Electronics India The Second Sunrise Vandana Srivastava 27-02-32013

Electronics Industry: World Scenario Largest and fastest growing manufacturing industy in the world. Reported at USD 1.75 Trillion and expected to reach USD 2.4 Trillion by 2020.

Electronics Industry: Indian Scenario Huge Market : Rapid increase in domestic demand due to- Growth in income levels leading to higher off take of Electronics products Automation demands of corporate sectors Government’s focus on e-governance.

4 Big Reasons Why India ? Huge Market Large Talent Pool Conducive Policy Low Operating Costs

Demand & Production Trends for 2020 CAGR – 37% Year Demand CAGR – 24.4% CAGR – 15% Values in US$ Bil

Electronics Market in India Burgeoning Needs, Emerging Opportunities

US$ 60-80 Bil US$ 60-80 Bil | Semiconductors Projected semiconductor design market in 2020 US$ 60-80 Bil Projected semiconductor market in 2020 US$ 60-80 Bil Cost of semiconductor design (US$ Mil, 2010)

~ US$ 11 Bil ~ US$ 34 Bil |Telecom equipment Demand in 2010 Broadband on Demand by 2015, 600 Mil connection by 2020 at min. 2 Mbps speed NOFN : US$ 4 Bil project to provide broadband connectivity to panchayats NKN : US$ 1.2 Bil Infra project to connect educational and research institutes Total telephone subscribers ~ 950 Mil, teledensity 77% Demand in 2010 ~ US$ 11 Bil Projected demand 2020 ~ US$ 34 Bil

| Consumer Durable Market The consumer durables market recorded revenues of USD6.3 billion in FY10 During FY03-10, the industry expanded at a CAGR of 11.7 per cent Urban markets lead the revenues, accounting for two-thirds of the total sales in India Refrigerators , Air conditioners (ACs) , Washing Machine & Televisions Driving Growth

| Consumer Electronics Consumer Electronics (CE) represents one of the largest segments of the overall electronics industry in India. The market is anticipated to grow at a CAGR of around 17% during 2012-2015 to reach over US$ 15 Billion by the end of 2015

| Automotive Electronics Digitization of controls and expanding inclusion of safety and sophistication features. Evolving trend of localization in product procurement by Auto OEMs Value of electronics in automobiles ~ 20%-40%, increasing rapidly Production of nearly 18 Mil Automotive vehicles in 2010-11

| Medical Electronics Size of medical electronics equipment market by 2020 ~ US$ 5 Bil GoI committed to development of Affordable medical electronic device industry Devices typical to the environmental & infrastructural condition prevalent in India Adapted from Indian Medical Electronics Industry Outlook 2020 , Deloittee & FICCI , December 2011

| Solar Power Jawaharlal Nehru National Solar Mission Enabling policy framework for the deployment of 20,000 MW of solar power by 2022. Ramp up capacity of grid-connected solar power generation to 1000 MW within three years – by 2013 An additional 3000 MW by 2017 through the mandatory use of the renewable purchase obligation by utilities backed with a preferential tariff. India has had significant scope in solar cell and module manufacturing. The disability due to lack of presence in the upstream sectors, such as polysilicon and wafer is getting addressed Government in the advanced stage of getting a Fab setup in India.

| Aerospace Sector Defense Major defence acquisition and development programmes comprising Medium Multi Role Combat Aircraft (MMRCA), Fifth Generation Fighter Aircraft (FGFA), Multirole Transport Aircraft (MTA), Medium Lift Helicopters (MLH) and Light Utility Helicopters (LUH). Aviation Passenger and cargo movement has increased by a CAGR of 19.14% and 9.91% during the period from 2003-04 to 2007-08. The fleet size has grown by 23.77%. The civil aviation market is expected to register more than 16 per cent CAGR during 2010-2013. The Indian commercial aerospace market is estimated to absorb about 1,100 commercial jets worth Rs.585,000 crore over the next 20 years. Space Indigenous suppliers provide an estimated 70 per cent of the technology content. The current major space programmes are PSLV, GSLV, INSAT and IRS.

< US$ 1 Bil ~ US$ 35 Bil | LED Market Demand in 2010 Lower carbon emissions by 20-25% by 2020 Distribution of free LED lights to all Below Poverty Line (BPL) families (20 Mil lights) Government initiatives : Excise duty reduced to 6% on LED lamps and LEDs SAD fully exempted on LEDs used for manufacture of LED Lamps Demand in 2010 < US$ 1 Bil Projected demand 2020 ~ US$ 35 Bil

US$ 34 Bil | Computers Projected Market for laptop, desktop by 2020 India PC shipments increase in 2012 ~ 17%; world average ~ 4.4% GoI aims to provide 1 tablet to every student under Aakash scheme State Government initiatives Free laptop to students in Tamil Nadu and Uttar Pradesh Other states coming up with similar schemes

