By 2040, the world will be very different from what it’s today. Asia will be representing half of the global GDP and 40% of the global consumption. India will be one of the top 3 global economies and in terms of the number of digital consumers. It’s expected that ESDM in India will play a crucial role to generate a $1T digital economy by 2025 and will grow further until 2040 purely owing to its demographics.
India’s Electronics Opportunities
India at this point has about 250-300M households, out of which 64M make up the aspirers, affluent, and the elite, the segment of society which can afford at least a basic level of digital devices. This segment is expected to grow to 110M households owing to the GDP growth by 2025. This massive demographic change is the opportunity space for electronics in India, estimated as approximately an additional 120-150M people added to the consumer realm.
Let us overlap this with some penetration rates of a few consumers’ electronic goods like personal computers (PC) and air conditioners in India. PC penetration is at 15.4 per 1000 people in comparison to China at 41, and the US at 781. Even a move to a penetration level of 30 in the next five years translates to 15M additional PCs in the country. The case for air conditioners is no different. India has a penetration of only 40 per 1000, while Indonesia is 80, China 530, and Taiwan and Singapore above 700. Even reaching Indonesia’s level in the next 5 years will mean an additional 40M ACs to be made and sold. Importantly, most ACs sold in the country in the next 5 years will be inverter-based and has significant electronic content.
We haven’t spoken of other segments like mobile phones and other household products. When the world of aspirers meets the value-added consumer products realm, the opportunity space expansion will truly be beyond exponential and transformative, if not disruptive.
Multiple growth drivers are needed to enable this dream starting with strong policy support from the Government towards all-around economic growth. Thankfully it appears the government is a step ahead on this in recent times.
Therefore, the challenge for the industry is to:
- Build scale quickly to face the impending surge in demand,
- Build skills at a scale not previously imagined,
- Expand capabilities slowly but steadily through positive actions on technology development and strategic collaborations while being doggedly committed to the Make in India spirit
Let’s dream big! Reality will catch up rather quickly this time. Make in India also has the collateral gain of also creating more aspirers who would become consumers of value-added products.