Policy Changes to India’s OEM Market

Sudha Nagaraj Bharadwaj, Journalist | 12/6/2012 | 8 comments

Sudha Nagaraj Bharadwaj
Faced with growing demand but a domestic manufacturing market too small to handle it, India has embraced a new Electronics Policy 2012, which seeks to pave the way for domestic manufacture of electronics, generate 2 million jobs, and improve cybersecurity for the country.

The consumption of electronics in the country is growing at a CAGR of 23 percent. By the end of September 2012, the country boasted 937.7 million telecom subscribers. By 2014, the country will phase in digitized pay TV services that will call for millions of set-top boxes, estimated to cost $2 billion. India has overtaken Brazil to become the sixth largest producer of automobiles, where electronics are playing a growing role. Demand for electronic products stood at $45 billion in 2008-09, and is expected to soar to $400 billion by 2020 in the country.

It is unfortunate, therefore, that the Indian market is dependent on imports for most electronic components. Domestic production is estimated to be capable of only meeting $100 billion worth of demand by 2020. If the problem is not tackled, Indian imports of electronics will exceed oil imports.

The new policy will take several steps that may reduce the problem:

Establishment of two semiconductor wafer fabrication facilities. To facilitate the estimated $5 billion initiative, an empowered committee has been set up to identify and shortlist potential technology and investors. The first facility is envisaged as a center for manufacturing a variety of chips to meet requirements of high-volume products. It could be a new facility or one relocated from abroad. The second unit would be a greenfield, state-of-the-art facility, and the government is open to providing equity or grants for an established integrated device manufacturer to establish a facility in India. Inquiries have already come in from five global semiconductor makers including Infineon Technologies, ST Microelectronics, Russia's Sitronics, Global Foundries, and a consortium comprising Jaypee Associates, IBM, and Israel's Tower Jazz. Intel has offered advisory support.

Modified special incentive packages. A subsidy is being offered to attract domestic and global players and promote large-scale manufacturing in 29 segments of electronic systems design and manufacturing (ESDM). It is also expected to offset the difficulties faced in terms of high transactional costs, complex administrative processes, poor supply chain, and infrastructural deficiencies. The incentive is being offered against investments in capital expenditure for a period of 10 years. A reimbursement of indirect taxes is also being offered.

Electronics manufacturing clusters (EMCs). The government will extend financial aid to special purpose vehicles (SPVs) that will help set up EMCs. The cluster approach has been adopted to promote entrepreneurial ecosystems, complete with increased supply chain responsiveness, consolidation of suppliers, decreased time-to-market, better access to talent, and lower logistics costs. EMCs are also easier to monitor for security reasons, curb inflow of sub-standard products, and mandate technical standards. Private industry has already responded with proposals to set up such clusters in Bhiwadi (Rajasthan) and Ananthapur (Andhra Pradesh). In addition, the state governments of Andhra Pradesh (Hyderabad and Vishakapatnam), Kerala (Kochi), and Punjab (Ropar) have also sent in proposals.

Preference to domestically manufactured electronics. All government departments and their agencies (except defense) have been instructed to specify a list of electronic products that may be procured only from manufacturing units located within India -- both for security considerations as well as for government’s "own-use" in line with WTO commitments. Generic products like computers will be under the purview of the Department of Information Technology/Telecommunications. Such procurement should not be less than 30 percent of the total value of the electronic product or products.

The policy also proposes an Electronic Development Fund, a human resources development plan, and a National Electronics Mission to establish India as a global destination for electronics manufacturing. Clearly, with these policy changes and the growing demand, both domestic and international OEMS need to start taking India seriously as a location for electronics manufacturing.

View Comments: Newest First | Oldest First | Threaded View
Umair Ahmed   Policy Changes to India’s OEM Market   12/7/2012 12:27:21 PM
Re: Holy Mackerel
It seems like the trend in every government is going to be making what you need in your own country. It will be interesting to see how that effects the global economy.

