India's large and thriving domestic market can be the base for it to set up semiconductor and electronics manufacturing industries in the next three-five years. And as the ecosystem matures in the medium to long term, India can be expected to emerge as a strong regional hub in semiconductor and electronics manufacturing.
Furthermore, the recently announced incentive package of $10 billion to drive semiconductor manufacturing in India and the PLI schemes will encourage handset manufacturing in India to service the second-largest smartphone market in the next five years.
This is among the many observations in the India edition of Deloitte’s 2022 Global TMT (Technology, Media, and Entertainment, Telecom) predictions.
P N Sudarshan, Partner and TMT Industry Leader, Deloitte India, said "The government’s recent announcement on the Production Linked Incentive (PLI) scheme for the semiconductor and electronics manufacturing industries has the potential to create an end-to-end ecosystem for manufacturing electronic products. We expect the broader shift to digital to continue in 2022 and drive the industry growth in the future.”
- PLI scheme effective: India exports $ 1.5 billion worth of smartphones
- India invites smaller chip design companies to be part of its semiconductor push
More demand for smartphones in rural markets: Deloitte
The total cumulative shipments of smartphones in India are expected to reach 1.7 billion units from 2022 to 2026, creating a market of about $250 billion.
Deloitte said smartphone demand in India will increase at a CAGR (Compound Annual Growth Rate) of 6% in the rural market and at a CAGR of 2.5% in the urban market to reach a cumulative number of about 400 million units being sold in 2026. "This is largely propelled by demand for internet services in the rural market with the adoption of e-learning, fintech and e-health platforms. Internet enabled devices in the rural market will also get a push with the government’s plan to fiberize all villages by 2025 under the BharatNet program." Deloitte said.
On 5G devices, Deloitte said they will alone contribute 80% (about 310 million devices) to smartphone demand by 2026.
India will have 1 billion smartphone users by 2026. This growth will result in over 75% of the subscribers using smartphones by 2026 from a sub-70% as on date.
5G enabled devices will contribute 80% to the devices being sold in the year 2026 and Indian consumers will purchase 840 million 5G smartphones over the next 5 years valued at $130 billion. In addition, 5G will fuel an incremental sale of 135 million smartphone units over the next 5 years, Deloitte said.
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