Introduction 

The electronics and electrical equipment manufacturing industry is one of the fastest growing and most dynamic sectors in the world. It covers a wide range of products, such as consumer electronics, industrial electronics, lighting, electrical appliances, power generation and distribution, and renewable energy. The industry is driven by the increasing demand for smart devices, digitalization, automation, energy efficiency, and environmental protection. The industry also contributes to the economic growth, employment generation, and innovation in various sectors, such as IT, telecom, healthcare, education, and defense. 

The industry faces some challenges, such as the high dependence on imports, the lack of standardization, the environmental and social impacts, and the cyber security risks. The industry needs to adopt best practices, invest in research and development, enhance quality and productivity, and comply with the regulatory and ethical norms to overcome these challenges and sustain its growth. 

Market Potential 

Global market 

According to a report by Mordor Intelligence, the global electronics and electrical equipment market was valued at USD 2.74 trillion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 6.2% from 2020 to 2025. The major factors contributing to the growth are the rising disposable income, urbanization, and innovation in technology and design. The Asia-Pacific region dominates the market, accounting for more than 40% of the market share, followed by North America and Europe. The key players in the global market include Samsung, LG, Panasonic, Sony, Philips, Siemens, GE, Schneider Electric, ABB, and Honeywell. 

The global market is segmented by product type, end-user industry, and geography. The product type segment includes consumer electronics, industrial electronics, lighting, electrical appliances, power generation and distribution, and renewable energy. The consumer electronics segment accounts for the largest share of the market, followed by the industrial electronics segment. The consumer electronics segment includes products such as smartphones, tablets, laptops, TVs, cameras, headphones, speakers, and gaming consoles. The industrial electronics segment includes products such as automation systems, sensors, controllers, motors, drives, and robots. The lighting segment includes products such as LED bulbs, tubes, lamps, and fixtures. The electrical appliances segment includes products such as refrigerators, washing machines, air conditioners, fans, and heaters. The power generation and distribution segment includes products such as generators, transformers, switchgears, cables, and meters. The renewable energy segment includes products such as solar panels, inverters, batteries, and wind turbines. 

The end-user industry segment includes residential, commercial, industrial, and public. The residential segment accounts for the highest share of the market, followed by the commercial segment. The residential segment includes the use of electronic and electrical products for household purposes, such as entertainment, communication, comfort, and security. The commercial segment includes the use of electronic and electrical products for business purposes, such as office, retail, hospitality, and education. The industrial segment includes the use of electronic and electrical products for manufacturing, processing, and engineering purposes, such as automation, quality control, and safety. The public segment includes the use of electronic and electrical products for social and environmental purposes, such as healthcare, transportation, and energy. 

The geography segment includes North America, Europe, Asia-Pacific, Latin America, and Middle East and Africa. The Asia-Pacific region accounts for the highest share of the market, followed by North America and Europe. The Asia-Pacific region includes countries such as China, India, Japan, South Korea, and Taiwan, which are the major producers and consumers of electronic and electrical products. The North America region includes countries such as the United States, Canada, and Mexico, which are the major markets and innovators of electronic and electrical products. The Europe region includes countries such as Germany, France, the United Kingdom, Italy, and Spain, which are the major exporters and users of electronic and electrical products. The Latin America region includes countries such as Brazil, Argentina, and Chile, which are the emerging markets and suppliers of electronic and electrical products. The Middle East and Africa region includes countries such as Saudi Arabia, UAE, South Africa, and Nigeria, which are the potential markets and importers of electronic and electrical products. 

Indian market 

The Indian electronics and electrical equipment market is one of the largest and fastest growing in the world. According to a report by India Brand Equity Foundation, the market was estimated at USD 118 billion in 2019 and is projected to reach USD 400 billion by 2025, growing at a CAGR of 21%. The growth is driven by the increasing domestic demand, rising exports, favorable government policies, and the emergence of India as a global manufacturing hub. The major segments of the market are consumer electronics, industrial electronics, strategic electronics, and electrical machinery. The consumer electronics segment accounts for the largest share of the market, followed by the industrial electronics segment. The key players in the Indian market include Tata, Reliance, Bajaj, Havells, Crompton Greaves, Bharat Electronics, and Larsen & Toubro. 

