ELCINA ELECTRONIC INDUSTRIES ASSOCIATION OF INDIA

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ELCINA ELECTRONIC INDUSTRIES ASSOCIATION OF INDIA
IMPORTANCE OF VALUE ADDED MANUFACTURING BS
Sethia Past President ELCINA Director, Elin
Electronics Ltd. New Delhi
National Conference on Electronics
Industry Accelerating Manufacturing Export of
Electronics Hardware 28th August 2009 New Delhi
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Current Indian Scenario

• The 13th WEF in Tel Aviv reported the Global
  Electronics Industry at US 1.6 Trillion the
  largest and fastest growing mfg industry
• Current Indian market US 45Bn Growing by
  25-27
• At this rate would exceed US 190 Bn by 2015 8
  of global production
• Present Production _at_22 Bn - about 50 of
  domestic demand!
• Components production (excluding media CD/DVD)
  Rs 9000 Cr
• Export of Components (excl media) Rs. 4000 Cr
• Import of components at cost (assumed at 25 of
  MRP value of production US 22 Bn) Rs. 20000 Cr (
  Rs 25,000 Cr Rs 5000 Cr 9000-4000)
• Foreign Exchange outgo Rs 100,000 Cr
• Market (200,000) Production (100,000) Export
  (19,000) Import of Components (20,000)
• Estimated Direct Indirect Employment 20 Lacs
  (Ratio 13)

Sources Dept of IT, Annual Reports ELCINA
Research
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Likely Scenario in 2015

• Foreign Exchange outgo Rs. 7 Lac Cr(148 Bn)
• Market (900,000) Production (200,000) Export
  (50,000) Import of Components (40,000)

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Indian Electronic Industry (2008-09)Total 23
Billion (1,10,000 Cr)
Components 2.8 Bn
Consumer Electronics 6.4 Bn
Strategic Electronics 2.0 Bn
Comm. Broadcasting Equip. 4.4 Bn
Industrial Other 3.5 Bn
Computers 4.2 Bn
Components has fallen behind from 3rd place to
5th place in last 5 years !
(_at_47.50 Rs/)
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Share of Domestic Components in Equipment
Production
Figures in INR Million US42.50









(Rs. in cro
Growth in component production not keeping pace
with equipment manufacturing
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Multi-Tier Structure - Complex Value Chain
Basic Raw Material
PARTS
Manufacturing
Components
Sub Assemblies (Modules)
100-200
40-50
Finished Equip /Consumer product
30-40
Value Addition
10-25
Distribution
Retail Sales
Trading
5-10
Value Chain
Raw Materials, Parts, Components require high
investment have high value add Zero duty
discourages investment encourages imports Less
Risk Profit possible only in Low Value add
activities
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Value addition analysis

• Disabilities high Indirect Taxes adversely
  affecting industry
• High Value Addition Capital Intensive - Raw
  Matl, Piece parts,
• components face highest disability impact
• Encourage low value add trading activity

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Impact of Zero Duty

• Zero duty Negative rate of protection !
• Negative protection due to local disability cost
  varying from 0.75 to 10.3 at different stages
  of Value Chain
• Higher value addition faces higher disability
  cost
• Electronics hardware has become a super global
  industry- no restriction to movement in goods
  no tariff barrier
• Auto industry is similarly multi tier but highly
  protected
• Investment in components / inputs follows
  assembly of finished autos
• On the contrary, in ICT sector, finished
  equipment as well as all inputs are at zero
  import duty thus no incentive to manufacture
• Perception of development under zero duty has to
  change
• Must set priorities to achieve goal of value
  added manufacturing

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Human Life Priorities !!

• Difference between priority importance
• Pranic energy
• Breathing
• Water
• Food
• Work karma
• Right priority can make us stress free and
  fearless. While all 5 above are important we
  must define our priority eg.
• We give inordinate emphasis to karma (maybe to
  achieve success!) but forget that efficient karma
  is not possible without balanced pranic energy,
  correct breathing, pure water and balanced diet.
• If our priorities under zero duty regime are not
  defined, we should not stress about lack of
  investment in value added manufacturing !

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Vision for 2015 with priorities set right

• Market at 9 Lac Cr (US190Bn)
• Production growth from Rs 1 Lac (22Bn) to Rs 6
  Lac Cr (130 Bn)
• Export growth from Rs. 19,000 Cr (4 Bn) to Rs
  100,000 Cr (23 bn)
• Foreign Exchange outgo Rs. 2.6 Lac Cr 55Bn
  (against 7 Lac Cr 148 Bn with current
  priorities)
• Market (900,000) Production (600,000) Export
  (100,000) Import of Components (60,000)
• Employment Growth Direct Indirect from 20 to
  100 Lacs (Ratio 13) based on growth of
  production

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By Products of Value Addition

• Huge Employment potential specially for women
  and unskilled workers
• Revenue Neutrality growth of revenue hinges
  upon market expansion
• Importance of Electronic in other sectors -
  Electronic industry is all pervasive in every
  other industry i.e automobile, oil, aviation,
  telecom etc. No industry can operate without
  electronics.
• Focus on developing core technology
  semiconductors electronic components enhance
  local value add growth of all sectors
• Strategic role of Electronics in economic
  development infrastructure, communication, oil
  natural gas, space, environment even
  agriculture ..need electronics as an enabler

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ELCINA ELECTRONIC INDUSTRIES ASSOCIATION OF INDIA
Thank you for your attention Lets move from
disability to success