35% of India's Total Exports in 2008
- from 21.3% during 2003-04
|
|
Share of IT Software & Services Industry in GDP
- Likely to be 7% of GDP in 2008
- from 2.64% of GDP during 2003-04
|