This article comes as a necessity to analyze India’s electronics market potential post the recent ‘AtmaNirbhar Bharat’ and ‘Make In India’ movements. Though COVID-19 has been a disaster for the economy as well as to the way of life, it has built-up a pedestal to consider local products and reconfigure supply chains to avoid future disruptions. The COVID-19 period has changed the perspective of many due to clearly defined changes in work culture, healthcare, and retail. So much that we can see an increase in the use of keywords — ‘pre-COVID’ and ‘post-COVID’.
To get a better overview of what situation we are in and what must be our future moves, I spent a few hours googling and here’s what I found:
There is particularly a lot to talk about when we consider a wide topic as 'a market', to limit the complexity this essay only goes through government initiatives and numbers. Future parts will dive more into technologies and desi industries.
- IBEF: A 2015 India Brand Equity Foundation study says the electronics market size should be 400 billion USD (overall electronics sector) by 2020 [1]. Statista shows 2020 revenue for consumer electronics to be 12.17 billion USD with 32.1% YoY growth [2]. Though note that this is revenue, not market size/potential as described in the IBEF study, to get a better perspective multiplying the number of users with average user consumption may help. Other statistics that may help us from the same outlook at Statista are — 234.8 million users as of 2020 and average revenue per user (ARPU) to be 51.85 USD for 2020 — hence multiplying ARPU by users gives you the total revenue as mentioned in the first half of para. If we consider multiplying ARPU with the total population we may get the market size (being total optimistic, not everyone’s going to spend 51 dollars on electronics), we get ~70 billion USD for 2020. But what multiplying with the total population means? If you look at the image below, China ranks number one in consumer electronics with 153.8 billion USD. This means the focus needs to be on increased consumer spending, the ARPU. That brings us to, how to increase per capita spending? Growth in per capita income makes sense but more importantly concentrating on the fact that spending happens when users fell a need. New startups, innovations and variety in products can make this happen a big way. New products need marketing to survive, marketing means more pull to spend. Even industrial electronics sector pitches in by this point, for more startups to rise there needs to be better supply chains and cheaper variety of raw materials, for electronics that means PCBs, capacitors, ICs, MEMS etc. Note that the above-mentioned revenues also involve foreign products, hence the cash flow may not necessarily stay in India. The inferences of this para can be limited to (a) The market is growing and is big enough (b) No matter how big we are and how fast we are growing, it needs to be explored how much revenue stays in India for the people and the R&D. (c) Need for variety in the market, hence more startups. PS: For a better gist, here are top 5 revenue players.
- Invest India/PIB: A similar and more recent statistics by Invest India shows the total market to be 400 billion USD by 2025 in contrast to the above point mentioning it to be by 2020. It also specifically talks about consumer electronics in India to be the 5th largest in the world by 2025. More interestingly it mentions the electronics manufacturing sector to account for 2.5% of India’s GDP and employing 13 million people (2018 figures) [3]. The electronics manufacturing doesn’t look that bad looking at these numbers, that comes out to be something around 68 billion USD. A recent PIB youtube video also identifies ‘trilogy of schemes’ to improve the electronic manufacturing numbers, these focus on providing cost, infrastructure, sales, and factory setup incentives [4]. (You can check more details from the video provided in references, an image shows the name of schemes below) Overall, Invest India factors growth into the electronics sector due to an increase in middle-class population, hence increasing the number of users and secondly increase in disposable income, hence increasing the average revenue per user.
- Going through a few more articles we can see rising trends to be noticed in IoT, battery technology, printed circuits, 3D printing, and miniaturization in devices [5]. Exploring more into these trends will give us a better perspective on what we are capable of in the future.
Since we went through the electronics market from the government perspective in this part, in part 2 we will explore new desi industries and the technologies they are getting into along with possibly exploring more new tech opportunities.
Until next time!
—Pranav
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