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Policy push may give much-needed spark to electronics industry in country [Financial Express (India)](Financial Express (India) Via Acquire Media NewsEdge) India's electronics and semiconductors industry is upbeat about 2012 kickstarting a new wave of growth in the sector, provided key government policies are on track. With a proposed National Electronics Mission in the works and the triad of policies for electronics, telecom and IT being finalised, the industry believes that electronics is back on the national agenda and that will unlock private investment into the sector. India's electronics systems design and manufacturing (ESDM) industry is projected to touch $400 billion by 2020, but the current level of domestic production has raised concerns that the country's import of electronics will potentially exceed its oil bill. The industry size in 2011 is estimated to be around $55-60 billion, with semiconductors constituting about $9.5 billion. The global electronics industry is expected to reach about $ 2.4 trillion by the end of the decade. The draft of the National Policy on Electronics 2011, which was unveiled in October, aims at creating an ESDM ecosystem by attracting investment of about $100 billion over the next eight years, achieve a turnover of $55 billion in high-tech areas, such as chip design, and increase exports to $80 billion. While the policy envisions the creation of 200 electronics manufacturing clusters, it is the equal focus on high value-addition activity, such as creating intellectual property, that has the industry excited. "A larger focus now is on the fact that India's sweet spot is knowledge," says Sanjay Nayak, CEO and managing director of Tejas Networks, a Bangalore-based telecom products company started in 2000. "To me, this is the watershed year and it looks like the policymakers have got it right. The question is, we need to move," says Nayak. Some of the measures being suggested, such as preferential market access for Indian-made products and financing for companies, would help ''break the chicken-and-egg loop'', says Nayak. "It has been a challenge for entrepreneurs to turn their R&D ideas into business success. Unless we fix the business success issues, the environment is neither motivating nor supportive for an entrepreneur," he adds. Agrees Vinay L Deshpande, chairman and CEO of Encore Software, the Bangalore-based company that was part of the team that built the Simputer nearly a decade ago. "There needs to be some creative financing schemes to support production," he says, adding that several good ideas do not make it to the market because of the lack of financing. Deshpande is optimistic of seeing investment coming into the sector soon because he reckons that investors see potential in local companies and that the credibility is much higher than it was a few years ago. The industry hopes that a National Electronics Mission (NEM) would help create a success story on the lines of the green revolution that put India on the path to self-sufficiency in food production. "It's ambitious and it's going to require a lot of work. That's why we are hoping the NEM will be notified soon. Because once you have a national mission, all vectors in government begin to align in a certain direction," says PVG Menon, president of the Indian Semiconductor Association (ISA). "Ultimately, this has to translate to budget allocations. I'm looking at this budget very keenly to see what is going to get allocated." The ISA, meanwhile, is also part of a task force that is looking at, among other areas, creating a network of incubation centres in the major electronics clusters. "The huge problem for a start-up is access to electronic design and automation tools, which are very expensive. We are trying to make those licences available over a cloud and we are talking about having a hardware lab attached to it," says Menon. Creating a market will also help draw more youth to electronics and help expand the talent pool required for such a ramp-up, says S Sadagopan, founder-director of the International Institute for Information Technology, Bangalore. "You need the market, you need the products and you need the jobs. You need to create that suction force," he says. The electronics policy aims at creating 2,500 PhDs annually by 2020. The overall domestic manufacturing in the electronics sector is expected to be around $200 billion by 2020, which still leaves a huge demand-supply gap. "If the policy comes up, the gap will be bridged in a big way," says Niju V, deputy director, automation and electronics practice, Frost & Sullivan, South Asia and Middle East. He adds that the challenge of building an ecosystem of clusters will, to a great extent, be driven by the investments made by equipment manufacturers, which will have a ripple effect. "In a three-year time-frame, I am extremely positive about this industry." Says Nayak of Tejas Networks: "A holistic picture has been taken and that's what I am excited about. At least the problem has been understood and the right steps are being thought through. The only concern and challenge I see is time." Copyright 2012 The Indian Express Online Media Ltd., distributed by Contify.com Credit: Ajay Sukumaran (c) 2012 The Indian Express Online Media Ltd., distributed by Contify.com |