The Electronics Sector Is Gradually Evolving

A certain level of maturity is being perceived by the Indian consumer electronics sector.

Aimed at positioning India as a global manufacturing hub, the government has increased allocations toward Modified Special Incentive Package Scheme (M-SIPS) and Electronic Development Fund (EDF) to Rs.745 crore in 2017-18. 243 applications have been received, out of which 75 have been approved, involving investment proposals of Rs.17,997 crore. Amendments to M-SIPS to further incentivize investments and move toward the goal of net zero imports in electronics by 2020 have been made, and daughter funds set up by EDF to provide risk capital to companies developing new technologies. Financial support is being given under the Electronics Manufacturing Cluster (EMC) scheme to support creation of world-class infrastructure for attracting investments in electronics manufacturing; 28 EMCs have received approval till date with ELCINA expecting its Bhiwadi cluster likely to be the first to start production. The case is being helped as China, facing increasing pressure due to rising labor costs, is gradually vacating this position.

The lower income tax rates for individuals within Rs.2.5–5 lakh income segment recently announced in the Union Budget should give a fillip to consumer spending. The increased focus on boosting agricultural income as well as a greater thrust on rural economy will help rural penetration. 100 percent rural electrification and Housing for All shall provide impetus to demand. Over the last couple of years, a distinct shift has been seen in the consumption pattern, with smaller towns showing a preference for high-end models and an increased retailer presence in Tier II and III cities. This transition will be easier once GST is implemented, and movement of goods made less cumbersome and cost of logistics and distribution lowered.

Reduction in the amount of cash transaction, improvement of net banking facilities, shrinking of the unorganized segment, promise of collaboration between government and industry to offer skill-training and certification, and increased broadband connectivity are gradually strengthening the sector.

The icing on the cake is the forecast of a CAGR of 9.5 percent from 2017 till 2021 by CEAMA and Frost and Sullivan in a recent study.

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