Download The Vibrant Electronics Industry - Mr. Vinnie Mehta (MAIT

India: the Vibrant Electronics
Industry
Vinnie Mehta
Executive Director
Manufacturers’ Association for Information Technology
Tel Aviv
November 05 ,2007
1
Presentation agenda
 India – a land of opportunities
 Snapshot of Electronics & IT industry in India
 Conclusion
2
India on the move…
 One of the fastest growing nations
GDP
3500
3228
3000
 GDP grew at 9.4% during 2007
 On the verge of sustained double-digit growth
US$ BB
 Top 10% of nations since 1980
2500
2000
1229
1500
1000
635
722
FY2005
FY2006
891
500
 Strong investment momentum
 Market capitalization up from USD 140 Bn in FY
2001 to > USD 1 Trn recently
0
FY2007
FY2010
FY2020
GDP composition – FY 2007
Industry
27%
 FDI on the rise - USD 7.6 Bn (06) and USD 19.4
Bn (07)
 FII investment - USD 6.5 Bn in 2006-07
Services
54%
 140 + public traded companies with market cap
> USD 1 Bn
Agriculture
19%
Source: CMIE
By 2050, India projected GDP is US$ 70 Trillion
3
India – the 5 Ds
• Democracy
– Largest democracy in
the world
– Largest digital elections
– 9 Prime ministers from 6
major parties, 50 + state
parties, 3 MM elected
representatives
– ONE POLICY
• Diversity
• Diaspora
– Highly diverse
– 23 languages, 30
provinces
– 6 major religions
– Cultural,religious,
& Climatic
• Demographics
– 1.12 Bn population, Remain a
‘young’ nation beyond 2050
– < 20 yrs population
– 442 Mn currently
– 479 Mn by 2050
– ~10 Mn finishing school, 600,000
Engineers and 3 Mn graduates
p.a
– Over 2 Mn Indians
outside India
– Indian companies
outbound M&A >
USD 15 Bn in 2006
• Demand
– 5th largest consumer market in
the world by 2025.
– 300 Mn growing middle class
– Rising incomes to lift 291 Mn
out of poverty to make middle
class 583 Mn by 2025
Ingredients for sustained and consistent economic performance
4
Electronics industry in India: A snapshot
 The Market: 2006-07
 Domestic demand: USD 30 bn
 Production: USD 16 bn
 Exports: USD 2.2 bn
 Employment
Components
$ 2.15 Bn
Strategic
Electronics
$ 1.09 Bn
Consumer Electronics
$ 4.87 Bn
 Direct: 0.75 million
 Indirect: 1.5 million
Comm. &
Broadcasting Equip.
$ 2.32 Bn
Computers
$ 3.12 Bn
•
Industrial + Other
$ 2.55 Bn
Growth over 2005-06: 20%
5
Key Electronics Associations in India
 CEAMA: Consumer Electronics & Appliances Manufacturers’
Association
 ELCINA: ELCINA Electronic Industries Association of India
 ISA: Indian Semiconductor Association
 MAIT: Manufacturers’ Association for Information Technology
 TEMA: Telecom Equipment Manufacturers Association
CEHA: Council of Electronics Hardware Associations
6
Electronics & IT industry in India: A snapshot
 The Market: 2006-07
 IT Industry size: USD 48 bn +
• IT Hardware Domestic: USD 7 bn: USD 1.7 bn
• ITES & Software Exports: USD 31.3 bn ; Domestic: USD 8.4 bn
 6.3 million PCs sold; Installed base: 22 mn
 13 million TVs consumed; Installed base 100 mn +
 5 million + DVDs sold: growing at 40% annually
 Internet users: 50 mn+;Broadband connections: 2.5 mn
 Mobile sales: 75 mn ; Installed base: 172 mn
 Significant R&D and product development
 Sizeable presence of MNCs: Intel, IBM, Cisco, Motorola, Nokia,
Samsung, LG
 India is suddenly attractive for hardware/electronics manufacturing
7
The PC market (Desktop + Notebooks) in India
7,500,000
6,341,451
6,000,000
Units
5,046,558
4,500,000
3,809,724
3,124,422
3,000,000
2,344,617
1,715,620
1,500,000
0
2001-02
2002-03
2003-04
2004-05
•
CAGR 2001-07: 30%
•
Growth over 2005-06: 26%
2005-06
2006-07
9
Desktop Market: Share of Indian, MNC & Assembled
Indian Brands
MNC brands
Assembled
Indian Brands
MNC brands
23%
28%
37%
Assembled
38%
39%
35%
2005-06
2006-07
•
Consumption of Indian brands decreased 2% in absolute terms
•
Sales of MNC Brands grew by 33% and that of Assembled by 22% in absolute
terms
12
Desktop sales: City-spread
Rest of India
Next 4
Top 4
100%
80%
56
53
43
60%
12
40%
20%
14
38
11
33
13
32
8
12
30
35
2001-02
2002-03
54
60
45
51
2003-04
2004-05
2005-06
2006-07
0%
•
Consumption in Top 4 metros grew by 15% while in Next 4 it dropped by 26%
•
Sales in Rest of India (Other smaller Towns) grew by 33%
13
The Set top box market: 2004-07
3
2.75
Million Units
2.5
2
1.5
1.5
1
0.75
0.5
0
2004-05
2005-06
2006-07
Set-top box
•
Annual growth 84%;
•
2007-08: sales expected to cross 2.5 million
21
Telecom Market in India : 2002-07
171.21
180
160
140
Mobile Phones
120
98.78
Million Units
100
66.5
80
52.2
60
41.9
33.6
40
15.4
13
20
0
2002-03
2003-04
Annual Mobile Sales
2004-05
2005-06
2006-07
Mobile Subsciber Base
•
Annual subscriber base growth 44%; 2007-08: subscriber expected to cross 250 mn
•
2006-07: Base Stations installed: 100,000; Annual growth: 55%
•
2006-07: Towers installed: 100,000; Annual growth: 60%
22
The Software & Services market
45,000
39,700
40,000
USD Million
35,000
Industry Size
30,300
31,300
30,000
25,000
22,600
20,000
15,900
15,000
10,000
10,100
7,680
12,450
9,870
Domestic
Exports
Total
23,600
17,700
12,500
5,000
0
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
Year
 Annual growth: 31%; Exports growth at over 32% and domestic at 25%
Source: NASSCOM
The Software & Services Exports Markets
2003-04
2004-05
2005-06
Americas
69.4%
68.3%
67.18%
Europe
22.6%
23.10%
25.13%
ROW
8.0%
8.60%
7.69%
Source: NASSCOM
~ 80% of Fortune 500 outsource their IT from India
24
India Semiconductor Market
40
Revenues $ Billion
35
TM CAGR – 29.8%,
TAM CAGR- 29.4%
TM
TAM
36.3
30
TM in 2015 is expected to grow
by 13 times the TM in 2005
25
TAM in 2015 is expected to
grow by 14 times the TAM in
2005
20
15.52
12.67
15
10
5
5.8
2.82
1.14
0
2005
2010
2015
•
India’s share in the global semiconductor market is expected to increase from 1.2 % in 2005 and is forecast
to be 5 % by 2015
•
Telecommunication, Consumer and IT Hardware are the segments driving the market during the forecast
period
•
Wireless handsets, Base Station Transceivers (BTS) are the major sub product categories driving the TAM
for telecommunications segment
•
Set Top Box, DVD players and writers are the emerging product categories in consumer segment
•
Few other emerging product categories are electronic clusters, Capacitive Discharge Units (CDI) and Engine
Management Systems (EMS)
Source: ISA – Frost & Sullivan 25
Venture Capital Industry


