India's electronics industry will grow faster

By agencies   |   Thursday, 30 June 2005, 07:00 Hrs
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NEW DELHI: Driven by computer and computer component sectors, the Indian electronics industry is poised to take off at growth rates surpassing even those of China, according to a report released by In-Stat.

However, India's total electronics market will remain well behind China's electronics industry, which was worth $272 billion in 2004, compared with India's $11.5 billion for the same year. It is the expected growth rate of India's electronic segment that caught the eye of the market research firm. In-Stat expects India's electronics market to log a compound annual growth rate of 23 percent, enabling it to reach $40 billion in sales by 2010.

In-Stat said the Indian market will be driven by low labor and raw materials costs as well as by an abundance of available engineering skills. The country's substantial population will also help spur electronics sales. There are some hurdles to growth, though.

"Major challenges facing the Indian electronics manufacturing market are an infrastructure that needs to be improved at the earliest possibility, easing of foreign investment procedures, which is underway, and a restructured government tariff that now makes domestically manufactured goods more expensive than imported goods with zero tariff," said In-Stat analyst Bryan Wang in a statement.

The analyst noted that India's growing middle class of some 330 million now has enough disposable income to purchase consumer goods including computers and electronics devices.

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