Along with 4.0 data guzzling consumer applications like video streaming, gaming, social media and remote working will place massive demands on 5G for voluminous and reliable data transfer. With the demand for 5G devices, electronics and electronic component manufacturers see huge business opportunity
ANOctober 14, 2021
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Electronics and electronic component manufacturers in India are poised for a phase of massive growth in business opportunities. Industry 4.0; with its revolutionary usage of voluminous, fast and reliable data; is set to place unprecedented demand on data networks, driving demand for 5G devices and with it a host of compatible electronic equipment and components.
“5G could be a game changer for Indian industry with a potential to create an economic impact of more than USD 1 trillion by 2035,” affirms Dr. Sreeram Srinivasan, CEO, Syrma Technology, among the top-notch Electronics Manufacturing Services (EMS) provider.
With the GoI promoting electronic industry as a part of its ambitious aim of making India a global manufacturing hub, the industry is not short of support or attention in the galleries of power.
“The government has set the ball rolling with the Production Linked Incentive (
PLI) scheme,” says A Gururaj, MD, Optiemus Electronics Limited, among the early qualifiers of the scheme with a business plan of investing upward of USD 200 million in telecom manufacturing and R&D.
Disruptive technologies opening up market demand and the government backing the industry; it couldn’t have been better time for electronics and electronic manufacturers.
5G to drive demand for electronics and components
India is expected to have 13.5 billion-13.7 billion IIoT connections by 2025, say reports, and manufacturing industries are eager to leverage this disruption for maximum benefits.
The likely impact of 5G is yet to be fully ascertained. What is certain is that the demand for connectivity will drive demand for the module that enables devices to connect with mobile network, the radio frequency front-end (RFFE). 5G modems, 5G routers, MIMO antenna, 5G New Radio (5GNR), C-RAN units, multichannel highly integrated RF transceivers, voltage-controlled crystal oscillators (VCXOs) and innumerable other compatibles. Present displays will give in to displays more conducive for virtual reality functions.
Requirement for enhanced memory and storage will see demand for micro-chips going up. That opens up an unprecedented opportunity for semiconductor businesses. Going beyond the conventional buyers, namely the handsets and computing equipment manufacturers, 5G will see customers for semiconductors come from growing base of connected industrial and consumer product manufacturers according to a report by Accenture.
“On the 5G value chain, connectivity and infrastructure related gear will be the first movers for manufacturers and service providers. However, the bigger opportunity will result from the adjacencies like advanced handsets, dongles adapters and USB terminals for the adoption and also the application side that leverages AI, M2M and others,” says Srinivasan whose company is into custom design and manufacturing of high precision electronic products.
Government support to electronics industry
The electronic industry can look forward to the government creating an eco-system conducive for its businesses leveraging the demand for 5G devices and compatibles.
The National Policy on Electronics 2019 conveyed the “high priority to electronics hardware manufacturing” that the government attached to. Schemes like the Production Linked Incentive (PLI), the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductor (SPECS) and Modified Electronics Manufacturing Clusters (EMC) were introduced in continuation of the effort.
“The Government has been proactive, in our view, in the last few years towards supporting electronics hardware manufacturing but it is a little premature to speak of the progress from PLI,” says Srinivasan, while taking cognizance of the ones announced early in the series such as mobile phones related PLI and SPECS that have progressed well.
“It is heartening to see how India has already emerged as the 2nd largest mobile manufacturer in the world and this is the result of proactive work and policies by the government and industry,” says Gururaj whose company is a recipient of PLI for mobile devices and IT hardware.
More need to be done, feel industry experts. Extending a duty concessions parity to Indian companies to what is being extended to FTA countries is a plea often heard. Srinivasan would like to see an immediate differentiation of HSN codes for ITA1 and ITA2 products to prevent ITA2 products, that were not even signed for in ITA list, from getting concession benefits. Gururaj wishes for the PLI scheme to be extended beyond the 4-year timeline for R&D to bloom.
The industry is certainly relishing the demand prospects and the government support. But there are hurdles ahead.
Electronics industry- Challenges and responses
Within sight of an appealing business opportunities, the industry is faced with challenges, some of which have dogged it for a long time. India has been traditionally dependent on imports for electronic components. Though India makes many passive components, it is still dependent on imports to some extent. For active components, the dependency is still greater and more so for semiconductors.
