INDIAN ELECTRONICS INDUSTRY - STRATEGY FOR DEVELOPMENT

The developments taking place in Information Technology (IT), particul arly, the convergence between computers and communication has made the world a global village. Indeed competitive advantage would be primari ly determined by a nation's or firm's IT infrastructure. This is all t he more compelling in the context of our economic reforms programme wh ere India is all set to get plugged into the global economy. The shift from analogue to digital technology has brought a major transition wh ich has completely altered the communications landscape. ''anytime any where'' communications based on mobile cellular, satellite and Persona l Communication System (PCS) technologies are fast becoming a global r eality. This coupled with the development of ''Information Superhighwa ys'' based on optical fibre is making the integration of voice, data a nd video available through the Integrated Services Digital Network. Wh ile wireless and optical fibre based local loops loom on the horizon, 'the last mile problem' has resulted in the amalgamation of major swit ching and cable networks in the USA, in order to bring multimedia to t omorrow's home. It is anticipated that several of these possibilities would become commonplace by the year 2000 and in this context it is ex tremely important that developing countries like our own, chalk out st rategies in order to leapfrog technologies in the most cost effective manner with a view to successfully managing the tremendous changes und erway. The output of global electronics reached $700 billion in 1990 a nd is expected to reach about $1.3 trillion by the year 2000. The valu e added by the electronics industry is growing at about 6 per cent per year, compared with about 3.8 per cent for all manufacturing industri es and 3.1 per cent for Gross Domestic Product (GDP) (all in real term s). At this pace by the year 2000 electronics will account for about 4 per cent of world GDP and 14 per cent of value added in manufacturing . In comparison, the Indian electronics industry reached an output lev el of a little over $ 4 billion in 1992 representing 0.7 per cent of t he global electronics industry. If India were to achieve a production level of $ 20 billion by the year 2000, this would increase to 1.5 per cent. In the context of the next decade China whose current electroni cs output is almost 3 times that of India provides a very useful point of reference. What is alarming is the rate at which electronics appli cations are growing in China, in TV, telecom and Information Technolog y (IT). Thus, China's production of TV sets, both colour and Black & W hite, is 5 times that of India; it proposes to install over 3 times th e number of telephones by the year 2000; and its IT industry currently is also 3 times of India's. These in turn provide rapidly improving e conomies of scale, when compared to those of the Indian electronics in dustry, thus promoting greater vertical integration, increasing cost c ompetitiveness, makes exports more viable and attracts greater foreign direct investment and technology to feed its burgeoning market. Conse quently, there is an imperative need to provide a strategic vision at this juncture to address the Chinese challenge and to ensure the futur e health of the Indian electronics industry commensurate with our size and capabilities. The background paper provides the current status of the electronics industry both nationally as well as internationally a nd the development strategies pursued by different countries. From the se, the major issues in devising an appropriate strategy for future de velopment of the Indian Electronics Industry are derived. This is to l ay the ground work for further deliberation. The paper is divided into following parts: Development of the Indian Electronics Industry Elect ronics Industry: Global Scenario Development Strategies in Selected Ec onomies Issues Relating to Developing the Indian Electronics Industry