200 Million units | Set Top Box Projected Market for Set Top Box in next 5 years Cabinet has approved providing Digital Addressable System (DAS) throughout country by December 2014 Tamil Nadu state government owned Arasu Cable TV Corporation floated tender for 2 Mil STB 200 Million units

Electronics Market by segment Market Size * Telecom Equipment 34 Laptops, Desktops, Tablets LED 35 Set Top Boxes 10 Automotive Electronics Medical Electronics 8.5 Consumer Electronics India: 2020 Electronics Market by segment * US$ Billions

Challenges Strengths Infrastructure gap Tax Structure Chip Designing Supply chain and logistics Inflexible labour laws Limited R& D focus Inadequate funding Limited value addition Strengths Chip Designing Embedded system software Huge market Large talent pool Low operative costs Conducive environment

Conducive Policy Environment Infrastructure, Incentives, Innovation

National Policy on Electronics, 2012 Holistic, Investor-friendly, Market-driven ELECTRONICS INDIA Billion Needs, Million Chips

Investment : US$ 100 Bil Production : US$ 400 Bil Employment : 28 Mil NPE Vision 2020 “To create a globally competitive electronics design and manufacturing industry to meet the country's needs and serve the international market” Investment : US$ 100 Bil Production : US$ 400 Bil Employment : 28 Mil

National Policy on Electronics | Major strategies ESDM Sector National Policy on Electronics | Major strategies I Setting up of Semi-conductor Wafer Fab in India II Preferential Market Access III Modified Special Package Incentive Scheme (M-SIPS) IV Electronics Manufacturing Cluster Scheme (EMC) V Electronics Development Fund (EDF) VI Mandating Safety Standards VII Human Resource Development VIII Communication & Brand building Number of strategies identified under NPE >50

Billion Needs, Million Chips Electronics Manufacturing Clusters Infrastructure Development Roads Power Water ETP’s Testing facilities Social Infrastructure Subsidy of 50-75% Subsidy upto ~USD 10 mil per 100 acres of land Applicable to both Greenfield and Brownfield projects Targeting 10 Clusters in 2013, and 200 by 2020 ELECTRONICS INDIA Billion Needs, Million Chips

Billion Needs, Million Chips Modified SIPS Substantial CAPEX subsidy Reimbursement of CVD/excise for capital equipment in non-SEZ units Reimbursement of Central taxes and duties for 10 years in select high tech units like fabs and ATMPs Available for entire value chain of identified electronics products Incentives available for 10 years from the date of approval Subsidy of 20-25% ELECTRONICS INDIA Billion Needs, Million Chips

Billion Needs, Million Chips Semiconductor Fab FAB in India Decision by March 2013 India : Latest destination for Chip mfg. based on strength of Chip design Global responses sought in the form of EOI to setup Fabs Leading players have expressed interest Partners for Fab project to be finalized by March 2013 ELECTRONICS INDIA Billion Needs, Million Chips

Billion Needs, Million Chips Preferential Market Access (PMA) Preference to domestically manufactured electronic goods in Government procurement Electronic goods having security implications Extent of Government procurement from domestic manufacturers will not be less than 30 % of the total procurement. Enabling framework WTO compatible No discrimination between foreign and Indian companies ELECTRONICS INDIA Billion Needs, Million Chips

Daughter fund -Innovation Electronics Development Fund (Proposed) Size of EDF US$ 2 Bil EDF Daughter fund – infra Typical Daughter fund Daughter fund -Innovation Fund to promote Innovation and IP and R&D, product commercialization, etc in ESDM, nano-electronics & IT sectors Comprises of “Daughter Funds” of size US$ 20 Mil -100 Mil Each fund to have Govt. share from 25% - 75%; remaining from private and financial institutions ELECTRONICS INDIA Billion Needs, Million Chips

Billion Needs, Million Chips Mandating standards Order comes into effect from April 3, 2013 15 electronics products notified under safety standards on October 3, 2012 Allows Self registration BIS accredited labs to test the goods ELECTRONICS INDIA Billion Needs, Million Chips

Billion Needs, Million Chips Export Incentives Export Incentives on FOB Value Focused Product Scheme -2% duty credit script Special Focused Product Scheme-5% duty credit script Focused Market Scheme 2-5% ELECTRONICS INDIA Billion Needs, Million Chips

Billion Needs, Million Chips HR Initiatives PhDs in Electronics by 2020 2500 annually Electronics and Telecom Sector Skill Council set up 31 ICT and Electronics Academies-Scheme under approval Skill Development for 1 mn persons Special Manpower Development Programme- Phase III for VLSI and chip design for 10,000 students . ELECTRONICS INDIA Billion Needs, Million Chips

Electronics? Think India !