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DELHI TECHNOLOGICAL UNIVERSITY
(Formerly Delhi College of Engineering)
Shahbad Daulatpur, Bawana Road, Delhi- 110042
DEPARTMENT OF HUMANITIES
Engineering Economics
Assignment- 01
Subject Code: HU
Submitted To: Submitted By:
Mr. Hariom Verma Ankit Verma 2K21/EC/33)
Ashish Chotani (2K21/EC/54)
A BRIEF STUDY ON THE INDIAN CONSUMER-ELECTRONIC
INDUSTRY AND IT’S STEP TOWARDS ECONOMIC DEVELOPMENT
Abstract
India has established an important spot in the global electronics market thanks to the electronics industry's phenomenal expansion in recent years, which has been a dynamic and revolutionary force in economies across the world. This study explores the many facets of the Indian electronics industry by closely examining statistics data from reliable sources including the Ministry of Commerce and Industry and the Ministry of Statistics and Program Implementation. This article attempts to provide a complete overview of the industry's impact on India's economic development by looking at the industry's contributions to GDP growth, employment generation, trade dynamics, technological breakthroughs, and problems. Employment generation, a critical aspect of the industry's impact, is thoroughly examined. The paper provides a detailed analysis of direct and indirect employment across manufacturing, research and development, and support services within the electronics sector. Real-world examples and case studies supplement statistical insights, offering a comprehensive view of the industry's role in job creation and its socio-economic implications. Moving into trade dynamics, the paper explores the electronics industry's influence on India's trade balance through an analysis of export trends. Statistical data from the Ministry of Commerce and Industry is presented, highlighting the substantial growth in electronic exports and their contribution to the nation's overall export figures. Insights into emerging markets and strategic partnerships provide context to the evolving landscape of international trade in electronics. Despite the industry's achievements, challenges such as import dependency for specific components persist. Import statistics are scrutinized to identify areas where India remains reliant on foreign sources. The paper explores strategies and policy interventions to reduce import dependency, fostering a more self-sufficient electronics ecosystem and mitigating potential vulnerabilities. Shifting focus to technological advancements, the paper delves into the industry's commitment to research and development (R&D). Key technological breakthroughs and innovations are showcased, illustrating the industry's role in driving technological progress. Case studies highlight successful R&D initiatives and collaborations between industry players, research institutions, and the government, underlining the critical importance of innovation in sustaining growth. The challenges and future prospects section address regulatory hurdles that the industry faces, such as regulatory frameworks, taxation policies, and bureaucratic impediments. Recommendations for policy interventions and regulatory reforms are discussed, aiming to create a more conducive environment for sustained growth.
in the hands of a major players. It is estimated that in 2019 the consumer electronic industry had 10.93 CAGR rate and it is expected to by 21.18 in the year 2025. White goods industry has shown growth trend. It is estimated that refrigerators, air conditions, washing machines would show a rise in sales by around 80%. The Indian consumer electronics industry has been growing at a double-digit growth rate since past few years. Higher disposable income, increased product awareness, affordable pricing, and shift in lifestyles have together been instrumental in changing the amount and pattern of consumer spending; thereby, resulting in strong growth in the consumer electronics industry. But still, the consumer electronics goods, like refrigerators, televisions and air conditioners, have low penetration in the country, leaving vast room for future growth. The Indian consumer electronics industry will grow at a CAGR of around 18 per cent during 2021- 2022. During this time period, we expect that LCD TV will capture majority of the television market share as it will replace colour televisions market to a large extent. Moreover, observed that the air- conditioner (AC) segment is one of the most important product segments driving the overall growth of the Indian home appliances market. Introduction of innovative features and technology coupled with the expansion of distribution network is helping the market to grow at a faster rate. Besides this, microwave oven is becoming a high growth segment in the consumer electronics market in India. The market will witness a dramatic change in the competitive landscape over the next few years. A large number of companies will foray into the lucrative Indian consumer electronics market with their diversified product portfolio. This will lead the incumbent players to invest heavily in establishing their stores across different states of the country. The key consumer electronics companies operating in the country including their business overview, after sales service & support system, distribution channel and their promotional & corporate strategies. Growth drivers of the electronics industry As observed, the Indian electronics sector is one of the fastest-growing industries in India in terms of production and exports driven by macro factors such as growing middle-class population and increased disposable income. Declining production prices of these electronic devices which are passed on to the consumer and adoption of high-end technology leading to the need to buy newer products, have helped consumption. This industry in India is expected to become the fifth largest in the world by 2025 with a growth rate of 17% CAGR. In 2016-17 a significant milestone was achieved in this sector when India’s domestic electronics production exceeded imports of electronic goods. And this has happened due to various industry and government led growth drivers.
