The Electrifying Future of Electrical Industry in India

The electrical industry in India is on a rapid growth trajectory, projected to reach an astounding USD 520 billion by 2025. This surge is driven primarily by an increasing demand for electronic products, expected to hit USD 400 billion by 2025, a significant leap from USD 33 billion in FY20.

This remarkable growth isn’t new, as the market has been expanding at a 14 percent compound annual growth rate (CAGR) from 2016 to 2019.

Electrical Industry in India Market Expansion and Reducing Imports

The electronics system market in India is expected to more than double by 2025, reaching USD 160 billion. India is actively working to reduce its reliance on imported electronics, a critical move considering the high imports in FY23 (USD 73.46 billion).

However, exports have also been rising, reaching USD 22.68 billion in FY23 and climbing further to USD 15.48 billion in the first half of FY24. This trend signifies a growing domestic capability and a robust push towards self-reliance.

Also Read: Growth of Consumer Durable Sector in India

Bright Spots: Design Segment Growth

Within the industry, the design segment stands out. Growing at over 20 percent annually, it is anticipated to constitute 27 percent of the market by 2025, up from 22 percent in FY19. This indicates a burgeoning domestic capability for designing electronic products, showcasing India’s evolving proficiency in this critical area.

Financial Performance of Key Players

India’s cable and electronics sector saw mixed performance in FY24. Leading companies like Polycab India, with the highest market capitalisation at ₹43,109.86 crore, experienced significant growth in both sales (up to 27.87 percent) and profits (up to 36.63 percent) compared to FY23. Other major players like KEI Industries and Finolex Cables also reported positive trends, suggesting a potential upswing for the industry.

However, not all companies shared this success. Universal Cables and Diamond Power Infrastructure faced declining sales and profits, indicating pockets of struggle within the sector, possibly due to company-specific factors or low market variations. Despite these challenges, the overall strong performance of leading companies paints a promising outlook for the cable and electronics industry in India.

Also Read: Growth of Construction Material Sector in India

Future Outlook: A Surge in Demand

Driven by a growing middle class, rising disposable incomes, and falling electronics prices, India is witnessing a surge in demand for electronic devices. The electronics system design and manufacturing (ESDM) sector in India is expected to reach ~USD 220 billion by 2025, expanding at a 16.1 percent CAGR between 2019 and 2025. India’s ambitious goal is to produce 1 billion mobile handsets worth USD 190 billion by 2025, with 600 million handsets worth USD 110 billion targeted for exports.

The ESDM sector was valued at USD 90 billion in FY19, segmented into electronics systems (78 percent) and electronics design. According to the India Electronics and Semiconductor Association, over 90 percent of semiconductor companies globally have their research and development centres in India. This semiconductor R&D generates about USD 2.5 billion in revenue and 6 lakh jobs in India.

Localized Component Sourcing and Global Investments

The growth in the ESDM sector is driven by a rise in localized component sourcing and the increasing presence of technology giants like Apple, Samsung, and Lenovo. Apple’s planned USD 40 billion investment and Samsung’s move to manufacture laptops in India exemplify this trend. This influx of global players, coupled with government initiatives like production incentives, is creating massive opportunities for Indian EMS companies.

The total addressable market is expected to reach USD 100 billion by FY27 as finished goods imports decline and domestic component production ramps up. This digital revolution is propelling the domestic ESDM sector towards a projected value of USD 220 billion by 2025.

Government Support and Initiatives

The Indian government is actively supporting this growth with initiatives like Make in India and Digital India, aiming to meet domestic demand and transform India into a major electronics exporter. With a target of USD 120 billion in electronics exports by 2026, India is well on its way to becoming a leading player in the global electronics market.

However, challenges remain, as imports of electronics goods still significantly outweigh exports. Bridging this trade gap will be crucial for sustaining the industry’s growth momentum.

Conclusion

Overall, India’s electronics manufacturing industry is on a promising trajectory. With a booming domestic market, a growing design sector, and a strategic push towards reducing reliance on imports, the future looks bright for this key sector. As India continues to attract global tech giants and foster local talent, its vision of becoming a global electronics hub seems well within reach.