Incredible India, Enchanting Electronics Growth
By Arthur Visser, Bishop & Associates Inc.

Over the past two decades, India has captured the attention of industries, businesses, and politicians alike. This emerging economy is part of the BRIC countries, a group that includes Brazil, Russia, India, and China (some consider Indonesia part of the group, and call it BRICI). These countries have converted part of their huge populations into highly educated, tech-targeted workforces, and have captured overseas jobs, generated their own businesses, and created a new and large consumer class.

In 2006, India was the partner country at the Hanover Industry Fair in Germany. The country was promoted as the fastest-growing free democracy in the world. India has taken its place on the world stage. Various connector manufacturers recognize this, and have established subsidiaries and manufacturing plants in India.

India is Partner Country at Hanover Industry Exhibition in 2006

With more than 1.16 billion inhabitants, India's population is huge, second only behind China, with 1.34 billion inhabitants. India’s population represents 17.1% of the world population  (July 2010 estimate). With a GDP (at official exchange rates) of $1.236 trillion, the country represents however only 2.1% of the world’s GDP ($58.15 trillion, 2009 estimate). With a GDP per capita (at PPP - Purchasing Power Parity) of $3,100 (2009 estimate), India ranks number 163 in the world. However, with its huge population, India ranks fifth in terms of total GDP at PPP in the world, behind the European Union, the U.S., China, and Japan. It is thus the fourth largest economy by country in terms of GDP at PPP in the world.

These numbers may seem impressive, but the Indian industrial market has not yet fully developed and matured. The transition from a mostly rural, agricultural and traditional economy to a modern industrialized and service-oriented economy is in full swing. Today, India’s economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Services are the major source of economic growth, accounting for more than half of India’s output, accomplished with less than one third of its labor force.

Specific sectors driving the Indian economic growth include:

• Information technology and telecommunications

• Electronics

• Automobiles

• Pharmaceuticals and biotechnology

• Consumer goods

• Textile industry

• Construction industry

• Power and energy

• Chemical industry

Currently, telecommunications is probably the biggest growth driver. This is illustrated by the growth expectations by end-use sector published by the Indian Semiconductor Association 

Estimated Growth by End-Use Sector
2009 to 2011

                      Source: ISA

It is obvious that these industries also drive the growth of the Indian connector market. The fragmented nature of the economy, combined with the fact that traditional ways of manufacturing coexist alongside modern factories, and the political and institutional landscape (the country is divided into 28 states and six union territories), makes it difficult to get an accurate and complete picture of the industrial activities in India.

The future potential of the Indian economy is illustrated in the next table showing the GDP growth in India over the past decade and a forecast through 2015. Despite the underdeveloped infrastructure in the country, which the government is trying to tackle, and which is probably one of the most important roadblocks for even higher growth rates, GDP growth year-over-year is impressive.

Indian GDP Actual Growth and Forecast
2006 to 2015'

                                           Source: © The Economist

The GDP in India expanded at an annual rate of 8.90% in the quarter from April to June 2010, and another 8.90% in the quarter from July to September 2010, defying economic slowdown elsewhere in the world. According to the forecast provided by the Economist, the Indian economy may start to outgrow the Chinese economy by 2012.

Currently, about 4.5 million people work in the Indian electronics industry. This number is expected to grow rapidly to 16 million by 2015 and nearly 28 million in 2020, an average growth rate per year of more than 18%!

According to ELCINA, the Electronic Industries Association of India, the electronic industry in India grew by a compound average growth rate of 16.6% between 2002/2003 and 2007/2008 (see table on Production Output). The table also shows that earlier this decade, the computer market was outgrowing the (tele) communications market. The communications market is likely to take over as the biggest growth driver, confirming the data published by the Indian Semiconductor Association for 2009-2011 (previous table). 

Indian Electronics Industry Production Output
2002 to 2007

                                      Rs crore

The growth of the Indian electronics industry, and more specifically local production, is expected to continue to grow at high, double-digit rates. This growth will probably accelerate, as more and more OEMs and EMS providers choose India as a location for manufacturing their products not just for exports, but also to serve the domestic market, which is growing just as fast—especially for consumer goods.

Indian Electronics Production
2002 to 2010

India’s Connector Industry

Bishop & Associates is currently preparing a report on the Indian connector industry, which will be published within several weeks. To provide our readers with a sneak preview, we are happy to provide some high level facts about the Indian connector industry.

• The Indian connector industry is estimated to be worth around $600 - $650 million in 2009/2010, and is growing at double-digit rates. 

• Most connectors sold in India are imported and not manufactured locally. The ratio is about 60/40. 

• Telecommunications and consumer products are leading end-use sectors for connectors.  

• PCB, circular, RF, and rectangular I/O connectors are dominant connector types on the Indian connector market. 

• The regions around Mumbai and Pune, Bangalore and Chennai, and Delhi NCR (National Capital region) are major production hubs. We find most electronics production and IT companies concentrated in the first two regions, as well as EMS providers (Chennai) and connector manufacturers.

It’s clear that India holds spectacular promise for the connector industry in the years to come. This country not only will provide high levels of first-time demand for consumer products, but we’ll increasingly see new innovations coming from India as well, as this highly educated workforce applies its own spin on technology development in the future.

Arthur Visser Managing Director—Europe, Bishop & Associates Inc. Arthur Visser started his career in 1987 at Océ Corporate headquarters in Venlo, the Netherlands, as a product engineer assigned to provide support to the American Océ organization. In 1988, he joined OMRON Corporation at its European headquarters in the Netherlands as the European product manager responsible for industrial automation systems and components. In 1993, Arthur moved to OMRON Electronics in Brussels as a key account sales engineer, and in 1995 became the product and marketing director. In 1998, he joined the connector manufacturer HARTING as managing director for its Belgian subsidiary. Arthur became an independent consultant, based in Brussels, in 2003. Arthur has a bachelor of science degree in airplane engineering, degrees in marketing and finance, and a master’s degree in e-media enterprising. His native tongue is Dutch, but he also speaks English, French, German, and Russian.