NEW DELHI:
The Indian electronics hardware manufacturing industry will grow 12 times to touch $62 billion revenue, according to a study done by Ernst & Young and Manufacturers Association of Information Technology.

The study, sponsored by the ministry of communications and information technology, predicts that the domestic market would account for $37 billion and exports the remaining $25 billion.

"Government has to play very actively the role of a facilitator. Getting the policy framework right is of crucial importance as also the infrastructure and technology position," according to the study.

"Besides focusing on technology, the industry also needs to look beyond the short term and think global. The convergence of actions, by industry and by governments at union and state levels, is necessary to address many vexing issues," it adds.

Releasing the study, Union communications and IT minister Pramod Mahajan said: "Electronics hardware industry is a very important industry for India to focus on and it will be our endeavour to ensure that the sector flourishes.

"According to the study, there exists a massive exports opportunity with contract manufacturing expected to touch $11 billion, components $5 billion and designs another $7 billion. Domestic personal computer sales would touch 22 million by 2010 with PC penetration of over 69 per 1,000 people in 2010.

The study focuses on the electronics hardware industry with the objective of reviewing the current state of the industry, identifying issues being faced, opportunities available, and initiatives that need to be taken by the industry and the government to realise these opportunities.

It covers the entire gamut of the hardware industry, from components to intermediate products to finished products and spans the telecom sector, consumer electronics sector, industrial electronics and the IT hardware sector.

Under the existing growth pattern, the domestic PC market is expected to touch 14.3 million units by 2010 with PC penetration being 45 per 1,000 people.

However, if the government takes the right initiatives in the form of tax and duty rebates, coupled with increased government spending on IT, PC sales could be of the order of 8.9 million units in 2005 and 22 million units in 2010 with PC penetration of over 69 per 1000 people in 2010.

Telephone penetration is also projected to increase dramatically with the deregulation of telecom networks. In 2010, over 39 million new lines would be installed and the penetration would be 217 per 1,000 people.Similarly, over 18 million colour TVs are expected to be sold in 2010. The domestic demand for electronics hardware products in 2010 would, therefore, be in the range of $ 41-47 billion.

The study reveals that the major export opportunities lie in the area of innovative new products, contract manufacturing and design services. Export of components offers an opportunity of $5 billion while that of designs and related services in embedded systems and wireless telecommunication systems $7 billion by 2010.

In the area of contract manufacturing, India can corner a share of 2.2 per cent of the global electronics contract manufacturing market by 2010 - a $11 billion opportunity with the size of the global contract manufacturing market crossing $500 billion.

"India can target a share of one per cent of the North American market, 2 per cent of the Western European market, 4 per cent of the Asian market and 5 per cent of the rest of the world. Potential areas for contract manufacturing are PCB assembly, cable harness assembly, product assembly and testing, power supplies and semiconductor assembly," it says.

"However, to be globally competitive in contact manufacturing, the manufacturing environment must enable increased flexibility in production, substantial reduction in time-to-market as product life cycles shorten, sharp reduction in manufacturing costs, significantly reduced need for capital resulting in higher returns on invested capital, focus of capital and intellectual property on core competencies; and start of new products company without competencies or investment in manufacturing," adds the study.