1. 1
FDI AND GROWTH OF INDIAN MANUFACTURING DURING POST
REFORMS:
A Brief Analysis of the Electronic and Automobile sector
Abstract: Foreign Direct Investment (FDI) and Multinational Enterprise (MNE) operation play quite
an important role in developing economies as with FDI not only investment flows into the most country
but access to a variety of other assets including world-class frontier technology becomes easier. The
present study examines the production growth rate of two sectors namely electronic and automobile
sector during post 2000s. This paper shows a decreasing trend of production growth in both sectors.
However, the study suggests that with FDI and MNE operations, India is being used an export platform
in the post liberalization era.
Keywords: Foreign Direct Investment, Multinational Enterprise, Production growth rate, Export.
1. Introduction:
Since independence, Indian economy has been an underdeveloped economy and predominantly
agricultural with very slow growth. The causes can be found in poor irrigation facilities,
destruction of cottage industries, discriminatory tariff policies and lack of manufacturing
production and protective trade policies. In the 1980s, the country faced severe financial crisis with
an acutely low foreign exchange reserves. Simultaneously, the collapse of Soviet Union impacted
the Indian economy adversely, Soviet Union being the main trading partner. In 1991, the Indian
economy took steps forward towards liberalization. Different reform packages in terms of lowerd
tariff policy, reformed exchanged rate policy, relaxed policies towards foreign direct investment
were taken. Hence Indian economy had a paradigm shift and got avenues to integrate with the
world. This opened the doors for Foreign Direct Investment (FDI) and hence Multinational
Enterprise (MNE) operations in India. FDI plays an important role in development of a country.
Through FDI, not only investment flows into the most economy, but FDI brings with it
professional skills, world class technology, marketing and distributing networks, managerial
know-how etc. In India inflow of capital increased from Rs.191.7 crores in 1990-91 to Rs157800
crores in 2010 and the number of countries investing in India increased from 29 in 1991 to 150 in
2010.
2. 2
Literature focuses on the importance of manufacturing sector (Clark and Fisher, 1935; Rostow,
1955) on economic growth. As development takes place in countries, there is a shift from primary
sector (agriculture) to secondary sector (manufacturing). This growth of manufacturing sector
leads to growth of tertiary sector. Secondary sector play a very important role in creating markets
for commodity, and here labour market implication particularly in terms of employment. FDI and
MNE operation play quiet and an important role in developing manufacturing in the most economy
as with FDI, not only investment flows into the most country but also a variety of other assets
including technologies.
Technology play a vital role in determining the production of manufacturing sector and hence the
role of FDI seems to be quite important. This paper tries to look into the importance of FDI inflow
in increasing the production of two high technology sector namely automobile and electronic
sector.
The major objectives of the paper are:
1. To study the performance and production growth of two high technology sector, Automobile
sector and electronic sector in the post reforms period (2001-2012).
2. To compare the growth rate of industrial production in two sectors in the post liberalization era.
The paper is organized as follows: Section 2 reviews the existing literature in brief. Section 3
explains the database and methodology used for the purpose of analysis. Section 4, analysis the
paper and section 5, concludes the paper.
2. A brief review of Literature:
Bhagwati and Srinivasan (1975) estimated that a number of Indian manufactures adopted some
new changes in their production in the 2nd half of the 1960’s from foreign such as, aluminum die-
cast bodies instead of cast iron bodies, which resulted in a reduction of weight. Nevertheless, in
1970 the Electrical Manufactures Association reported that of 32 manufactures in the organized
sector and 170 in the small scale sector only 12 produced motors. Indian industry has 3 types of
research and development i.e. Quality control, Technical services, Material adaptation. He also
3. 3
focused on the export and government policies. Bhat. (2014) focused on structural changes which
is occurred in Indian industry in recent year. The study suggests manufacturing sector is the major
engine of economic growth, as an export driver and in creating employment and business
opportunity. Over the years since linearization manufacturing output has diversified to basic,
intermediate and consumer durable and non-durable industry though the deceleration has been
sharp since the second half of 2008. A majority of the studies, including Goldar (2000 & 32004),
Trivedi (2000), Goldar and Kumari (2003), and Das (2003), have found a fall in productivity
growth in the post-reforms period. They used some index such as Solow index to study the growth
rate. However it cannot be denied that since liberalization there has been a quantities inflow of
FDI across sector. With economic reforms there has been a splendid production of manufacturing
goods and a positive impact on labour productivity and capital per worker (Hulten, 1999). Further
Kiran and Kaur (2008) highlighted the change in growth performance of registered manufacturing
sector in India by analyzing value added, capital, labour, partial productivity and total productivity
of all Indian manufacturing. This paper considers two high technology sector namely automobile
and electronic as there has been considerable inflow of FDI in these sector and electronic has been
considered to be one of the strategic sector to strengthen natural capabilities (Bhat, 2014).
