India-Japan JWG Industry-Industry Session: Presentation on Industry Scenario in India

November 13, 2013

2

1 India Story

2 Indian ESDM Industry Overview

3 Government Initiatives

4

Talent Availability and HR Initiatives

5 India Specific Product Innovation

6 Opportunities in India

Contents

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10th largest economy in the world, 3rd largest by 2030.

World's third-largest economy in

purchasing power terms.

Dominated by young people with 60% of the 1.2 Bn Population between 15-54

age group

India has the 2nd largest pool of engineers and scientists in the world

In the next three years, up to 25% of the world's new workers will be Indian.

India's GDP per capita will quadruple from 2007 to 2020, according to

Goldman Sachs

220 out of Fortune 500 companies outsource to India

Half the world’s outsourced IT services come from India

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Source: United Nations

India – Demographic Dividend

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“We came to India for costs, stayed for quality and are now investing for innovation.”

Dan Scheinman, SVP and GM, Cisco Systems Inc.

“India is a developing country, but it is developed country as far as its intellectual

infrastructure is concerned. We get the highest intellectual capital per dollar here..”

John Welch, Former Chairman, GE

“India has evolved into one of the worlds leading technology centers.”

Craig Barrett, ex-CEO, Intel Corp.

“By 2032 India will be among the top 3 largest economies in the world.”

BRIC report, Goldman Sachs

“India has taken its place in the world economy. You already have them in cars & autos, in

electronics and systems.”

Jamie Dimon, Chairman and CEO JP Morgan

“"We are in India for the long run, and getting the production right is the key.”

Mr Toru Hasegawa , Corporate Vice President for Africa, The Middle East And India, Nissan

India Story – Leaders Speak

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0.00

20.00

40.00

60.00

80.00

100.00

2010 2011 2012 2013 2014 2015

51.22 55.45 57.58 63.53 70.48

78.74

7.79 9.15 10.72

12.08

13.68

15.46

Rev

en

ue

s ($

Bill

ion

)

Indian ESDM Industry: Revenue Forecasts Split by Product and Services (2010-2015)

Product Industry Size Services Industry Size

59.01

64.61

68.31

75.61

84.16

94.20

2012 TM Revenues: $44.81 billion

Mobile Devices 39.0%

Telecommunications

8.1% Consumer Electronics

15.9%

Automotive 6.8%

IT / OA 17.9%

Industrial 6.9%

Others 5.4%

Very High demand for 3G and Smart Phones drive Mobile Devices growth

Tablets, Notebooks and Memory Cards position IT/OA as the second biggest contributor

Rapid growth in FPD TV market, Digitization drive propels STBs to make Consumer electronics the 3rd biggest revenue contributor

Indian Electronic System Design and Manufacturing (ESDM) - Industry Overview

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Mobile Phones FPD TV Notebooks Desktops Digital Camera

Inverter & UPS Pen Drives & Flash Cards EMS 4W LCD Monitor BTS GSM & CDMA

Servers Power Supplies CFL STB Printers/MFD

Routers & Switches Car Radio Instrument Clusters Energy Meters Smart Cards

Product Revenue % of

Total

Mobile Phones 38.6%

FPD TV 7.9%

Notebooks 5.5%

Desktops 4.4%

Digital Camera 2.7%

Inverter, UPS 2.7%

Pendrives, Flash Storage

2.5%

EMS 4W 2.3%

LCD Monitor 2.0%

BTS 1.7%

Total of Top 10 Products

70.3%

Product Revenue

% of Total

Servers 1.7%

Power Supplies 1.3%

CFL 1.2%

Set Top Box 1.3%

Printers, MFD 1.1%

Routers, Switches 1.1%

Car Radio 1.0%

Instrument Clusters 0.7%

Energy Meters 0.7%

Smart Cards 0.5%

Total of Top 20 Products

80.7%

Top 20 Products Account for 81% of

Overall TM in 2012

Top 20 Products that drive India’s Demand

National Optical Fiber Network

Provide broadband connectivity to panchayats so that

banking and health services can be accessed online

US$ 4

bn

US$ 1.2

bn

US$ 4

bn

National Knowledge Network

Infrastructure project to connect educational and research

institutes

National e-Governance Plan

Countrywide infrastructure reaching down to the remotest

of villages; bringing public services closer to home

US$ 2

bn

Low cost Tablets

Low Cost Tablet for Education- Aakaash;