The Indian market is segmented by product type, end-user industry, and region. The product type segment includes consumer electronics, industrial electronics, strategic electronics, and electrical machinery. The consumer electronics segment accounts for the largest share of the market, followed by the industrial electronics segment. The consumer electronics segment includes products such as smartphones, tablets, laptops, TVs, cameras, headphones, speakers, and gaming consoles. The industrial electronics segment includes products such as automation systems, sensors, controllers, motors, drives, and robots. The strategic electronics segment includes products such as defense, aerospace, and nuclear electronics, such as radars, missiles, satellites, and reactors. The electrical machinery segment includes products such as generators, transformers, switchgears, cables, and meters. 

The end-user industry segment includes residential, commercial, industrial, and public. The residential segment accounts for the highest share of the market, followed by the commercial segment. The residential segment includes the use of electronic and electrical products for household purposes, such as entertainment, communication, comfort, and security. The commercial segment includes the use of electronic and electrical products for business purposes, such as office, retail, hospitality, and education. The industrial segment includes the use of electronic and electrical products for manufacturing, processing, and engineering purposes, such as automation, quality control, and safety. The public segment includes the use of electronic and electrical products for social and environmental purposes, such as healthcare, transportation, and energy. 

The region segment includes North, South, East, West, and Central. The South region accounts for the highest share of the market, followed by the West region. The South region includes states such as Andhra Pradesh, Telangana, Karnataka, Tamil Nadu, and Kerala, which are the major hubs of electronic and electrical manufacturing and consumption. The West region includes states such as Maharashtra, Gujarat, Goa, and Madhya Pradesh, which are the major markets and exporters of electronic and electrical products. The North region includes states such as Delhi, Uttar Pradesh, Haryana, Punjab, and Rajasthan, which are the major suppliers and users of electronic and electrical products. The East region includes states such as West Bengal, Odisha, Bihar, and Jharkhand, which are the emerging markets and importers of electronic and electrical products. The Central region includes states such as Chhattisgarh, Uttaranchal, and Himachal Pradesh, which are the potential markets and consumers of electronic and electrical products. 

Andhra Pradesh and Telangana market 

Andhra Pradesh and Telangana are two neighboring states in southern India that have a strong presence in the electronics and electrical equipment industry. According to a report by the Federation of Indian Chambers of Commerce and Industry, the combined market size of the two states was USD 17.8 billion in 2018 and is expected to grow at a CAGR of 17% from 2019 to 2024. The growth is driven by the availability of skilled manpower, infrastructure, natural resources, and the support of the state governments. The major segments of the market are LED lighting, solar power, consumer electronics, and electronic components. The LED lighting segment accounts for the highest share of the market, followed by the solar power segment. The key players in the market include Philips, Osram, Moser Baer, Micromax, Videocon, and HCL. 

The market of Andhra Pradesh and Telangana is segmented by product type, end-user industry, and district. The product type segment includes LED lighting, solar power, consumer electronics, and electronic components. The LED lighting segment accounts for the highest share of the market, followed by the solar power segment. The LED lighting segment includes products such as LED bulbs, tubes, lamps, and fixtures. The solar power segment includes products such as solar panels, inverters, batteries, and wind turbines. The consumer electronics segment includes products such as smartphones, tablets, laptops, TVs, cameras, headphones, speakers, and gaming consoles. The electronic components segment includes products such as resistors, capacitors, diodes, transistors, and integrated circuits. 

The end-user industry segment includes residential, commercial, industrial, and public. The residential segment accounts for the highest share of the market, followed by the commercial segment. The residential segment includes the use of electronic and electrical products for household purposes, such as entertainment, communication, comfort, and security. The commercial segment includes the use of electronic and electrical products for business purposes, such as office, retail, hospitality, and education. The industrial segment includes the use of electronic and electrical products for manufacturing, processing, and engineering purposes, such as automation, quality control, and safety. The public segment includes the use of electronic and electrical products for social and environmental purposes, such as healthcare, transportation, and energy. 

