Electronic System Design & Manufacturing

  • Overview
  • Why Karnataka?
  • Policies & Initiatives
  • Investment Opportunities & Facilitation

Electronics is the fastest growing manufacturing sector in the world and is primarily driven by the demand for new age consumer electronics. The Global market is expected to touch USD 2.4 Tn by 2020 from 1.75 Tn in 2013. The share of Asia-Pacific region in manufacturing of Electronics products is growing due to low cost of production and high consumer demand. Indian electronics market grew at CAGR of 14% in-between 2007-2012 with domestic revenue accounting for ~ 70% of the industry’s revenue. In India, Karnataka ranks amongst the largest contributors to Electronic Industrial Output and recorded a growth rate of 18% CAGR.

Karnataka is often referred to as home to the Silicon Valley of India and rightfully so, with its sprawling technology industry landscape and the associated ecosystem across the value chain. Electronic System Design and Manufacturing (ESDM) are pivotal to address the growing demand and facilitate growth as the domestic electronics market is on an upswing. While the share of imports has seen some growth, government initiatives like ‘Make in India’ as well as policies, training, development initiatives and investment opportunities spearheaded by the Karnataka government form major steps in transforming the state in to a production hub to cater to the increasing domestic and international demands. This is a potential opportunity for investors to enable manufacturing in India to fulfill domestic consumption and export.

Key drivers for growth in the segment:

The demand-supply gap in India is projected to increase to USD 296 billion by FY20. Growth in Telecom Infrastructure to cater to the country’s increasing market penetration and subscriber base is a big driver. According to eMarketer, India will exceed 200 million Smartphone users, topping the US as the world's second largest Smartphone market by 2016. Increasing demand for high-end technology gadgets is another important growth driver in this segment. CEAMA affirms that India’s appliance and consumer electronics sector is set to grow at a compound annual rate of 13.4%, to touch $20.6 billion by 2020. The ‘Make in India’ initiative with its focus on reducing reliance on imports supported with other government initiatives like Digital India, Smart cities, IOT policy is expected to steer significant expansion of this sector. Increase in disposable income largely attributed to a growing affluent middle class population in the country is driving more consumption whereby demand. Abundance of talent in India and especially Karnataka to fulfil the rising demand in order to boost the growth of semiconductor design market support the growth of this sector.

Karnataka is one of the top five states contributing to the country’s electronic industry. Bengaluru being a global hub for R&D operations in the software industry greatly aid the electronic hardware industry. The state has major electronic hardware clusters as well as designing companies in Bengaluru as well as 200+ Engineering colleges, 200+ Polytechnics, 300 Industrial Training Centres and ~400 R&D institutions that provides the state with a high quality talent pool of 5,00,000 IT professionals; 1,00,000 researchers and with 80,000 engineers added annually. Infrastructure support along with being the innovation and knowledge hub of the country makes Karnataka a preferred destination for the ESDM sector. Bengaluru has been rated 2nd in innovation and growth by the Global Start-up Ecosystem Growth Index and is also acknowledged by expatriates as the best place to live and work.

Track Record:

Karnataka contributed ~10% of the country’s electronic industrial output and recorded a growth rate of 18% CAGR ranking it prominently amongst the top 5 contributing states.Being home to 70% of India’s chip designers makes Karnataka the 2nd largest chip design hub of India. Karnataka also houses a whopping 85 Semiconductor design firms and is the first state to roll out initiatives for innovation centres, skilling centres and dedicated ESDM clusters. Bangalore is the 4th largest technological cluster in the world and the 1st state to roll out ESDM skill development program targeting for 15,000 youth to be trained across 5 years. The state has world class innovation centres for designing, prototyping, testing, characterizing and certifying ESDM technologies and products namely, IIIT-Bangalore and STPI-Bangalore and is also host to an upcoming ICT Academy of Karnataka in association with Government of India & NASSCOM for industry -oriented ICT Skill Development Programs making it the place to be for the ESDM sector.

Establishment of ESDM cell under the Government of Karnataka and the introduction of the Karnataka Electronic System Design and Manufacturing (ESDM) Policy in 2013 for providing measures for investments, ease of doing business venture capital, R&D and Capital Subsidies, Special package for mega projects etc are aimed to accelerate business in the state. Karnataka multi-sector start-up policy encourages the start -up ecosystem, patents grants and incentives for export markets, Preferential Market Access (PMA) and post performance incentives and subsidies. The establishment of Karnataka Semiconductor Venture Capital Fund (KARSEMVEN Fund), a state government backed specialized fund for semiconductor start-ups also boosts the start-up environment in the state for the sector.Significant financial and human resource contribution by the state government in providing flagship initiatives such as support infrastructure, the SMART Lab (Semiconductor Measurement, Analysis and Reliability Test Lab) and the Electronic Hardware common facility center augments the government’s support initiatives in boosting this industry

Potential Areas of Investments:

Medical Electronics

Diagnostic and therapeutic instruments
Equipment's testing and monitoring with wireless connectivity

Communication Hardware and Networks

Manufacturing of networking hardware like gateways, routers, network bridges, switches, convertors, etc
Mobile phones, Personal Display Assistants (PDAs)

Semiconductor Design

Medical, automotive, mobile equipment's
Design for Consumer electronics like personal electronics, PCs, servers, etcConsumer Electronics
Audio and video equipment for home entertainment (TV sets, set top boxes), auto (music systems), and musical instrument amplification

Defence Electronics

Maintenance, Repair and Overhaul (MRO)
System design, engineering and testing services
Development of Tactical Communication System (TCS)-Internet protocol based mobile system

For Investments in Infrastructure:

Brownfield and Greenfield Industrial Clusters:
Green field clusters to be developed with line infrastructure like roads, power and water E.g.: Vasanthnarsapura Phase III & IV and Sira
Brown field Clusters to be developed with laboratory, assembly and testing centres, PCB manufacturing, etc

Department of Industries & Commerce
#49, Khanija Bhavan, South Wing,
Race Course Road, Bengaluru - 560001