India: the Vibrant Electronics Industry Vinnie Mehta Executive Director Manufacturers’ Association for Information Technology Tel Aviv November 05 , 2007 1
Presentation agenda w India – a land of opportunities w Snapshot of Electronics & IT industry in India w Conclusion 2
India on the move… w One of the fastest growing nations GDP Ø GDP grew at 9. 4% during 2007 Ø Top 10% of nations since 1980 Ø On the verge of sustained double-digit growth w Strong investment momentum Ø Market capitalization up from USD 140 Bn in FY GDP composition – FY 2007 2001 to > USD 1 Trn recently Ø FDI on the rise - USD 7. 6 Bn (06) and USD 19. 4 Bn (07) Ø FII investment - USD 6. 5 Bn in 2006 -07 Ø 140 + public traded companies with market cap > USD 1 Bn Source: CMIE By 2050, India projected GDP is US$ 70 Trillion 3
India – the 5 Ds • Democracy – Largest democracy in the world – Largest digital elections – 9 Prime ministers from 6 major parties, 50 + state parties, 3 MM elected representatives – ONE POLICY • Diversity • Diaspora – Highly diverse – 23 languages, 30 provinces – 6 major religions – Cultural, religious, & Climatic • Demographics – 1. 12 Bn population, Remain a ‘young’ nation beyond 2050 – < 20 yrs population – 442 Mn currently – 479 Mn by 2050 – ~10 Mn finishing school, 600, 000 Engineers and 3 Mn graduates p. a – Over 2 Mn Indians outside India – Indian companies outbound M&A > USD 15 Bn in 2006 • Demand – 5 th largest consumer market in the world by 2025. – 300 Mn growing middle class – Rising incomes to lift 291 Mn out of poverty to make middle class 583 Mn by 2025 Ingredients for sustained and consistent economic performance 4
Electronics industry in India: A snapshot w The Market: 2006 -07 Ø Domestic demand: USD 30 bn Ø Production: USD 16 bn Ø Exports: USD 2. 2 bn w Employment Components $ 2. 15 Bn Strategic Electronics $ 1. 09 Bn Consumer Electronics $ 4. 87 Bn Ø Direct: 0. 75 million Ø Indirect: 1. 5 million Comm. & Broadcasting Equip. $ 2. 32 Bn Computers $ 3. 12 Bn • Industrial + Other $ 2. 55 Bn Growth over 2005 -06: 20% 5
Key Electronics Associations in India w CEAMA: Consumer Electronics & Appliances Manufacturers’ Association w ELCINA: ELCINA Electronic Industries Association of India w ISA: Indian Semiconductor Association w MAIT: Manufacturers’ Association for Information Technology w TEMA: Telecom Equipment Manufacturers Association CEHA: Council of Electronics Hardware Associations 6
Electronics & IT industry in India: A snapshot w The Market: 2006 -07 Ø IT Industry size: USD 48 bn + • IT Hardware Domestic: USD 7 bn: USD 1. 7 bn • ITES & Software Exports: USD 31. 3 bn ; Domestic: USD 8. 4 bn Ø 6. 3 million PCs sold; Installed base: 22 mn Ø 13 million TVs consumed; Installed base 100 mn + Ø 5 million + DVDs sold: growing at 40% annually Ø Internet users: 50 mn+; Broadband connections: 2. 5 mn Ø Mobile sales: 75 mn ; Installed base: 172 mn Ø Significant R&D and product development Ø Sizeable presence of MNCs: Intel, IBM, Cisco, Motorola, Nokia, Samsung, LG Ø India is suddenly attractive for hardware/electronics manufacturing 7
Units The PC market (Desktop + Notebooks) in India • CAGR 2001 -07: 30% • Growth over 2005 -06: 26% 9
Desktop Market: Share of Indian, MNC & Assembled 2005 -06 2006 -07 • Consumption of Indian brands decreased 2% in absolute terms • Sales of MNC Brands grew by 33% and that of Assembled by 22% in absolute terms 12
Desktop sales: City-spread • Consumption in Top 4 metros grew by 15% while in Next 4 it dropped by 26% • Sales in Rest of India (Other smaller Towns) grew by 33% 13
The Set top box market: 2004 -07 Million Units • Annual growth 84%; • 2007 -08: sales expected to cross 2. 5 million 21
