High demand for electronics could outpace domestic production, leading to an import requirement of about USD 300 billion by 2020, a report by Assocham-NEC today said.

The report pointed out that while demand for electronic products in India is expected to grow at a CAGR (compound annual growth rate) of 41 per cent to reach USD 400 billion by 2020, domestic production is growing at a CAGR of 27 per cent.

This leaves a huge gap for import to the extent of USD 300 billion, the joint study said.

India is home to a growing middle class population. With increasing disposable income, consumer demand for electronic products – specially advanced TVs, mobile phones and computers – has grown significantly.

“However, what needs to be addressed to meet government’s vision of turning India into a manufacturing hub is the domestic production,” it said.

The Indian electronics and hardware market grew by 8.6 per cent year-on-year to reach USD 75 billion in 2015.

India’s total electronics hardware production in 2014-15 is estimated at USD 32.46 billion.

The domestic consumption of electronic hardware in the same year was USD 63.6 billion, out of which 58 per cent was fulfilled with imports.

With demonetisation adding to the demand for Point of Sale (POS) devices and mobile phones, this demand is going to increase manifold, the study said.

Investments in electronics manufacturing stood at about Rs 1,27,880 crore in 2016, buoyed by initiatives like Make in India and Digital India as well as schemes like Modified Special Incentive Package Scheme (M-SIPS) and Electronics Development Fund (EDF).

Even though there are signs of promising growth, the local production of electronic products has to be increased significantly to meet the domestic demand, the study said.

It suggested steps like increased emphasis on raising the percentage of local component manufacturing in India as well as simplifying complex regulatory structure for easier compliance for new entrants to help boost domestic production.

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