An estimated USD 7.5 bn in VC/PE in 2006 across 299 deals
•
Over 250 deals in first half of 2007 with USD 5.6 bn
•
Expected to cross USD 10 bn in 2007
Key Investment Verticals – IT/ITES (23.5%), BFSI (12.1%),
Manufacturing (12%), Real Estate (7.1%); Engg & Construction (7.9%)

India Specific VCs: ChrysCapital, HSBC Pvt Equity, ICICI Ventures,
IL&FS Venture Corporation, Infinity Technology Ventures, SIDBI,
Walden International etc.
Source: IVCA
26
India emerging as a manufacturing destination

Surge in manufacturing confidence led by mobile players

Branded players: Nokia, Motorola, LG, Samsung, Ericsson…

EMS companies: Elcoteq, Flextronics, Solectron, Jabil
Circuits, Sanmina, Celestica and Foxconn/Honhai …

With new Fab policy several Semiconductor firms are keen to
manufacture in India

Taiwanese Companies just about coming in

Foxconn/Honhai; Compal (Reliance), Delta Electronics, Liteon
27
India advantage

A very rapidly growing domestic
market: CAGR 30%+

Global recognition for back-end
services:


Profit from Local
Sales
A proven case for IP, embedded
systems and IC design
Attractive for Manufacturing
Investments



Local Market
Skilled employee base
Fast and upcoming modern
infrastructure (SEZs)
Proximity to EU and MEA market

Freight Cost; 20% cheaper than
China - Faster delivery and
lesser pipeline inventory
Advantage
India
Harness low cost
manufacturing
base to service
local, European
and MEA markets
Manufacture
Use India for IP and ITes
Services
-New Product
development
-Engineering services
-BPO
Back-end Services
India is a great Opportunity
–Triple Advantage
29
The Future…
2010…
 Mobile installed base: 500 mn
 PC sales: 25 mn; installed base 65 mn
 ITES & Software exports: USD 60 bn
 40 mn new internet connection; at least 50% broadband
 Nationwide TV broadcast to be digital by 2015 beginning 2010:
significant opportunity for STB consumption & manufacturing
 Over USD10 bn investment in e-governance and national id card
2015: Total expected Market USD 320 bn;
Domestic production USD 155 bn
30
Come..explore..be a part of the great Indian
opportunity!
We look forward to welcoming you to WEF 2008
Thank you!
- [email protected]
31