World electronics production has seen an exponential increase. Telecom and data processing equipments are the two largest segments accounting for 25%, and 21%, respectively, of the total world electronics production in the year 2008. Industrial and medical electronics accounted for 18% share, and audio-video equipments accounted for 15% share in world production of electronics. Automotive (8%), aerospace & defence (7%), and home appliances (6%) are other sub-sectors in electronic production.
As per the Exim Bank of India strategic electronics has become one of the important areas in the electronic industry due to the criticality of the technology development targeting two aspects, viz., a) the technology applicable to the strategic sector, like defence purposes; and b) the emerging state-of-the-art technology in the civilian applications. The strategic electronic sector envelops satellite based communication, navigation and surveillance systems, radars, navigational aids, sonars, underwater electronic system, infra-red based detection and ranging system, disaster management system, internal security system, etc. The percentage growth in this sector as per EXIM Bank of India is as per Table Below-
2007-2008 Percentage Change
Radar systems 27.7
Navigational equipment 17.6
Underwater and sonar 21.5
Electronic warfare equipment 21.5
Defence communication equipment 32.4
Miscellaneous strategic equipment 23.5
The Indian strategic electronic industry has been able to meet the bulk of the requirements of India’s defence and paramilitary forces. There has been consistent growth in production of strategic electronics. In the year 2008-09, production of strategic electronics in India was valued at ` 6,840 crore, a growth of 20% over the previous year. The production data for the year 2009-10 is estimated to be ` 6,980 crore, registering a marginal growth of about 2%. However, this is much lower than the growth rate witnessed in 2008-09 over 2007-08. This was mainly because of reduced military spending in some sectors and the troubled global economy. At the national level, various research institutions are developing strategic systems, and the public sector undertakings and some of the private agencies are mainly contributing to the growth in production.
It is expected that military and aerospace semiconductors are expected to witness growth in the coming years, as suppliers are likely to be looking forward for the end-product growth coming to the market over the next few years. This growth is due to technological advances which are driving the demand due to changes in national military policies, and as a result of the substantial backlog of undelivered orders in aerospace. Prior to the era of computers and consumer electronics, military electronics consumed almost all of the world’s semiconductors. Although the market share of military electronics in the consumption of semiconductors has been reduced, semiconductors nonetheless perform critical roles in the military electronics segment.
In the overall industrial market, which includes military and aerospace applications, more designs are being used in digital signal processing, sensors, analog circuitry for automation, measurement, security, and other growing areas. While volumes of shipment in the end-equipments are lower and growth is limited, the increasing electronics content, requiring semiconductors, is driving an average growth of 5% per year for military / aero chips. The forecast for military and aerospace semiconductors shows that the year 2010 would be a growth year for this market, with revenue likely to approach US $ 2.6 billion. [Based on Exim Bank Report].
Defence Electronics Market in India – Contemporary Perspective
Electronics industry organization India Electronics and Semiconductor Association (IESA) holds annual event known as the DEFTRONICS. At the DEFTRONICS 2015, IESA-Roland Berger whitepaper titled ‘Defence Electronics Market - Perspectives and Recommendations’ was released.
M N Vidyashankar, president of IESA said, “As our country is steadily transforming itself as a global superpower, defence self-reliance has become imperative in the recent times. Realising this pressing requirement, we have collaborated with Roland Berger - one of the leading strategy consultancies worldwide to deep dive in to India’s A&D ecosystem challenges and propose the way forward.”
Giving the overall size of the defence market, “In the last one year, Rs 2 lakh crore worth order has been already placed under buy and Make in India category. This itself precludes a larger role of foreign investors and gives greater flexibility to domestic industry to participate in Defence order,” DIPP Joint Secretary Shubhra Singh said while speaking at Electronica India event. She said that among 25 sectors identified for Make in India campaign, Defence and aerospace is being increasingly looked upon as one of the most promising segments to push indigenous manufacturing. “… over next seven years, there is expected spend of USD 130 billion on Defence forces and additional USD 110 billion on homeland security. This is a type of opportunity before domestic manufacturers and also for foreign investors,” Singh said. “It is important that the Aerospace and Defence industry leverage ESDM (Electronic System Design and Manufacturing) policies to drive down operation cost,” Singh said.
As per electronics association estimates, current market for Strategic Electronics is estimated at approximately US$ 4 Billion and growing at 12-15% per annum.. Defence PSUs and Ordnance Factories outsource about 20–25% of their production to the private sector. Out of this outsourcing, about a quarter is met through the small–scale sector. It is estimated that over 6000 SMEs operate in this space supplying components and sub–assemblies to the DPSUs, Ordnance Factories, and DRDO many of which are operating at the Tier 3 and 4 levels. The opportunity for electronics in defence systems in India is spread across both stand alone equipment (about $18.5 billion) as well as at a sub-system level. The main pie is at a sub-system level.
The IESA release estimates that land systems opportunity for Indian companies is around projects such as the infantry combat vehicle, main battle tank, artillery and launcher programmes. The naval opportunity is around platform programmes of conventional submarines, frigates, aircraft carriers and support vehicles. In the Air Force, the market could open up around supplies to fighter and transport projects.
A number of states are providing incentives for the electronics sector. To keep the sector cruising, the Telangana government is not only setting up the state's second aerospace park spread over 1,000 acres at Elimenidu on Hyderabad's outskirts, but is also giving finishing touches to an aerospace policy to be announced in November.
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