The district segment includes Hyderabad, Visakhapatnam, Vijayawada, Nellore, Kurnool, and others. Hyderabad accounts for the highest share of the market, followed by Visakhapatnam and Vijayawada. Hyderabad is the capital city of both Andhra Pradesh and Telangana, and is the major center of electronic and electrical manufacturing and consumption. Hyderabad is home to many leading companies, such as HCL, Wipro, Infosys, and TCS, as well as many startups, incubators, and research institutes, such as T-Hub, IIIT, and ISB. Hyderabad is also known for its IT parks, such as HITEC City, Gachibowli, and Madhapur, which house many electronic and electrical units. Visakhapatnam is the largest city and the main port of Andhra Pradesh, and is the major market and exporter of electronic and electrical products. Visakhapatnam is home to many industries, such as steel, power, and petrochemicals, as well as many special economic zones, such as Vizag SEZ, APSEZ, and RINL SEZ, which host many electronic and electrical units. Vijayawada is the second largest city and the commercial hub of Andhra Pradesh, and is the major supplier and user of electronic and electrical products. Vijayawada is home to many industries, such as textile, food, and paper, as well as many industrial parks, such as Auto Nagar, Jawahar Auto Nagar, and Kondapalli Industrial Estate, which house many electronic and electrical units. Nellore is the fourth largest city and the rice bowl of Andhra Pradesh, and is the emerging market and importer of electronic and electrical products. Nellore is home to many industries, such as leather, aquaculture, and agro, as well as many industrial corridors, such as Chennai-Bangalore Industrial Corridor, Chennai-Krishnapatnam Industrial Corridor, and Nellore-Kavali Industrial Corridor, which attract many electronic and electrical units. Kurnool is the fifth largest city and the gateway of Rayalaseema region of Andhra Pradesh, and is the potential market and consumer of electronic and electrical products. Kurnool is home to many industries, such as cement, granite, and mining, as well as many industrial clusters, such as Kurnool Mega Food Park, Kurnool Ultra Mega Solar Park, and Kurnool Leather Park, which offer many opportunities for electronic and electrical units. Other districts include Guntur, Tirupati, Warangal, Karimnagar, and Nizamabad, which are the other important markets and consumers of electronic and electrical products. 

Government Subsidies and Incentives 

Government of India 

The government of India offers various subsidies and incentives to the electronics and electrical equipment industry to promote its development and competitiveness. Some of the common schemes are: 

• Production Linked Incentive (PLI) Scheme: This scheme provides an incentive of 4-6% on incremental sales of eligible products manufactured in India for a period of five years. The eligible products include mobile phones, electronic components, LED products, and solar modules. The scheme aims to boost the domestic production, attract foreign investment, and enhance the export potential of the industry. The scheme has a budget of Rs. 40,995 crore and targets to create 10 lakh direct and indirect jobs and generate Rs. 10 lakh crore of production and Rs. 6.5 lakh crore of exports by 2025. 
• Modified Special Incentive Package Scheme (MSIPS): This scheme provides a capital subsidy of 20-25% on the eligible investment in plant and machinery for setting up or expanding manufacturing units of electronic products. The scheme covers 27 categories of electronic products, such as computers, telecom equipment, medical devices, and solar cells. The scheme aims to reduce the cost of production, encourage innovation, and create employment opportunities in the industry. The scheme has a budget of Rs. 10,000 crore and targets to create 2.8 lakh direct and indirect jobs and generate Rs. 44,000 crore of production and Rs. 26,000 crore of exports by 2020. 
• Electronic Manufacturing Clusters (EMC) Scheme: This scheme provides financial assistance of up to 50% of the project cost for developing infrastructure and common facilities in clusters of electronic manufacturing units. The scheme covers both greenfield and brownfield clusters, with a minimum area of 100 acres and 50 acres respectively. The scheme aims to create an ecosystem for the industry, facilitate the access to utilities and services, and improve the quality and efficiency of the products. The scheme has a budget of Rs. 3,762 crore and targets to create 1.5 lakh direct and indirect jobs and generate Rs. 90,000 crore of production and Rs. 54,000 crore of exports by 2020. 
• Electronics Development Fund (EDF): This fund provides risk capital to domestic companies engaged in research and development, innovation, and intellectual property creation in the electronics sector. The fund operates as a fund of funds, which invests in venture capital funds, angel funds, and seed funds that support the electronics industry. The fund aims to foster the growth of the industry, enhance the technological capabilities, and promote the indigenous products. The fund has a corpus of Rs. 10,000 crore and targets to create 2.1 lakh direct and indirect jobs and generate Rs. 60,000 crore of production and Rs. 36,000 crore of exports by 2020. 
• Goods and Services Tax (GST) Concessions: The GST rates for various electronic products have been reduced from 18-28% to 12-18% to lower the tax burden and encourage domestic production. The GST rates for some of the electronic products are as follows: 

