BRIEF HISTORY OF CONSUMER ELECTRONICS

The consumer electronics market is one of the largest segments in the

electronics industry in India. With a market size of Rs.15,897.13 crore
($3.89 billion) in 2006, catering to a population of more than 100 crore
people, the consumer electronics industry in India is poised for strong
growth in the years to come.
iSuppli Corp. predicts the Indian audio/video consumer electronics industry
will grow to Rs.26,931.13 crore ($6.59 billion) by 2011, rising at a
Compound Annual Growth Rate (CAGR) of 10.0 per cent from Rs.18,390
crore ($4.5 billion) in 2007.
The growth will be aided by a multitude of factors, including:
—Growing consumer confidence due to rising disposable incomes;
—Easy financing schemes that are making purchases possible;
—Increased local manufacturing;
—Expanding distribution networks;
—Sporting events, such as the Cricket World Cup.
The figure attached presents iSuppli's estimates and projections for the size
of the Indian audio/video consumer electronics industry for the period of
2004 to 2011.
Video remains the key driver
Television continues to be the mainstay of the consumer electronics industry
in India with the transition slowly occurring to newer technologies such as
LCD and PDP.
Most players in the consumer-electronics industry have introduced products
in the FPD segment, and for few companies, especially the Korean chaebols,
FPD remains a focus area.
But the Indian market continues to exhibit contradictions that may be unique
to this market.
On one hand, campaign promises have prompted the free distribution of 75
lakh 14-inch CRT television sets worth Rs.3,065 ($75) each to families
below the poverty line in one electoral state over the period of three years.
On the other hand, FPD sets are available for Rs.1.23 lakh ($3,000) in India.
Although, black and white TVs are obsolete elsewhere in the world, they
still sell in large numbers in India.
Increased customisation to suit domestic demand
Companies are focusing on customising products to suit Indian tastes,
thereby creating a niche for themselves. Several companies are conducting
market research in order to understand the psyche of an Indian consumer.
The inputs from this research are determining product attributes and pricing
and accordingly are achieving better acceptance among consumers.
By conducting consumer research, companies are trying to identify customer
requirements, thereby incorporating specific design elements into their
products. For example, LG in 2006 launched a range of TVs from 21 inches
to 29 inches in size that were designed based on the company's research on
consumer preferences for television sets.
Expanded distribution is critical
In order to tap semi-urban and rural demand, companies are expanding their
distribution networks in these areas. The move has positively impacted sales
for companies opting for rural expansion.
However, rural consumers have not been as brand-conscious as their urban
counterparts. Due to the lower prices of unbranded products, rural
consumers have been inclined to buy these products, although they often
have poor quality. As the awareness among rural consumers rises, they are
expected to show a preference for branded products. This is reflected by the
fact that established players are reporting higher sales of products in rural
areas.
Domestic manufacturing to expand
iSuppli expects domestic manufacturing to be a key characteristic of this
growth in the years to come.
Although electronics production has remained a miniscule portion of overall
Indian manufacturing for a long time, the trend is gradually changing. The
government has been focusing increasingly on developing the manufacturing
sector by developing infrastructure, rationalising duties and creating export-
promotion zones. This is in alignment with India figuring into the plans of
several companies that want to cater to the domestic and export markets.
Domestic consumption is reaching significant size to trigger manufacturing
in the electronics sector. India also is assuming a significant place in the
global plans of several major electronics manufacturers, thereby positioning
it also as an export base.
Furthermore, fabless companies are suitable to cater to such development
because they can assist in moving the industry up the value chain by creating
design-service opportunities for the Indian market.
EMS and ODM companies in India have been associated with several design
companies, although such relationships represent an extension of their global
relationships. However, some local partnerships also are appearing, such as
Flextronics' deal with inSilica for the development of SoC devices.
Currently, such instances are few and far between. As the local market gains
size, these associations will become more common.
Significant challenges remain
iSuppli believes that there are still challenges facing the India consumer
electronics industry as the sector tries to realise its full potential. These
include declining margins for many players; inverted duty structure;
expansion of distribution reach; creating awareness about new technologies
and products and low affordability level of consumer products among the
rural masses.
However, these challenges are gradually being addressed. And looking
ahead, iSuppli believes that India will continue to grow as an important
market for the global consumer.

If one can direct his/her attention to the times of the

manufacture of radio receiving sets in private sector, in late
forties, the electronics industry has achieved very quick
progress. In 1983 its total production was worth Rs. 1.360
crores. This illustrates virtually a five times growth. In a
single year of 1987-88, growth was 37.7%. The industry has a
very vast range of production, like consumer electronics,
principally radio and television sets, control instruments and
industrial electronics, computer system, communication and
broadcasting equipment, aerospace and defence equipment, and
electronic components. India has surfaced as one of the
leading exporters of electronic goods. Besides hardware, India
has garnered high reputation in the production of software and
has impressive international market. Electronics is the
fastest growing sector of Indian economy. In 1997-98 its
production was worth Rs. 32,070 crores, 92 % increase from the
previous year. Exports in the same year had reached Rs. 9,500
crores. By the end of 9th Five Year Plan, it is expected to
surpass 49,000 crores of rupees. Similar to industrial
estates, Electronic Technology parks are being developed in
various centres.