Telecom Market in India : 2002 -07 Million Units Mobile Phones • Annual subscriber base growth 44%; 2007 -08: subscriber expected to cross 250 mn • 2006 -07: Base Stations installed: 100, 000; Annual growth: 55% • 2006 -07: Towers installed: 100, 000; Annual growth: 60% 22
The Software & Services market USD Million Ø Annual growth: 31%; Exports growth at over 32% and domestic at 25% Source: NASSCOM
The Software & Services Exports Markets 2003 -04 2004 -05 2005 -06 Americas 69. 4% 68. 3% 67. 18% Europe 22. 6% 23. 10% 25. 13% ROW 8. 0% 8. 60% 7. 69% Source: NASSCOM ~ 80% of Fortune 500 outsource their IT from India 24
India Semiconductor Market 40 Revenues $ Billion 35 TM CAGR – 29. 8%, TAM CAGR- 29. 4% TM 36. 3 TAM 30 TM in 2015 is expected to grow by 13 times the TM in 2005 25 TAM in 2015 is expected to grow by 14 times the TAM in 2005 20 15. 52 12. 67 15 10 5 5. 8 2. 82 1. 14 0 2005 2010 2015 • India’s share in the global semiconductor market is expected to increase from 1. 2 % in 2005 and is forecast to be 5 % by 2015 • Telecommunication, Consumer and IT Hardware the segments driving the market during the forecast period • Wireless handsets, Base Station Transceivers (BTS) are the major sub product categories driving the TAM for telecommunications segment • Set Top Box, DVD players and writers are the emerging product categories in consumer segment • Few other emerging product categories are electronic clusters, Capacitive Discharge Units (CDI) and Engine Management Systems (EMS) Source: ISA – Frost & Sullivan 25
Venture Capital Industry Ø An estimated USD 7. 5 bn in VC/PE in 2006 across 299 deals • • Ø Over 250 deals in first half of 2007 with USD 5. 6 bn Expected to cross USD 10 bn in 2007 Key Investment Verticals – IT/ITES (23. 5%), BFSI (12. 1%), Manufacturing (12%), Real Estate (7. 1%); Engg & Construction (7. 9%) Ø India Specific VCs: Chrys. Capital, HSBC Pvt Equity, ICICI Ventures, IL&FS Venture Corporation, Infinity Technology Ventures, SIDBI, Walden International etc. Source: IVCA 26
India emerging as a manufacturing destination § Surge in manufacturing confidence led by mobile players Ø Branded players: Nokia, Motorola, LG, Samsung, Ericsson… Ø EMS companies: Elcoteq, Flextronics, Solectron, Jabil Circuits, Sanmina, Celestica and Foxconn/Honhai … Ø With new Fab policy several Semiconductor firms are keen to manufacture in India § Taiwanese Companies just about coming in Ø Foxconn/Honhai; Compal (Reliance), Delta Electronics, Liteon 27
India advantage w w Local Market A very rapidly growing domestic market: CAGR 30%+ Global recognition for back-end services: Ø w Attractive for Manufacturing Investments Ø Ø w Profit from Local Sales A proven case for IP, embedded systems and IC design Skilled employee base Fast and upcoming modern infrastructure (SEZs) Proximity to EU and MEA market Ø Freight Cost; 20% cheaper than China - Faster delivery and lesser pipeline inventory Advantage India Harness low cost manufacturing base to service local, European and MEA markets Manufacture Use India for IP and ITes Services -New Product development -Engineering services -BPO Back-end Services India is a great Opportunity –Triple Advantage 29
The Future… 2010… w Mobile installed base: 500 mn w PC sales: 25 mn; installed base 65 mn w ITES & Software exports: USD 60 bn w 40 mn new internet connection; at least 50% broadband w Nationwide TV broadcast to be digital by 2015 beginning 2010: significant opportunity for STB consumption & manufacturing w Over USD 10 bn investment in e-governance and national id card 2015: Total expected Market USD 320 bn; Domestic production USD 155 bn 30
Come. . explore. . be a part of the great Indian opportunity! We look forward to welcoming you to WEF 2008 Thank you! - vinnie@mait. com 31
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