“In 2019-20, this dependency was to the tune of Rs1.15 lac crore, 37% of which came from China and the situation will continue to remain the same for another 3.5 years,” assesses Srinivasan.
In a similar vein, Gururaj says, “Though our economy has matched the pace of global mobile manufacturing, it is yet to keep up with the manufacturing of active components and semiconductors.”
Adding to the woe of the industry is the concessions on import duties given to FTA countries which allows free import of value-added products. According to Srinivasan, the best of our component manufacturing companies even in SEZs are not extended the concessions that are extended to FTA countries. This anomaly is putting up a big challenge to the local industry.
“Component manufacturers in India face a disability of 7~8% vis-a-vis China and Vietnam. This cost disadvantage combined with zero import duty on many of the components has been a significant roadblock in the growth,” Srinivasan points out.
“In the last few years, India has been able to make progress in manufacturing and leading companies have set up base in India, which is the big testimony of the right direction and approach by the country,” points Optiemus MD. Companies are looking at multiple options to face the challenges including collaborative efforts with global companies. Optiemus is strategically partnering with Wistron; a Taiwan headquartered US$ 30 billion corporation; for joint development of products, software and firmware development.
“Our partnership with Wistron is an attempt to build a unique proposition in Indian Electronics Manufacturing Services (EMS). The alliance will work towards creating a joint hub in India for Design Solutions Product Development apart from bringing smart manufacturing to India.” Gururaj informs.
Creating conducive eco-system
The industry is taking cognizance of the poor R&D work in the field and acknowledging the need to address it urgently. R&D expenditure by the companies in the ESDM sector in India is an abysmal 0.6~0.7% of sales.
“As hardware become more and more standardised and commoditised and the product features are controlled by the embedded software, India’s chance to add value to products is emerging. The time is now to encourage R&D expenditure,” says Srinivasan.
“India now needs to work on the overall ecosystem which would be the enabler for the next level of growth supported by more policy reforms for ease of doing business,” says Gururaj in the same line.
The industry is watching with interest as global giants are sizing up at the opportunity thrown by the GoI that has issued Expression of Interest (EoI) and Request for Quotation (RFQ) to set up fab units in India.
Prospects before electronics and component manufacturers
Business prospects for the electronics and electronic manufacturers are for real, here and now.
The inevitability of Industry 4.0 is now universally accepted. But, all the constituents of i.40 demand bandwidth. IIoT enabled devices, AI, ML, VR, robotics, autonomous vehicles, visible assets, remote maintenance through AR, and all the other buzzwords related to the fourth industrial revolution and smart manufacturing place demands on network. The present networks will be stretched to their limits.
With a latency of less than one millisecond, high reliability communication protocol and a data speed, according to Qualcomm of 20 GB per second, 5G is the panacea for reliable communication across huge networks. Simultaneously, it will also be the cause for wider usage putting further demands on the network.
The supply chain industry will find in 5G their answer to asset visibility, route optimisation, remote mechanic and predictive maintenance, connected warehouses and warehouse robotics. The healthcare industry will look for harnessing robotic aid in surgeries, transfer of voluminous data and medical imagery, drone ambulances, wearable medical gadgets monitored remotely and other IoT solutions. Local bodies looking for making cities smart will be seeking connected streets and buildings and public transport with sensors everywhere generating huge data.
Along with i4.0, data guzzling consumer applications like video-streaming, gaming, social media and remote working will be among the demand creators. As of now, the possibilities of usages of 5G are endless and is limited by the constraints of our own imagination.
Enabling these humungous and reliable data transfer will be made possible by 5G. At the same time, availability of 5G will be driving further demands on networks by newer usages.
According to one GSMA prediction, 5G will constitute one-fifth of mobile connection in just under three years. In the wireless network infrastructure market 5G is the fastest growing segment, according to a Gartner report. Revenue from 5G infrastructure worldwide is expected to grow by around 39% to USD 19.1 billion in 2021, the report further adds.
IDC expects India to clock 40 million 5G sets by end of 21. With the demand for all these devices around, electronics and electronic components manufacturers have huge business opportunities to look for
