This report offers a profile of India’s electronics industry, with an overview of market trends through H2 2013 and forecasts for 2014 and beyond. The report also summarizes the market positions of leading players in the sector including Bharat Electronics, D-Link India, and Sterlite Technologies.

Over the last few years, the Indian electronics industry saw a period of high growth with a rapid surge in domestic consumption. The country has become one of the world’s largest markets for mobile phones, computer hardware, and other consumer appliances in the last five years. Electronics was one of the sectors barely affected by the industrial slowdown that hit the country during the last two years, with the credit for this going to the consumer electronics segment. Its double-digit growth during this period has compensated for the decline recorded in other segments. However, the majority of the demand for these products is being met through imports, putting a strain on the country’s trade balance. Global players like Samsung, LG, Sony, HP, Dell and Nokia dominate the Indian electronics market, while domestic companies have not been able to reap the benefits of the huge demand growth. A few domestic players like Bharat Electronics Ltd, Data-Link India Ltd, and Sterlite Technologies Ltd registered profits, but saw a fall in revenue during 9MFY14. Most of the domestic companies reported losses even amid a growing market in the last two years.

Going forward, we expect further growth and development in the Indian electronics manufacturing sector and a reduction in the excessive dependence on imports. The demand, however, is not expected to fall anytime soon. Indian consumers’ rising incomes and their ever-growing love of devices like smartphones, tablets, and LED TVs bode well for this sector.

Key Points:

• This report details the market position and provides financial information for leading domestic players in the sector, among them Bharat Electronics Ltd. (BEL), D-Link India Ltd. (D-Link), and Sterlite Technologies Ltd. (STL).

• India’s total electronic hardware production grew at a CAGR of 17.8% during the last six years. Domestic production of electronics hardware was around USD 33bn as of FY13.

• Around 25% of total production was exported to other countries. In FY13, products worth USD 8,058mn were exported from India. The exports grew by 3.2% y/y in rupee terms but declined by 9% y/y in dollar terms owing to rupee depreciation.

• The largest contribution to electronics production in FY13 came from communication and broadcast equipment, accounting for 31% of the total, followed by consumer electronics with 23.2%. Together these two segments accounted for more than half of the entire production turnover in the industry.

• During 2003–13, the trade deficit in the electronics sector grew at a CAGR of 18.3%. However, the recent government initiatives have started to show some effects as Indian brands saw better sales in 2013, especially in the smartphones and tablets segment. The global players are also ramping up their Indian manufacturing operations. As a result, the trade deficit declined marginally by 2% y/y in 2013.