3. Database and methodology:
This paper is descriptive in nature. We show the growth of manufacturing sectors and the paper
depends on secondary data. The data are collected from secondary online database of the
Government of India and different volumes of Economic survey. For the purpose of analysis we
have used tables to represent the data and simple diagrams (line and bar diagram) are used for
analyzing the data.
4. Analysis:
In this study we consider the electronic and automobile sector. We examine growth rate of both
the sectors during post 2000s (2001-2012). Automobile industry plays a very vital role in the Indian
Economy. Its connections with various other sectors of the economy make it an important
4. 4
component of the economy. Electronic also considered in this paper as a major export component
in the Indian export basket.
4.1 Automobile Sector
The production of automobiles started in India since the 1940s and grew considerably since the
1970s. Joint ventures with foreign collaboration started in this industry in the mid-1980s and
accelerated after the initiation of economic reforms. The core group of Automobile Research and
Development (CAR) was set up in the year 2003 to identify priority areas in automobile industry
for Research and Development (R&D) in India.
The tables (1.1 to 1.3), there are 17 types of automobile goods. We show that total production of
those goods in different years. In 2001, the production of two wheelers (segment-Motorcycles)
was high and the production of two wheelers (Segment-Electric Two Wheelers) was nil. In this
year grant total of automobile production was 5316302 unit. . In 2002, the production of two
wheelers (segment-Motorcycles) was high and the production of two wheelers (Electric Two
Wheelers) was nil. In this year grant total of automobile production was 6279967 unit. . In 2003,
the production of two wheelers (segment-Motorcycles) was high and the production of two
wheelers (Electric Two Wheelers) was nil. In this year grant total of automobile production was
7243564 unit. In 2004, 2005 the production level was at similar to 2003. Total production of these
2 years were 8467853 unit, 9743503 unit.
Table-1.1 PRODUCTION (UNIT) OF AUTOMOBILE SECTOR (2001-2005)
Category Segment 2001 2002 2003 2004 2005
Passenger
Vehicles (PVs) Passenger Cars 500301 557410 782562 960487 1046133
Passenger
Vehicles (PVs)
Multi-Utility
Vehicles 169418 165920 206998 249389 263167
Passenger
Vehicles (PVs)
Total Passenger
Vehicles (PVs) 669719 723330 989560 1209876 1309300
Commercial
Vehicles (CVs)
M & HCVs Passenger Carriers 20283 21156 27628 30419 28982
5. 5
Commercial
Vehicles (CVs)
M & HCVs Goods Carriers 76469 99346 138495 184388 190313
Commercial
Vehicles (CVs)
M & HCVs Total M & HCVs 96752 120502 166123 214807 219295
LCVs Passenger Carriers 14977 19821 20962 22619 25395
LCVs Goods Carriers 50779 63374 87955 116277 146393
LCVs Total LCVs 65756 83195 108917 138896 171788
Total
Commercial
Vehicles (CVs)
Total Commercial
Vehicles (CVs) 162508 203697 275040 353703 391083
Three Wheelers Passenger Carriers 170013 210454 245084 237413 286987
