Defence Electronics Market in India

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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].