The Indian Electronics Industry


Preface

Dhiraj Bansal
Rajdeep Sharma
Parthasarathy Srinivasan
Michael Pecht

India is the fifth largest economy in the world and has the second largest GDP among emerging economies. Owing to its large population, the potential consumer demand is almost unlimited and consequently under appropriate conditions, strong growth performance can be expected. In fact, the liberalization of the economy in 1991 has led to rapid growth. The electronics industry, in particular, is emerging as one of the most important industry in the Indian market.
The electronics industry in India dates back to the early 1960s. Electronics was initially restricted to the development and maintenance of fundamental communication systems including radio-broadcasting, telephonic and telegraphic communication, and augmentation of defense capabilities. Until 1984, the electronics sector was primarily government owned. The late 1980s witnessed a rapid growth of the electronics industry due to sweeping economic changes, resulting in the liberalization and globalization of the economy. The economic transformation was motivated by two compelling factors - the determination to boost economic growth, and to accelerate the development of export-oriented industries, like the electronics industry.
The electronics industry has recorded very high growth in subsequent years. By 1991, private investments - both foreign and domestic - were encouraged. The easing of foreign investment norms, allowance of 100 percent foreign equity, reduction in custom tariffs, and delicensing of several consumer electronic products attracted remarkable amount of foreign collaboration and investment. The domestic industry also responded favorably to the politic policies of the government. The opening of the electronics field to private sector enabled entrepreneurs to establish industries to meet hitherto suppressed demand.
Improvements in the electronics industry have not been limited to a particular segment, but encompass all its sectors. Strides have been made in the areas of commercial electronics, software, telecommunications, instrumentation, positioning and networking systems, and defense. The result has been a significant trade growth that began in the late 1990s.
Despite commendable achievements in the sphere of electronics, considerable infrastructural improvements remain a priority. Water, power, telecommunications, and transportation sectors must still be augmented so that high economic growth can be sustained.
The Indian Electronics Industry is a text for investors who are considering India as a potential investment opportunity. The book is designed to cover various segments of India's electronics industry, which include telecommunications, consumer electronics, computer hardware and software, and medical electronic systems. The authors have examined the roles of government, major companies in electronics including the multinationals, research organizations, and educational institutions in establishing the infrastructure.

This book features detailed coverage of the important aspects of the Indian electronics industry and:
  • discusses the historical background of the electronic development in India
  • outlines tax structure, market strategies, economic policies (domestic and foreign), and traditional areas of economic development
  • tracks the growth of various segments of the electronics industry including telecommunications, consumer electronics, computer hardware and software, and medical electronic systems
  • addresses the problems faced by the industries pertaining to power, transportation, communication networks, and other environmental considerations
  • presents directions and strategies for radical industrial growth in the future, and hints at promising development in the coming years

A brief description of the organization of the book and the topics in the chapters follows:

Introduction

Chapter 1 provides a broad overview of Indian culture, religion, demographics, economy, trade, and describes India's drive towards liberalization. Information on education in electronics gives an assessment of the potential of the workforce.

The Indian economy

Chapter 2 covers topics that include the state of Indian economy; the impact of liberalization, trade and investment policies; financial system and tax structure; market entry strategies, and the emergence of multinational companies. A section is devoted to policy changes in the electronics industry. A brief comparative study of Indian and Chinese economy, along with their respective potentials, has also been presented.

The Indian electronics industry

Chapter 3 describes the electronics industry in India. It discusses the important role of the defense-related research and development towards the initial boost to the industry. The contributions of telecommunications, computers, commercial electronic products and software towards the rapid growth of the electronics industry have been assessed.

Critical issues and future trends

Chapter 4 explains the reasons behind the constrained growth of the electronics industry, consequences of political fluctuation, infrastructural shortcomings and environmental concerns. Chapter 5 predicts future economic and growth conditions. The necessity of increase in trade and investment to achieve rapid economic growth is also highlighted.

 

CONTENTS

Preface

Abbreviations

Chapter 1 About India
       1.1 An Introduction to India
             1.1.1 India's Roots
             1.1.2 Philosophies and Religions
             1.1.3 India's Geography
             1.1.4 Demographics
             1.1.5 Contemporary India
             1.1.6 Education and the Work Force
       1.2 Industrial Development, Economy and Trade
             1.2.1 Self-Reliance to Liberalization
             1.2.2 Economy
             1.2.3 Trade
             1.2.4 Corporate Sector

Chapter 2 The Indian Economy
       2.1 Economic Conditions, from Independence Onwards
       2.2 Investment Policies and Regulations
       2.3 Trade Policies and Regulations
       2.4 Import Policies
       2.5 Export Policies
       2.6 Economic Policy Changes in the Electronics Industry
             2.6.1 Entry Policies for the Electronics Industry
             2.6.2 Foreign Investment Policies
             2.6.3 Export and Import Policies
             2.4.4 Foreign Direct Investment
       2.7 Advent of Multinational Companies (MNCs)
       2.8 Growth of Consumers
       2.9 Information for Investors
       2.10 Financial System
             2.10.1 Banking System
             2.10.2 Stock Markets
             2.10.3 Foreign Exchanges Markets
       2.11 Tax Structure in India
             2.11.1 Taxation of Companies
             2.11.2 Excise Duty
             2.11.3 Customs Duty
             2.11.4 Sales Tax
       2.12 India: A Comparison with China
       2.13 Market-Entry Strategy for the Indian Market
             2.13.1 Understanding the Potential of the Indian Market
             2.13.2 Developing an Entry Strategy
             2.13.3 Completing the Actual Entry
             2.13.4 Summary

Chapter 3 The Electronics Industry in India
       3.1 Defense Electronics
             3.1.1 Defense Production and Supplies
             3.1.2 Electronics and Instrumentation
             3.1.3 Computers and Simulation
             3.1.4 Defense Research and Development
             3.1.5 Hindustan Aeronautics Limited
             3.1.6 Space Technology
       3.2 Telecommunications
             3.2.1 Electronic Switching Equipment
             3.2.2 Wireless Communication
             3.2.3 Investment in Telecommunications
       3.3 Electronics Development in India
             3.3.1 Hardware Production
             3.3.2 Personal Computers Industry
             3.3.3 PC Technology Development
             3.3.4 Printed Circuit Board Production and Assembly
             3.3.5 Integrated Circuits Industry
             3.3.6 Color TV Industry
             3.3.7 Audio Systems Industry
             3.3.8 Medical Electronics Industry
             3.3.9 Process Control Industry
             3.3.10 Information Technology Industry
       3.4 Software Development in India
             3.4.1 Introduction
             3.4.2 Top Twenty Exporters
             3.4.3 The Indian Advantage of Software Development
       3.5 Public Sector Companies
             3.5.1 Bharat Electronics Ltd. (BEL)
             3.5.2 Electronic Corporation of India
             3.5.3 Bull Power Systems Limited
       3.6 Conclusions

Chapter 4 Problems Faced by the Indian Electronics Industry
       4.1 Political Instability
       4.2 Shortfalls in Infrastructure
             4.2.1 Water
             4.2.2 Power
             4.2.3 Communication Networks
             4.2.4 Transportation
       4.3 Environmental Considerations

Chapter 5 Future Trends and Directions
       5.1 Introduction
       5.2 Future Strategy
       5.3 Conclusions

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