Three Wheelers Goods Carriers 42735 66265 111139 137032 147436
Three Wheelers
Total Three
Wheelers 212748 276719 356223 374445 434423
Two wheelers Scooter 937506 848434 935279 987498 1021013
Two wheelers Motorcycles 2906323 3876175 4355168 5193894 6207690
Two wheelers Mopeds 427498 351612 332294 348437 379994
Two wheelers
Electric Two
Wheelers NA NA NA NA NA
Two wheelers Total Two wheelers 4271327 5076221 5622741 6529829 7608697
Grand Total Grand Total 5316302 6279967 7243564 8467853 9743503
Source: www.data.govt.in
Table-1.2 PRODUCTION (UNIT) OF AUTOMOBILE SECTOR (2006-2008)
Category Segment 2006 2007 2008
Passenger Vehicles (PVs) Passenger Cars 1238032 1426212 1516967
Passenger Vehicles (PVs) Multi-Utility Vehicles 307202 351371 321626
Passenger Vehicles (PVs)
Total Passenger
Vehicles (PVs) 1545234 1777583 1838593
6. 6
Commercial Vehicles (CVs)
M & HCVs Passenger Carriers 32828 46542 40995
Commercial Vehicles (CVs)
M & HCVs Goods Carriers 261438 248415 151288
Commercial Vehicles (CVs)
M & HCVs Total M & HCVs 294258 294957 192283
LCVs Passenger Carriers 29443 33882 28635
LCVs Goods Carriers 196291 220167 195952
LCVs Total LCVs 225734 254049 224587
Total Commercial Vehicles
(CVs)
Total Commercial
Vehicles (CVs) 519982 549006 416870
Three Wheelers Passenger Carriers 385443 371060 417434
Three Wheelers Goods Carriers 170681 129600 79586
Three Wheelers Total Three Wheelers 556126 500660 497020
Two wheelers Scooter 943974 1074933 1161276
Two wheelers Motorcycles 7112225 6503532 6798118
Two wheelers Mopeds 379987 430827 436219
Two wheelers Electric Two Wheelers 30454 17389 24179
Two wheelers Total Two wheelers 8466640 8026681 8419792
Grand Total Grand Total 11087992 10853930 11172275
Source: www.data.govt.in
Table-1.3 PRODUCTION (UNIT) OF AUTOMOBILE SECTOR (2009-2012)
Category Segment 2009 2010 2011 2012
Passenger Vehicles
(PVs) Passenger Cars 1932620 2453113 2775124 2668633
Passenger Vehicles
(PVs) Multi-Utility Vehicles 424791 534183 370945 564928
Passenger Vehicles
(PVs)
Total Passenger Vehicles
(PVs) 2357411 2987296 3146069 3233561
7. 7
Commercial Vehicles
(CVs) M & HCVs Passenger Carriers 46026 NA NA NA
Commercial Vehicles
(CVs) M & HCVs Goods Carriers 204145 NA NA NA
Commercial Vehicles
(CVs) M & HCVs Total M & HCVs 250133 344542 384801 278560
LCVs Passenger Carriers 34751 NA NA NA
LCVs Goods Carriers 281686 NA NA NA
LCVs Total LCVs 317423 408193 544335 553184
Total Commercial
Vehicles (CVs)
Total Commercial Vehicles
(CVs) 567556 752735 929136 831744
Three Wheelers Passenger Carriers 530203 NA NA NA
Three Wheelers Goods Carriers 88890 NA NA NA
Three Wheelers Total Three Wheelers 619194 799553 879289 839742
Two wheelers Scooter 1494409 2144765 2659340 3025014
Two wheelers Motorcycles 8444857 10527111 11982669 11904212
Two wheelers Mopeds 571070 704575 785523 791954
Two wheelers Electric Two Wheelers 2567 NA NA NA
Two wheelers Total Two wheelers 10512903 13376451 15427532 15721180
Grand Total Grand Total 14057064 17916035 20382026 20626227
Source: www.data.govt.in
Hence we see that production of two wheelers (segment-Motorcycles) was high from 2006 to 2012.
