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The Smart Techie was renamed Siliconindia India Edition starting Feb 2012 to continue the nearly two decade track record of excellence of our US edition.

Hi-tech manufacturing – an opportunity in waiting

Deepak Puri
Monday, October 1, 2007
Deepak Puri
The Elephant has started to run’, ‘India is Shining’, ‘What’s the India angle?’, and other such expressions are becoming increasingly common parlances. The new India is zooming ahead with robust growth and is amongst the fastest growing economies of the world. Growth optimism is no longer a scarce commodity in the Indian market, as was the case a couple of years ago. This bonhomie coupled with confidence is visible in practically all the sectors of the economy including IT and ITES, real estate, retail, telecom, and manufacturing. While we may be still small from the global output perspective, we are fast reaching there.

As the growth story unfolds in India, I must bring attention to one segment which continues to lag behind. While there is some bit of investment and related activities happening, given the enormous potential of this industry, India has a long way to go to catch up with other countries. The industry: Electronics.

Before going into the detailed analysis of this particular industry in India and why it is not at par with the other booming industrial sectors, let us have a quick at the terra firma of the electronics industry worldwide.

Analysts estimate that the electronics industry is much ahead and above other major sectors. Estimates peg the global electronics industry at twice the size of industries like oil, petrol, and minerals; chemical and plastics; food, beverages and tobacco. During the period 1980-2006, global electronics industry achieved a CAGR of 7.5 percent, compared to global GDP growth at 3 percent. Interestingly, the share of electronics industry worldwide in the world GDP increased to 4.3 percent in 2006 from 1.5 percent in 1978. Analysts put the global electronics hardware production in 2005-06 at $1,300 billion with China leading the production graph with a share of 18 percent followed by Germany (14.5 percent) and South Korea

(8.7 percent). Compare this with India which had a negligible share of 0.9 percent of global GDP production. Also it is no surprise that this industry contributes significantly to the respective country’s GDP with China at 13.1 percent, Germany at 8.8 percent, and South Korea at 15.8 percent. The electronic industry accounts for 1.7 percent of India’s GDP. What makes these statistics look bad for India is that we have all the right skill sets to ensure that electronic production can become one of the significant contributors to the economy, yet.

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