- Increased domestic demand and new markets Rising demand from rural markets especially for washing machines and mobile phones and the changing household type to nuclear families coupled with the changing lifestyles of consumers has increased domestic demand of electronics.
- Discretionary income and easy credit options
Significant increase in discretionary income with consumers wanting to spend more and save less and availability of multiple financing schemes have helped change the mindset of consumers that now look at electronic items like ACs, washing machines and big TVS form luxury item to items of necessity. Also exchange offers, easier access to credit and adoption of credit cards have made it easier for not only consumers to buy more but also replace more often than before.
- Technology adoption Consumers are becoming technology aware and want to stay abreast with the latest and newest. They are demanding products with built in artificial intelligence which make their life easier. Washing machines with load sensor which decide the appropriate cycle is one such example.
- An attractive industry for investment The Indian consumer electronics sector has attracted several strong investments in the form of mergers and acquisitions by key participants of the global market and other FDI (foreign direct investment) inflows. 100% FDI is now in electronic hardware manufacturing, FDI into single brand retail has been increased from 51% to 100% with plans to hike multi brand retail to 51%.
- Broadband penetration Increased broadband penetration in the country will open up further avenues of growth for the electronics industry. Given the high demand for broadband and communication equipment, including mobile handsets and their accessories, this segment is also likely to drive the demand for electronic components and products.
- Support for manufacturing India is likely to emerge as a potential future manufacturing hub for the region. Specific factors that are likely to boost manufacturing in India include reduction in borrowing costs, export incentives, reduction of customs duties on raw materials and components, and improvement in the ease of doing business.
- Emerging trends for electronics industry The Indian electronics industry is in the midst of an exciting phase owing to new technology, introduction of innovative products and global competition which keeps the industry on its toes. This means that manufacturers must focus on continuous innovation and improvement of products. Here are some notable trends of the industry:
- Technology-conscious consumers Consumers are abreast with new technology and are now demanding products with built-in artificial intelligence. This has led to the development of intelligent electronics and consumer durable products. For instance, washing machines can now sense the load and decide the appropriate washing cycle. Artificial intelligence will move beyond consumer products and will be available in several medical electronics and industrial electronic products.
India can create a robust and resilient foundation for sustained economic growth.
- Employment Generation: A thriving electronics industry is a catalyst for job creation across a spectrum of skill sets and educational backgrounds. From assembly line workers in manufacturing plants to highly skilled engineers and researchers in research and development (R&D) centers, the sector accommodates a diverse workforce. This inclusivity contributes not only to economic development but also to social development by addressing unemployment and fostering skill development. As the industry continues to expand, employment opportunities will proliferate, thereby uplifting communities and supporting the demographic dividend that India possesses. The electronics sector's role as a significant employer aligns with the government's vision of creating a skilled and employable workforce, further solidifying its position as a key player in India's economic development landscape.
- Technological Innovation: Innovation is the lifeblood of the electronics industry, and it has the potential to catapult India into a leadership position in the global technology arena. Research and development (R&D) initiatives within the sector drive technological advancements, fostering a culture of innovation. From developing cutting-edge semiconductor technologies to embracing artificial intelligence and Internet of Things (IoT) applications, the electronics industry in India can serve as a hub for transformative technological breakthroughs. Encouraging collaboration between industry players, academia, and research institutions is crucial to sustaining this culture of innovation. By fostering an environment that nurtures creativity and technological exploration, India's electronics industry can contribute not only to its economic development but also to its global technological leadership.
