Understanding India: Growing footprint in electronics
- India’s electronics focus has shifted to hardware manufacturing in the past decade
- Key verticals have notched double digit production rates, with mobiles rising by the fastest
- We explore the nuance for mobiles manufacturing sector, potential and challenges
- Smartphone makers from China and Korea are the main investors currently; Taiwanese may catch up
India has launched a series of factor market reforms in recent years, aimed at strengthening the economy’s appeal as a manufacturing base and to attract domestic as well as global investments. The electronics manufacturing sector has been placed on high priority to participate in the strong global upcycle, expand its footprint in the tech supply chain, move up the value chain and draw in investors to tap into the domestic growing middle class with rising disposable incomes.
Unwrapping the verticals
The sector is diverse, with verticals classified based by application and/ across processes, for instance design manufacturers, component suppliers, electronic manufacturing service providers etc. under the latter. Electronics hardware production grew by a CAGR of 17% between FY14 and FY20 before a marginal drop in FY21 due to the pandemic.
Strengthening the support architecture
Achieving self-reliance and boosting indigenous production of electronics (and sub-components) ties into the broader push to ‘Make in India’s as well as achieve ‘Digital India’ objectives. To strengthen the support mechanism, the National Policy on Electronics 2019 was launched, seeking to strengthen India’s position in the Electronics System Design and Manufacturing (ESDM) field and across the value chain.
Foreign investment in India’s electronics sector – a North Asia perspective
North Asian economies play an increasingly important role in investing in India, especially in the electronics sector. FDI inflows into India from China, Hong Kong SAR, Japan, South Korea and Taiwan amounted to USD36bn in 2011-2020, a sixfold increase compared to USD6bn in 2001-10. As a percentage of India’s total FDI inflows, North Asia increased to approximately 10% in 2011-2020, up from 5% in the previous decade.
To read the full report, click here to Download the PDF.
Subscribe here to receive our economics & macro strategy materials.
To unsubscribe, please click here.
The information herein is published by DBS Bank Ltd and/or DBS Bank (Hong Kong) Limited (each and/or collectively, the “Company”). This report is intended for “Accredited Investors” and “Institutional Investors” (defined under the Financial Advisers Act and Securities and Futures Act of Singapore, and their subsidiary legislation), as well as “Professional Investors” (defined under the Securities and Futures Ordinance of Hong Kong) only. It is based on information obtained from sources believed to be reliable, but the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained herein does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. The information herein is published for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. The Company, or any of its related companies or any individuals connected with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein (including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Company or any other person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell any securities, futures, options or other financial instruments or to provide any investment advice or services. The Company and its associates, their directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking or financial services for these companies. The information herein is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction (including but not limited to citizens or residents of the United States of America) where such distribution, publication, availability or use would be contrary to law or regulation. The information is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction (including but not limited to the United States of America) where such an offer or solicitation would be contrary to law or regulation.
This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) which is Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Singapore recipients should contact DBS Bank Ltd at 65-6878-8888 for matters arising from, or in connection with the report.
DBS Bank Ltd., 12 Marina Boulevard, Marina Bay Financial Centre Tower 3, Singapore 018982. Tel: 65-6878-8888. Company Registration No. 196800306E.
DBS Bank Ltd., Hong Kong Branch, a company incorporated in Singapore with limited liability. 18th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
DBS Bank (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability. 13th Floor One Island East, 18 Westlands Road, Quarry Bay, Hong Kong SAR
Virtual currencies are highly speculative digital "virtual commodities", and are not currencies. It is not a financial product approved by the Taiwan Financial Supervisory Commission, and the safeguards of the existing investor protection regime does not apply. The prices of virtual currencies may fluctuate greatly, and the investment risk is high. Before engaging in such transactions, the investor should carefully assess the risks, and seek its own independent advice.