several other State Governments coming up with denamd

for laptop / tablets

US$ 0.2

bn

LED products

Distribution of free LED lights to all BPL families ; Excise

duty reduction on LED lamps and LEDs

Major Government Procurement Projects

32.5

99.5

400

69.6

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

450.0

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

Dem

an

d &

Pro

du

ctio

n

Year

CAGR – 37%

CAGR – 15%

Production is characterized by low value addition (5-10%)

Values in US$ Billions

Source: Report of sub-committee of task force set up by DEITY, Government of India. Report by Ernst & Young

India | Electronics Demand and Production - 2020

Requirement of 200 million Set Top Box in

next 5 years

LED

US$ 35

bn

Telecom

Equipment

US$ 34 bn

Laptop/Computers

US$ 24 bn

Automotive

Electronics :

US$ 4.5 bn

Semiconductor

design

US$ 55 bn

Medical

Electronics

US$ 5 bn

Major ESDM Products – Demand in 2020

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Electronics Manufacturing Cluster Scheme (EMC)

Modified Special Package Incentive Scheme (M-SIPS)

Electronics Development Fund (EDF)

Setting up of 2 Semi-conductor Wafer Fabs in India

Preferential market Access (Value Added Manufacturing Access)

Mandating Safety Standards

Human Resource Development

Government Initiatives

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Limited Battery for Radio 5 Persons on a

Scooter

TATA NANO: World’s Cheapest

Car

Base Model Price: $2000

TITAN EDGE: World’s Slimmest

Watch Launched in 2002

Crank Radio by Philips India: Works

on mechanical power through the movement of a rotary

arm

Low Cost Ultrasound by GE India Launched in 2011

A Few Innovative Leadership Products from India

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7 Inches Akaash 3 Tablet, Price = $50

UPS, Inverters and Power Stabilizers Smart Energy Meters

Tech Made in India ….. For the World

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2500 annually PhDs in Electronics by 2020

0

100

200

300

400

500

600

2009 2010 2011 2012 2013

Total Engineering Talent Relevant Engineering Talent

11%

Fresh graduate supply in India

Electronics and Telecom Sector Skill Council set up

28 trades proposed to be covered in the skill development plan

Skill Development for 1 million persons

Special Manpower Development Programme- Phase III for VLSI and chip design for 10,000 students

Steady growth planned in the number of persons to be imparted skills to reach around 6.5 lakh persons yearly by 2020

31 ICT and Electronics Academies-Scheme under approval

Talent Availability and HR Initiatives

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Top 10 Products making 70% of total market

◦ Enormous growth opportunity in Indian Market

◦ Japanese brands enjoy enormous goodwill and brand recall in India

But that does not necessarily translate to market share

• Scope for R&D work in India

◦ Japanese companies have leadership in technology development

◦ Huge comfort level in terms of IP protection

How can significant R&D in India translate to Japanese companies getting a share of Indian market?

Market Realities

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Energy, Education, Medical Electronics

◦ India looking at driving inclusive growth using electronics as a

meta-resource

◦ Innovative competitively priced products will be necessary to

achieve this goal

Automotive Electronics also offers huge opportunity for Japanese

companies

Collaborative approach in R&D can be utilized to build

products for India also involving local talent eco-system

◦ Why are design-development-manufacturing not being sited in

the markets where consumers are buying products?

“Made in India” ….. For the World – these products will find

huge market acceptance in Latin America, Africa, APAC

Manufacturing costs and new govt. incentives make it very

competitive

Opportunities in India

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