Wednesday, September 24, 2014: The electronics market in India, which caters to Indian defence, aerospace and internal security, will reach around Rs 2,000,000 million in next five years, according to industry body India Electronics and Semiconductor Association (IESA) and research firm PWC.
IESA chairman Ashok Chandak explained that the electronics market size, catering to the Defence, Aerospace and internal security (DAIS) sector, will grow around Rs 300,000 million in this fiscal year, which means the CAGR is estimated at 18 per cent. Electronics sector is quintessential for defence and security equipment which means the government needs to boost the domestic manufacturing sector by a proper policy framework. With this boost, indigenous players can get connected to defence technologies.
IESA usually provides data for Ministry of Communications and IT to result in National Policy on Electronics. A joint study on the electronics market in India has been conducted by IESA and PriceWaterhouseCoopers which shows that defence budget in the country has raised to Rs 2,240,000 million among which 40 per cent allocation has been done for capital expenditures. This percentage is expected to grow to Rs 1,370,000 million-1,540,000 million by 2018.
According to Chandak, the government should be more interested in boosting domestic players to focus on defence and security electronics needs. In fact, public and private sector can join hands to reduce import of electronics bill in the DAIS sector. This requirement follows Prime Minister Narendra Modi’s ‘Make in India’ agenda for the domestic manufacturing sector. The study by IESA and PWC has also pointed that the government should resume services as an “eligible offset component”.
The offset guidelines demand that at least 30 per cent of purchased equipment in deal size should be of the value of Rs 3,000 million and the value should be above domestic components. But defence standards are not met by all Indian manufacturing companies, so multinational companies also face challenges in meeting this offset parameter. The study also suggests that FDI in manufacturing electronics products for the DAIS sector should increase so that the technology part gets a boost to enhance the domestic ecosystem.