Government of Andhra Pradesh 

The government of Andhra Pradesh also offers additional incentives to the industry, such as: 

• Land allotment: The government provides land at concessional rates or on lease basis to the eligible units in the designated industrial parks or zones. The government also provides reimbursement of 50% of the land conversion charges to the eligible units. 
• Power subsidy: The government provides a power subsidy of Rs. 1.50 per unit for a period of five years to the eligible units in the priority sectors, such as LED lighting and solar power. The government also provides reimbursement of 50% of the power infrastructure development charges to the eligible units. 
• Stamp duty exemption: The government exempts the eligible units from paying stamp duty and registration fees on the purchase or lease of land or buildings. The government also provides reimbursement of 50% of the transfer charges to the eligible units. 
• Interest subsidy: The government provides an interest subsidy of 3% on the term loans taken by the eligible units from banks or financial institutions for a period of five years. The maximum amount of subsidy is Rs. 20 lakh per year. 
• Tax rebate: The government provides a rebate of 100% on the state GST paid by the eligible units for a period of five years. The maximum amount of rebate is Rs. 50 lakh per year. 
• Other incentives: The government also provides other incentives, such as reimbursement of 50% of the patent filing and quality certification charges, subsidy of 50% on the transportation of plant and machinery, and subsidy of 50% on the exhibition and marketing expenses. 

Government of Telangana 

The government of Telangana also offers additional incentives to the industry, such as: 

• Land allotment: The government provides land at concessional rates or on lease basis to the eligible units in the designated industrial parks or zones. The government also provides reimbursement of 50% of the land conversion charges to the eligible units. 
• Power subsidy: The government provides a power subsidy of Rs. 1.00 per unit for a period of five years to the eligible units in the priority sectors, such as LED lighting and solar power. The government also provides reimbursement of 50% of the power infrastructure development charges to the eligible units. 
• Stamp duty exemption: The government exempts the eligible units from paying stamp duty and registration fees on the purchase or lease of land or buildings. The government also provides reimbursement of 50% of the transfer charges to the eligible units. 
• Interest subsidy: The government provides an interest subsidy of 5% on the term loans taken by the eligible units from banks or financial institutions for a period of five years. The maximum amount of subsidy is Rs. 25 lakh per year. 
• Tax rebate: The government provides a rebate of 50% on the state GST paid by the eligible units for a period of five years. The maximum amount of rebate is Rs. 25 lakh per year. 
• Other incentives: The government also provides other incentives, such as reimbursement of 50% of the patent filing and quality certification charges, subsidy of 50% on the transportation of plant and machinery, and subsidy of 50% on the exhibition and marketing expenses. 

Investment Requirement 

The investment required for setting up or expanding an electronics and electrical equipment manufacturing unit depends on various factors, such as the product type, production scale, technology, location, and market demand. The following table provides an indicative estimate of the investment required for different production scales, based on the average cost of plant and machinery in India.