In 2005, the production of LCVs (segment-Passenger Carriers) was at a low level and the
production of two wheelers (Electric Two Wheelers) was nil. In 2006, the production of LCVs
(segment-V Passenger Carriers) was at low level .i.e. its production was 29443 unit. In this year
total production was 11087992 unit. On the other hand, in 2007, 2008, the production of two
wheelers (segment-Electric Two Wheelers) was at a low level. In 2007, it was 17389 unit and
24179 unit at 2008. The total production of automobile was 80853930 unit on 2007 and 11172275
unit on 2008. In 2009, the production of two wheelers (segment-Motorcycles) was high and the
production of two wheelers (segment-Electric Two Wheelers) was at a low level. In this year total
8. 8
production was 14057064 unit. The production of two wheelers (segment-Motorcycles) remained
at a high level at 2010, 2011, 2012. During 2010 to 2012, we see that there was no production of
7 types of automobile goods, they are Commercial Vehicles (CVs) M & HCVs(segment-Passenger
Carriers and Goods Carriers), LCVs (segment-Passenger Carriers and Goods Carriers), Three
Wheelers (segment-Passenger Carriers and goods carriers), Two wheelers(segment-Electric Two
Wheelers) respectively. And the grant total of these production was 17916035 unit (2010),
20382026 unit (2011) and 20626227 unit (2012) respectively.
In table, 1.4, we show the percentage growth rate of automobile production. In 2010, the growth
rate was at a higher level compare to the others year .i.e. 27.45. On the other hand, in 2007, it was
-2.11,represent a deceleration of automobile production. The downward sloping curve shows trend
line. Hence we draw a bar diagram to understand these trend.
Table-1.4 GROWTH RATE OF AUTOMOBILE PRODUCTION
Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Growth
rate (%) 18.13 15.34 16.9 15.06 13.79 -2.11 2.93 25.82 27.45 13.76 1.2
Source: Author’s calculation based on www.data.govt.in.
Figure-1.1: GROWTH RATE (%) OF AUTOMOBILE PRODUCTION
-5
0
5
10
15
20
25
30
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
GROWTHRATE (%) OF AUTOMOBILE
PRODUCTION
9. 9
We find that automobile sector enjoyed the high growth rate till the mid-2006. But at the end of
the year, industry had to face the hard truth and witnesses the fall in sales and revenue. In December
2007, overall growth in production fell into -2.11%. During this period, Global recession has hit
the Indian auto industry. India is a strong and growing industry but the impact of recession is
evident on industry as sales & growth of automobile companies have declined.
We find a downward trend line in the growth rate of production of automobile sector in spite of
many joint venture in this sector post 2010. However there might be nuances in this analysis is
conducted across sector.
There was also an inflationary pressure. A moderate amount of inflation is important for the proper
growth of an economy like India because it attracts more private investment. The increase in the
price of fuel and the steel due to inflation has led to as lower growth rate of these sector in India.
The effect of inflation has taken the rise in the price rate of the cars by 3-4%which in turn increased
the price of the raw materials to build those vehicles. Due to these causes, there was a decreasing
trend in automobile production.
From the table, 1.4 we find a downward trend in the production growth rate. India in this sector
has become is basically an assembler of path and not producing the final commodity. But with FDI
and the joint venture, India is being used an export platform, that is the reason why we find an
upward trend in export sector in spite of downward trend in growth sector which is shown in table
1.5.
Table 1.5. EXPORT OF AUTOMOBILES IN INDIA (NO. OF VEHICLES)
Type of
vehicles 2010 2011 2012 2013 2014
Passenger
Vehicles
(PVs) 446145 444326 507318 554686 593507
Commercial
Vehicles
(CVs) 75009 74043 92663 79944 77056
Three
Wheelers 173214 269968 362876 303088 353392
Two
wheelers 1140058 1531619 1947198 1960941 2083938
10. 10
Total 1804426 2319956 2910055 2898653 3107893
Source: www.ijcrar.com.
