Is Indian Consumer Electronics A Bust That Will Or Never Boom? Find Out

The speeding up of the consumer electronics market can be attributed to the advancement of technology, the growth of the burgeoning middle class in urban areas and aspirational demand from rural India

By Archit Agarwal

Electronic devices such as mobiles, smart watches, and headphones govern our lives. From entertaining us to connecting us with people worldwide, everything is available at the click of a button today! Thus, it is no surprise that the Indian consumer electronics market is witnessing a surge. It was valued at $ 73.73 billion in 2022, as per a report by Grand View Research, and is expected to grow at a compound annual growth rate (CAGR) of 6.8 per cent from 2023 to 2030. Given these numbers, it is vital to weigh whether we are set for a boom or if this uptick will lead to a downturn, especially due to growing concerns about data privacy.

The speeding up of the Indian consumer electronics market can be attributed to a range of reasons such as the advancement of technology, the growth of the burgeoning middle class in urban areas and aspirational demand from rural India. Moreover, due to the growing population and rising inter-connectedness in the world, consumers are becoming more tech-savvy. To meet this end, manufacturers are doing their bit too by offering cutting-edge technological advancements to the users, thereby boosting investment into research and development.

According to a report by Statista, the rate of internet penetration in India rose over 52 per cent this year, from about 14 per cent in 2014. This uptick also placed India second in the world for active internet users. In addition to this, by 2021 the number of internet connections tripled with urban areas accounting for a higher density of connections than rural regions. Such a trend points toward a range of possibilities for the Indian consumer electronics market.

Opportunities for the Market

India's electronics sector has witnessed an upsurge, reaching $ 155 billion in FY23. Its production nearly doubled from $ 48 billion in FY17 to $ 101 billion in FY23, driven primarily by mobile phones, which now constitute 43 per cent of total electronics production. The country has now considerably reduced its reliance on smartphone imports, now manufacturing 99 per cent of it domestically.

In being able to achieve this, initiatives by the Indian government such as ‘Make in India’ and ‘Digital India’ were instrumental. Improved infrastructure and ease of doing business, supported by various incentives boosted domestic manufacturing and attracted foreign investments over time. However, despite these developments, India’s electronics market accounts for a mere 4 per cent of the global market, which has so far focussed primarily on assembly, with limited capabilities in design and component manufacturing. To move forward constructively, it is a need of the hour for industries and stakeholders to collaborate and chart out newer paths.

Currently, the global electronics market, valued at $ 4.3 trillion, is dominated by nations like China, Taiwan, USA, South Korea, Vietnam and Malaysia. India exports approximately $ 25 billion annually, representing less than 1 per cent of the share despite a 4 per cent share in global demand. Thus, to attain a competitive edge, we must localise high-tech components, strengthen design capabilities through research and development, and forge strategic partnerships with global technology leaders.

Furthermore, it is worth noting that due to the influence of social media, the demand and awareness of consumer electronics are going up. With several powerful channels for brands to invest in, new gadgets are often cooking up a storm. In addition to this, viral trends and challenges for unboxing and reviewing have become popular among the young and old.

Some of the Key Challenges

While there exists a range of possibilities for the Indian consumer electronics market, several challenges stand in the way. Some of these include India’s import of semiconductors from China. A staggering 92 per cent uptick has been seen in India's semiconductor chip imports over the past three financial years; this dependency must be cut down. Moreover, price sensitivity in consumer electronics is a fundamental concern considering factors such as income levels, growing competition and consumption patterns. Thus, brands must carefully price their products to capture the attention of their consumers in a fast-shifting market.

Besides, the growing concerns among users for data security and privacy are directly impacting the market. In such a scenario, it becomes the need of the hour for companies to attain the trust of consumers. As such apprehensions increase, it would be beneficial for brands to establish transparency of communication regarding safe data practices along with investing in consumer education and awareness.

With the advent of technologies such as Artificial Intelligence, Machine Learning, the Internet of Things, and Automated devices, the upcoming years hold great promise for the Indian consumer electronics market. Users may expect extremely personalised experiences in real-time. Moreover, there is a high chance of regular appliances becoming completely automated, enabling one to communicate and perform additional functions. Going forward, consumer electronics will attract consumers speedily with the much-awaited 5G technology. It will open up a range of possibilities and blend physical and digital elements comprehensively.

Thus, the Indian consumer electronics market carries immense scope. It is destined to produce world-class products and offer economic growth by embracing technology and innovation.

The author is the co-founder at Crossbeat.

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