- International Trade Dynamics: The global nature of the electronics industry positions it as a key player in international trade dynamics. India's prowess in electronics manufacturing, coupled with its expanding capabilities in research and development, opens avenues for increased exports. A strategic focus on promoting electronic exports can contribute significantly to India's foreign exchange reserves and trade balance. Engaging in international collaborations and partnerships, particularly in emerging markets, can amplify the reach and impact of India's electronics industry. By positioning itself as a reliable and innovative electronics exporter, India can forge stronger economic ties with other nations, contributing to global economic development while fortifying its own economic prosperity. As India navigates the challenges and opportunities presented by the global digital transformation, leveraging the potential of the electronics industry becomes imperative. The
sector's impact extends beyond economic metrics; it permeates through society, fostering a culture of innovation, inclusivity, and global collaboration. By prioritizing investments in skill development, research and development, and infrastructural support, India can harness the full potential of its electronics industry, paving the way for holistic and sustainable economic development in the years to come. The journey towards economic prosperity through the electronics sector is not merely a destination; it is a transformative process that holds the promise of a brighter and technologically advanced future for India. Opportunities for the Consumer Electronics sector to exploit
- Consumption Pattern: The consumer electronics industry plays a pivotal role in influencing and reflecting consumption patterns, contributing significantly to economic development. As technology evolves, consumer preferences shift, driving demand for the latest gadgets and appliances. This continuous cycle of innovation and consumer demand creates a dynamic market, stimulating economic growth. The consumption of consumer electronics not only fuels domestic production but also contributes to the overall GDP through increased spending, creating a robust economic ecosystem.
- Rising Urbanization: The ongoing trend of urbanization is closely linked to the growth of the consumer electronics industry. Urban areas tend to have higher purchasing power and increased access to technology. The concentration of consumers in urban centers creates a substantial market for consumer electronics, driving production, sales, and service industries. As more people migrate to urban areas, the demand for electronic products, from basic appliances to sophisticated gadgets, continues to rise, providing a significant impetus to economic development.
- Influence of Social Media and Awareness: The pervasive influence of social media plays a crucial role in shaping consumer behaviour and awareness within the consumer electronics industry. Platforms like Instagram, Twitter, and YouTube serve as powerful tools for product discovery, reviews, and recommendations. The rapid dissemination of information through social media enhances consumer awareness, driving demand for the latest products. This heightened awareness not only fuels sales but also contributes to a tech-savvy population, fostering a conducive environment for economic growth within the electronics sector.
- Smartphones: The ubiquitous presence of smartphones exemplifies the transformative impact of consumer electronics on economic development. Smartphones serve as multifunctional devices, influencing various aspects of daily life, from communication and entertainment to business and education. The demand for smartphones has led to a robust manufacturing ecosystem, generating employment, fostering technological innovation, and contributing significantly to economic growth. Additionally, the
Challenges causing hinderance to the growth of the Industry
- Cost of Manufacturing: The cost of manufacture in India is relatively high when compared to China, Japan, south Korea. The average cost of finance transportation and power cost disability falls between 7% to 14 % in India whereas the interest rate in India is between 10%- 14% and it approximately 5% to 6% in other countries like China, south Korea, Japan and Vietnam. Hence electronic industry should be given capital subsidy incentive and other subsidized input factors to reduce the cost.