Figure 1.2: EXPORT OF AUTOMOBILES IN INDIA (NO. OF VEHICLES)
Automobile industry plays a significant role in export in India. Table 1.5 displays the export
performance of the industry during 2010-2014.The export in this sector has grown mainly to the
export of cars, two/three wheelers. Export performance of the Indian Automobile Industry has also
exhibited steady growth for the period 2004-2005 to 2011-2012. We see that export of two
wheelers has an increasing trend compare to other vehicle. Exports of commercial vehicles and
three wheelers have declined the exports during the period 2012-2013. The Government has
decided to implement the National Automobile Testing and Research and Development
infrastructure project to improve the export.
Across sector growth in automobile:
Now we examine which production gave the highest production during this period among the all
automobile production. For simplicity we divide the whole period into two subdivision.
From the figures 1.3 and 1.4 we see that production of these goods sometimes remain same and
sometimes vary. In 2002, there was slow growth of passenger vehicle (PVS) than other sector of
automobile and in 2003 it was two wheeler. We can see that in 2008, the great depreciation
0
500000
1000000
1500000
2000000
2500000
2010 2011 2012 2013 2014
Export of automobiles in India
Passenger Vehicles (PVs) Commercial Vehicles (CVs)
Three Wheelers Two wheelers
11. 11
occurred in the production of commercial vehicles (CVs) M & HCVs. This figure show their
exits downward trend in this sector.
Figure1.3: ACROSS SECTOR GROWTH IN AUTOMOBILE (2002-06).
Figure1.4: ACROSS SECTOR GROWTH IN AUTOMOBILE (2006-12).
0
10
20
30
40
2002 2003 2004 2005 2006
ACROSS SECTOR GROWTHINAUTOMOBILE
(2002-2006)
Passenger Vehicles (PVs) Growth rate(%)
Commercial Vehicles (CVs) M & HCVs Growth rate(%)
LCVs Growth rate(%)
Total Commercial Vehicles (CVs) Growth rate(%)
Three Wheelers Growth rate(%)
Two wheelers Growth rate(%)
-50
0
50
2007 2008 2009 2010 2011 2012
ACROSS SECTOR GROWTHINAUTOMOBILE
(2007-2012)
Passenger Vehicles (PVs) Growth rate(%)
Commercial Vehicles (CVs) M & HCVs Growth rate(%)
LCVs Growth rate(%)
Total Commercial Vehicles (CVs) Growth rate(%)
Three Wheelers Growth rate(%)
Two wheelers Growth rate(%)
12. 12
That growth rate is negative which is greater than as experienced in 2012 in India. According to
the estimated data, the highest production growth was in LCVs in 2009 as shown in appendix table
1.11 and 1.12. Hence we can conclude that Passenger vehicle and LCV had remained continued
its average growth during these year. The cause of these trend in these sector is already mentioned
above.
4.2 Electronic Sector:
Now we can focus on electronic production.
The Indian Electronics and IT Hardware sector has 6 key segments, namely Consumer Electronics,
Industrial Electronics, computer Hardware, Telecommunication Equipment, Electronic
Components, and Strategic Electronics. Electronic sector now has become a major export
component in the Indian export basket. There are various segments. They are as follows:-
Table 1.6: SEGMENT OF INDIAN ELECTRONIC SECTOR
Consumer
electronics
Industrial
electronics
Computer Communication
Strategic
Strategic
Electronics
Electronic
Component
Mobile
phone
UPS system Notebook Direct-to-
home(DTH)
Radars Semi-
Conductor
Device
TV SCADA Desktops Set Top
Box(STB)
Satellite based
Communication
Cathode Ray
Tube
Music
system
PLC Servers Internal
Security
System
Capacitor
AC Drive
systems
Disaster
Management
System
Picture
Tubes
Source: Export import bank of India, occasional paper no. 147.
13. 13
India is also well known for software. But on the hardware front, the process is rather slow.
Already, 50 electronic manufacturing service providers are operating in India. It is said that, the
period from 1984 to 1990 was the golden period for electronic. India is a labour intensive country.
Due to this reason, labour cost is less in India then in United States or Western Europe or any other
capital intensive country.
From the two table (1.7 and 1.8), we can observe the different production level at different year.