@ David: If it is achievable, than countries having trade surplus like China, Japan and Singapore are more likely to lose. In that case having relevant technology, technical skills and demand to at least cross the breakeven level will be vital.
Sudha N Bharadwaj   Policy Changes to India’s OEM Market   12/7/2012 12:12:28 PM
Re: Huge increase in energy demand
Thanks Umair. Lots of techniques have already surfaced post India becoming signatory to the Kyoto Protocol. Energy audits have also started to spread awareness. Sometime back the cement industry was in the news for adopting innovative means to cut down on CO2 emissions.
Sudha N Bharadwaj   Policy Changes to India’s OEM Market   12/7/2012 12:02:42 PM
Re: Sustainability is the key
Yes, I think Intel has previously pointed this out as a deterrent.
Sudha N Bharadwaj   Policy Changes to India’s OEM Market   12/7/2012 12:00:46 PM
Re: Holy Mackerel
@Rich I doubt if the US government would be interested. :)
Umair Ahmed   Policy Changes to India’s OEM Market   12/7/2012 11:49:54 AM
Huge increase in energy demand
Interesting post, Sudha. It is obvious that there is great potential in the India's domestic market, and Indian government is striving to utilize that potential in favor of its own people.

You mentioned that demand of electronic products is expected to grow from $45 billion (in2009) to $400 billion by 2020. This in nearly 9 times increase, and also demonstrates the rising demand of energy to power up those electronic equipments. It seems that federal energy department of India would be worried to meet such a huge increase in demand. The challenge seems not only to manufacture the electronic products locally but the energy efficient products. It will be interesting to see what new energy-efficient techniques evolve in Indian electronic manufacturing to help tackle the increasing energy demand.
David Wagner   Policy Changes to India’s OEM Market   12/6/2012 5:37:15 PM
Re: Holy Mackerel
@Rich- I had the same thought. Though, interestingly enough, it was announced that Apple, long a proponent of offshoring is bring back some of its manufacuring to the US. If Apple does it, you know many others will follow the lead. It seems like the trend in every government is goign to be making what you need in your own country. It will be interesting to see how that effects the global economy.
Hammad Masood   Policy Changes to India’s OEM Market   12/6/2012 4:09:36 PM
Re: Holy Mackerel
Two million people wow ! I hope the indian government then follows this policy very closely as its giving great benefits !
rdv   Policy Changes to India’s OEM Market   12/6/2012 3:36:08 PM
Sustainability is the key
There are many policy chages but sustainability is the Key...

semiconductor wafer fabrication facilities....

The main bottleneck for having a wafer fabrication and chip making facilites is the uninterrupted and a very good power supply grid.  The Government have to pay heed to these before implementing the policies..

 


The blogs and comments posted on EnterpriseEfficiency.com do not reflect the views of TechWeb, EnterpriseEfficiency.com, or its sponsors. EnterpriseEfficiency.com, TechWeb, and its sponsors do not assume responsibility for any comments, claims, or opinions made by authors and bloggers. They are no substitute for your own research and should not be relied upon for trading or any other purpose.

More Blogs from Sudha Nagaraj Bharadwaj
Sudha Nagaraj Bharadwaj   5/13/2014   32 comments
Internet surveillance in India is turning really fierce. A Facebook transparency report reveals that the social network removed 4,765 pieces of content originating in India in the second ...
Sudha Nagaraj Bharadwaj   4/30/2014   50 comments
With the growing importance of enterprise data, big data, and the Internet of Things, the Indian CIO will be forced to wear the cap of the CDO as well. Though the Chief Digital Officer ...
Sudha Nagaraj Bharadwaj   4/25/2014   15 comments
The much-dreaded April 4 deadline for certification of imported electronic products in India has passed. The Department of Electronics and Information Technology (DeitY) had mandated that ...
Sudha Nagaraj Bharadwaj   4/18/2014   15 comments
India will soon offer reliable, affordable, and efficient cloud services for the private sector through a unique government-private sector joint effort. With an eye on helping the micro, ...
Sudha Nagaraj Bharadwaj   4/11/2014   15 comments
If you are a CIO hiring or planning to hire IT professionals for onsite projects in the US, you will have to wait to see if luck favors you this season. For the second year in a row, the ...
E2 IT Migration Zones
IT Migration Zone - UK
Why PowerShell Is Important
Reduce the Windows 8 Footprint for VDI
Rethinking Storage Management
IT Migration Zone - FR
SQL Server : 240 To de mémoire flash pour votre data warehouse
Quand Office vient booster les revenus Cloud et Android de Microsoft
Windows Phone : Nokia veut davantage d'applications (et les utilisateurs aussi)
IT Migration Zone - DE
Cloud Computing: Warum Unternehmen trotz NSA auf die „private“ Wolke setzen sollten
Cloud Computing bleibt Wachstumsmarkt – Windows Azure ist Vorreiter
Like Us on Facebook
Twitter Feed
Enterprise Efficiency Twitter Feed
Site Moderators Wanted
Enterprise Efficiency is looking for engaged readers to moderate the message boards on this site. Engage in high-IQ conversations with IT industry leaders; earn kudos and perks. Interested? E-mail:
moderators@enterpriseefficiency.com
SPONSORED BY DELL
A Video Case Study – Translational Genomics Research Institute
e2 OEM Video