- Rules and Regulation: Manufacturing and supplying of consumer electronic face the global competition and to take a giant lap it is necessary to follow regulation and compliance and see that it is enforced Usually compliance laws and regulation are not new, but enforcement has to strongly be agreed and implemented. In case any ACE player avoids it, penalties are imposed. Ministry of electronics and information technology and BIS has introduced compulsory registration scheme (CRS), safety of electronic product which is on par with the international approval schemes and regimes. The bureau of energy efficiency (BEE) has made it mandatory for certain electronic products to rate and label for the performance of product. Hence to attract global investors, to face competition and to have sustainability growth. It is necessary to have product regulation and compliance are regularly update and it should strictly be enforced strategically
- Government Policies: Government of India has taken many policies to boost the consumer industry, to attract more investment from aboard it has relaxed licenses polices. And gave approval for FDI by 51 % in multi brands and 100% FDI in single brand retailing. These relaxed policies have encouraged many foreign brands to hunt business opportunities in India. According to Department for Promotion Industry and International trade 2.36 billion FDI inflows are in electronic sectors. Rural electrification government plans to invest significantly in rural electrician. This initiative boosted the rural demand for durable electronic goods like refrigerates, washing machines and air conditions. According to IBEF report the Indian consumer electronic market had 205 trillion on 2017 and is expected to reach 3.15 trillion in 2022 with a growth rate of 9 % CAGR. Urban demand for the products like LED TV, refrigerator, laptops, air conditions, setup box, beauty product is expected to rise and according to CEAME consumer electronic appliance manufacturers association are expected a grow of 20 % CAGR in LED /LCD TV. The electronic industry should be ready to design and delivery products which are reliable, affordable, and sustainable. It has to satisfy different of segment of markets.
- Environment norms and Sustainability norms: Electronic consumer goods industry has e- waste of about 10% per year. Company has to deal with e-waste strategically well in long run. They have to adopt new and innovative ways of disposing the e-waste and companies has to adopt more and more CSR in managing waste. Companies should practice operational Excellency techniques, IOT technologies in business to increase the performance and reduce the wastage.
- Cost of Import duties: India has signed Free Trade Agreement with Singapore, Thailand and ASEAN countries, each agreed country is required to gradually reduce and remove tariff rates on other countries goods. The finished imported into India are at lower rates than what it would have cost to manufacture the product in India. Hence reducing the cost of making in India can achieve if government provides a subsidy to locally manufacturer and have to keep other inputs that imported at zero duty and government should sign FTA to promote export to consumption driven economies. GST rate consumer electronic goods are subjected to different GST and which is a cost burden to consumers and it is necessary to revisit the tax structures and rate. The consumer will show interest and can be encouraged to shift from lower star rated to higher star energy efficient appliances
- Establishment of R and D: The major segment of consumer electronic goods like A.C, refrigerators, geysers, TV etc. fall under compulsory standard and labelling program introduce by Bureau of Energy Efficiency Program under Ministry of Power. The company should upgrade gradually its R and D in a planned manner and the innovative products should be energy sufficient and efficient, environmentally save, and add value to consumer.
- Complex Supply Chain Management: Global investment and newer innovation, fast changing customer taste has made the companies to juggle with resources to face with operational burdens. Companies should maintain effective close loop communication between sale, consumer’s, manufacture, engineers, to ensure effective product launch on time, in volume and with quality standards. Manufacturers also emphasize on understanding new imperatives of outsourcing to reduce cost.
References [1] M. Ravikanth and Prof. P. Venkat Rao International Journal of Core Engineering & Management (IJCEM) Volume 2, Issue 5, August 2015, page 159-177. [2] Maithili Deshpande, Yash Roade, Pooja Singh Darda International Journal of Scientific Development and Research “Impact of Advertisement on Consumer Buying Behavior in Electronic Industry”, volume 4, page 145 - 153. [3] Dr. Sabyasachi Dasgupta, Prof. Doyel Dutta, International Journal of Humanities and Social Science Invention,” Understanding Online Consumer Purchase Behavior for Varied Consumer Clusters for Electronics Brands in India ISSN (Online): 2319 – 7722, ISSN (Print): 2319 – 7714, Volume 6 Issue 1, PP.01- 15 [4] Demenko O, Savina N. (2019). Program for the development of the digital economy: Challenges and prospects.