In 2001, the production of Software for Exports was very high, .i.e. 28,350 unit and the production
of electronics component was at a low level i.e. 500 unit. The total electronic production of these
Table- 1.7 PRODUCTION (UNIT) OF ELECTRONIC SECTOR (2001-2006)
Item 2001 2002 2003 2004 2005 2006
Consumer Electronics 11,950 12,700 13,800 15,200 16,800 18,000
Industrial Electronics 4,000 4,500 5,550 6,100 8,300 8,800
Computer Hardware 3,400 3,550 4,250 6,800 8,800 10,800
Communication & Broadcast
equipment 4,500 4,500 4,800 5,350 4,800 7,000
Strategic Electronics 1,750 1,800 2,500 2,750 3,000 3,200
Electronics Components 500 5,700 6,600 7,600 8,800 8,800
Software for Exports 28,350 36,500 46,100 58,240 80,180 1,04,100
Domestic Software 9,400 10,874 13,400 16,250 21,740 29,600
Total Production 68,850 80,124 97,000 1,18,290 1,52,420 1,90,300
Source: www.data.govt.in
Table-1.8 PRODUCTION (UNIT) OF ELECTRONIC SECTOR (2007-2012)
Item 2007 2008 2009 2010 2011 2012
Consumer Electronics 20,000 22,600 25,550 29,000 32,000 34,300
Industrial Electronics 10,400 11,910 12,740 15,160 17,000 18,700
Computer Hardware 12,800 15,870 13,490 14,970 14,970 16,500
Communication & Broadcast
equipment 9,500 18,700 26,600 31,000 35,400 40,500
14. 14
Strategic Electronics 4,500 5,700 6,800 6,980 7,700 8,500
Electronics Components 8,800 9,630 12,040 13,610 21,800 24,800
Software for Exports 1,41,000 1,64,400 2,16,190 2,37,000 2,68,610 3,32,445
Domestic Software 37,000 47,010 59,000 67,800 78,700 91,765
Total Production 2,44,000 2,95,820 3,72,450 4,15,520 4,76,180 5,67,510
Source: www.data.govt.in
year was 68850 unit. On the other hand, the production of Software for Exports remained at a
higher level and in these year the production of Strategic Electronics became fall. From this table
we can examine that the production of Software was at higher level at each individual year and the
production of Strategic Electronics also fell. The highest production was 567510 unit in 2012.
From the table we find that consumer electronics, computer hardware, and software had got a
significant importance over these year.
In table, 1.9, we show the percentage growth rate of electronics production. In 2004, the growth
rate was at a higher level compare to the others year .i.e. 29%. On the other hand, in 2009, it was
12%, represent a sharp fall in electronics production.
Table-1.9 GROWTH RATE OF ELETRONICS PRODUCTION (2001-2011)
Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Growth
rate
(%) 16 21 22 29 25 28 21 26 12 15 19
Source: Author’s calculation based on www.data.govt.in.
Hence we draw a bar diagram to understand these trend and there is also a downward trend. There
exists an increasing trend during 2001 to 2004. The share of electronics production in India’s GDP
has been growing over the years, with increasing importance of this sector. From a share of 1.6%
in India’s GDP in 2001-02, the share has increased to 1.95% in 2009-10. Global recession was
another cause of such deceleration on production of some sector that India had to cover.
15. 15
Figure-1.5: GROWTH RATE (%) OF ELETRONICS PRODUCTION
We find a downward trend line in the growth rate of production of electronic sector in spite of
many joint venture in this sector post 2010.
India basically collaborate with technically advanced countries such as USA, UK etc. Most of
electronics and automobile goods are supplied from those countries. That’s why sometimes our
demand increases but not the supply.
Majority of the electronics production in India is intended for the domestic market. Export intensity
of sales in electronics industry has grown in 2000s. However, there has been a marked decline in
the export intensity in the post-2008-09 to 2010 period and the growth in India’s exports and
imports of electronic goods had peaked in 2010-11.India is an exporter of a vast range of electronic
component and product for telecom product, electronic manufacturing service, transmission and
signaling equipment, entertainment electronics etc. Table 1.10 shows the export projection of
India.
