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India’s Electronics and Semiconductor Industry – A New Sunrise after the COVID-19 Crisis

India’s electronics production during 2018-19 was estimated to be approximately US$70 billion which represents 3.3% of the global electronics production of US$2.1 trillion.

Rohit GirdharThis number is rather low and there is immense potential to grow. As a rapidly growing economy blessed with a young population of average age 29, India has a number of structural demand drivers in its favour. Be it increasing consumer electronics content or automotive electronics content, there are favourable tailwinds which will drive demand in India over the longer-term.

It is the supply side where challenges remain. A good part of India’s demand is still met by imports and India being well aware of this, is encouraging local manufacturing. The government (especially MeitY) has consistently supported electronic manufacturing and has encouraged global companies that they will get all the support in making India as a location for not just serving the domestic market but also an export hub.

At the same time, local entrepreneurs are also being encouraged to venture into establishing R&D and manufacturing. Indeed, the most important aspect of the Prime Minister’s address to the nation on May 12th was about the need for आत्मनिर्भरता or “self-reliance”. The PM repeatedly urged the country to turn the crisis into an opportunity by focusing on local manufacturing.

For a strong electronics industry, semiconductors and embedded software play a key role. In recent years, almost all global semiconductor companies have grown their R&D presence in India with most now having multiple design centres across the nation. The capabilities of the design centres has also steadily evolved from design support to full product ownership (hardware and software) in some areas. Global semiconductor companies today are not just doing sales in India but increasingly have strong application engineering teams spread across the country that can enable electronics companies to develop and get their products to market quicker. Spill-over from these design centres and application engineering teams has meant that teams of experienced engineers are now foraying on their own and establishing startup fabless semiconductor companies.

We are also seeing promising startup activity in the electronics area with dynamic teams looking at product development in Electric Bikes, Charging Infrastructure, IoT, Health-Tech, Drones, Robotics and so on. Dedicated incubators and accelerators focusing on hardware development have sprung up across the country with the visionary leadership and excellent support provided by MeitY, DST, Startup India as well as the Atal Innovation Mission of Niti Aayog.

All the building blocks have been diligently put in place by MeitY and other stakeholders in the government but a new and significant challenge has emerged due to the spread of COVID-19. Obviously this is a difficult situation for the industry but looking ahead, every crisis leads to opportunity. There is a sharp, short-term demand drop due to the COVID-19 crisis but it is expected that demand will pick up fairly quickly and by CY2021 we should see a return to pre-crisis levels.

We may also see the emergence of new and interesting application areas e.g. Health-Tech, Robotics and Automation and Cyber security. The second aspect is re-location of supply chains. What the crisis has brought out is the need for diversified supply chains and distributed manufacturing. We also expect to see moves in this regard over the next few months and years. Over here, India with a youthful demographic and a strong domestic market has natural advantages. Lastly, in a post-COVID world, global mobility will lessen and we are likely to see many more of India’s best and brightest STEM graduates stay in India and further deepen the talent pool. So, all in all we may see a new sunrise after the current crisis blows over.


Nitisha Dubey

I am a Journalist with a post graduate degree in Journalism & Mass Communication. I love reading non-fiction books, exploring different destinations and varieties of cuisines. Biographies and historical movies are few favourites.

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