On the Case
TGen IT: Where We're Going Next

7|11|12   |   08:12   |   10 comments


Now that TGen has broken new ground in genomic research by using Dell's storage, cloud, and high-performance computing solutions, the company discusses what will come next for it and for personalized medicine.
On the Case
Better Care Through Better Communications

6|6|12   |   02:24   |   11 comments


The achievements of the TGen/Dell project could improve how all people receive healthcare, because they are creating ways to improve end-to-end communication of medical data.
On the Case
TGen IT: Where We Are Now

5|15|12   |   06:58   |   6 comments


TGen is breaking new ground in genomic research by using Dell's storage, cloud, and high-performance computing solutions.
On the Case
TGen IT: Where We Were

4|27|12   |   06:45   |   10 comments


The Translational Genomics Research Institute wanted to save lives, but its efforts were hobbled by immense computing challenges related to collecting, processing, sharing, and storing enormous amounts of data.
On the Case
1,200% Faster

4|18|12   |   02:27   |   12 comments


Through their partnership, Dell and TGen have increased the speed of TGen’s medical research by 1,200 percent.
On the Case
IT May Improve Children's Chances of Survival

4|17|12   |   02:12   |   8 comments


IT is helping medical researchers reach breakthroughs in a way and pace never seen before.
On the Case
Medical Advances in the Cloud

4|10|12   |   1:25   |   5 comments


TGen and Dell are pushing the boundaries of computing, and harnessing the power of the cloud to improve healthcare.
On the Case
TGen: Living the Mission

4|9|12   |   2:25   |   3 comments


TGen's CIO puts the organizational mission at the heart of everything the IT staff does.
On the Case
TGen Speeding Up Biomedical Research to Save More Lives

4|5|12   |   1:59   |   6 comments


The Translational Genomics Research Institute is revamping its computing to improve speed, storage, and collaboration – and, most importantly, to save lives.
On the Case
Computing Power Helping to Save Children's Lives

3|28|12   |   2:13   |   3 comments


The Translational Genomics Institute’s partnership with Dell is enabling them to treat kids with neuroblastoma more quickly and save more lives.
Curtis Franklin Jr.
OEMs Change Roles

1|18|13   |   1:55   |   3 comments


OEMs can change markets – here's why IT should have a say in the decision.
Tom Nolle
The Enterprise Side of Amazon Fire

9|29|11   |   2:04   |   6 comments


Amazon Fire’s split-browser model hosts some of the GUI in the cloud, which could have a major impact on virtual desktop thinking.
Curtis Franklin Jr.
The OEM Relationship

9|13|11   |   02:02   |   1 comment


The growth of OEM relationships means that enterprise IT execs must pay closer attention to who's responsible for support and development.
Pablo Valerio
Can't Land on the Runway Behind You

8|15|11   |   1:36   |   1 comment


One lesson from aviation also applies to big IT projects: Give yourself plenty of leeway and have room to maneuver.
Ivan Schneider
Flecksequence Explained

7|28|11   |   2:46   |   3 comments


How to use the term in a sentence and, more importantly, how flecksequence can help manufacturers.
Sara Peters
E2 Has a New Look!

7|20|11   |   2:53   |   6 comments


E2's gotten a makeover. Take a tour through some of our new features.