Table 1.10: ELECTRONIC GOODS EXPORT PROJECTION (USD MILLION)
Sub sector 2010 2011 2012 2013 2014
Consumer electronic 632 800 950 1150 1350
Telecom Equipments 1644 2710 3500 4550 5800
Electronics Instruments 738 900 1050 1300 1600
Electronics Components 2045 2670 3300 4100 5050
0
5
10
15
20
25
30
35
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
GROWTH RATE(%) OF
ELETRONICS PRODUCTION
16. 16
Computer Hardware 401 600 700 900 1200
Total 5460 7680 9500 12000 15000
Source: Report of the Working Group on ‘Boosting India’s Manufacturing Exports’
Figure 1.6: ELECTRONIC GOODS EXPORT PROJECTION
From the figure 1.6, we see that the export remain high for Telecom Equipment and Electronic
component whereas export of Computer Hardware is quite less. India has a share of 1.44 per cent
in the world Electronics market estimated at US$ 1.8 Trillion. The growth of the electronics
manufacturing has sorely lagged behind Consumption. Important features of the strategy for
bolstering growth in electronics manufacturing include –
(a) change in strategy from ‘Design led Manufacturing’ to ‘Demand led Manufacturing.
(b) Promotion of export incentives to create an environment for electronic export.
(c) Policy to attract investment in setting up of ecosystem companies.
Across sector growth in electronic:
Now we examine the across growth in electronics sector. The Indian electronics market is one of
the largest market in the world. According to current scenario, the market is projected to grow at
0
1000
2000
3000
4000
5000
6000
7000
2010 2011 2012 2013 2014
ELECTRONIC GOODS EXPORT
PROJECTION
Consumer electronic Telecom Equipments Electronics Instruments
Electronics Components Computer Hardware
17. 17
a compound growth rate (CAGR) of 24.4 per cent during 2012-2020. For simplicity we also divide
the whole period into two subdivision.
Figure- 1.7: ACROSS SECTOR GROWTH IN ELECTRONIC (2002-07)
Figure- 1.8: ACROSS SECTOR GROWTH IN ELECTRONIC (2008-12)
-20
0
20
40
60
80
100
ACROSS SECTOR GROWTHIN ELECTRONIC
(2002-07)
2002 2003 2004 2005 2006 2007
-40
-20
0
20
40
60
80
100
120
ACROSS SECTOR GROWTHIN
ELECTRONIC
(2008-12)
2008 2009 2010 2011 2012
18. 18
From the figure 1.7 and 1.8, we see that, in 2006, the growth of Communication & Broadcast
equipment was higher than other components of electronics. Whereas there was a negative growth
rate in 2009 in Computer Hardware. In particular, consumer electronics had emerged in the 20th
century and has now become a global industry worth billions of dollars in India. There exists some
problems which hampers the growth of Indian electronic industry. They are:
1. Lack of world class infrastructure.
2. Lack of clean-cut government policy for the industry.
3. Very little expenditure in Research and Development.
5. CONCLUSION:
Liberalizing FDI was one of the important policies taken up by the Indian Government for the
manufacturing sector. Since liberalization, there has been huge inflow of foreign direct investment
(FDI) across sectors in Indian manufacturing. The increased investment access to frontier
technology, it is expected that the high technology industries would benefit in terms of production
as well as exports. This paper focuses on two high technology sectors namely automobile and
electronics. This study reveals that basically, India has emerged as Asia’s fourth largest exporter
of automobiles, behind Japan, South Korea and Thailand. Starting from the two wheelers, trucks,
and tractors to the multi utility vehicles, commercial vehicles and the luxury vehicles, the Indian
automobile industry has achieved a wonderful achievement in the recent years. On the other hand,
all electronic items are freely importable in India. For more development in electronic sector,
several steps have been adopted by the government. India has been experiencing a strong growth
in the demand of consumer products and durables in recent years, driven by consumer
demographic trends. This has also facilitated growth in the electronics sector both directly and
indirectly.
19. 19
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Bhat, T.P (2014), “INDIA: Structural Changes in the Manufacturing Sector and Growth
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Goldar B and A. K (2003), “Import Liberalization and Productivity Growth in Indian
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