Opportunities in the Automotive Electronics in India –

Avanteum Insights

The Context

COVID 19 has upended global supply chains and economic philosophies of nations. India’s economy has been
adversely impacted due to sharp decline in demand. Government of India’s “Atmanirbhar India” (self-
reliance) seeks to build industry capabilities to address not just domestic markets but also Make-for-the- World.

Globalization of supply chains in the last 3 few decades have led to inter-dependence that has given rise to
opportunities and challenges. While cost arbitrage was a great advantage to be leveraged from the emergence
of global supply chain, significant risks existed on account of factors like natural calamities, pandemics, hegemony
over resources and geopolitics.

India’s balance of trade has intensified in the recent years highlighting burgeoning imports. Oil and Electronics
have been the top two import items with the latter signalling widening demand to local supply ratio. Electronics
imports accounted for 38.2% of India’s imports in 2019-20, with and 30% of its international trade. In a
knowledge driven global economy, this has strategic implication for India’s growth.

The import of electronics is expected to accelerate as more consumers embrace the digital revolution.
Government of India projects that India’s market for electronics will reach US$ 400 billion by 2025, The trend
of imports for demand fulfilment is expected to remain strong unless the local ecosystem development brings
about a transformation. In effect Electronics will become the new Oil from an India perspective.

Government of India has taken efforts to create a conducive environment with supporting policies towards
encouraging investment. Among the prime targets for investment push are the top electronics constituents like
Mobile, Automotive, Industrial and Consumer. Automotive sector contributes 7 to 8% of the total demand for
electronics in India and is supported by the fact that India is a key production hub for automobiles. The increasing
electronics content in automobiles and low base of domestic value addition makes it a prime contender.

Automotive Electronics – Driving Mobility Changes

Automobiles have transformed from being pure mechanical devices to ‘computers on wheels. Three key trends
have influenced the change over the last few decades with stringent emission norms being the key
transformative force. Safety & security and user convenience have played a defining role in the evolution
of automobiles of today. This has been largely possible due to integration of electronics with mechanical
components leading to creation of mechatronics. The infusion of electronics will be accentuated by the increasing
adoption of technologies like electric vehicles and autonomous vehicles.

Electronics account for approximately 20% of the value of a vehicle in India and continues to move upwards.
Premiumisation of vehicles due to increased consumer affordability and preference for greater comfort and
convenience features is expected to drive demand for electronics in automobiles. As per the Automotive
Components Manufacturers Association (ACMA), automotive electronics is likely to contribute nearly 45% of
the value of the vehicle. The likely next wave of opportunities in the automotive electronics will be centred
around electronics components, chip design and embedded software.

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Avanteum Advisors recognizes the pre-eminent position of automotive electronics and its strategic importance
to economic growth of India. It proposes to undertake an in-depth analysis of the automotive electronics space
and identify opportunities for growth, domestic value addition and partnerships prospects. It aims to provide
the industry with the insights and critical inputs for strategic decision making.

Key Objectives and Proposed Learnings from this Research

• Size of opportunity
• OEM’s electronics adoption roadmap
• OEM’s sourcing strategy post COVIDs
• Insight on OEM’s sourcing of various electronics systems
• Electronics components value chain and capabilities in India
• Initiatives taken by the Government to promote electronic manufacturing in India:
• Manufacturing localisation possibilities and opportunities for companies in the electronics value chain

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Table of Contents

Electronics as an Integral Constituent of Automobiles

1. Automotive industry landscape in India and role of India in the global value chain
2. Transformative forces impacting automotive industry and outcomes (regulations, global changes impacting areas
like Powertrain, Safety, Body Electronics, EV’s, Autonomous vehicles, Communication technology, COVID
related changes and impact
3. Electronics adoption in automobiles in India, a brief history, change agents and future roadmap
4. Electronics growth in view of focus on EVs
5. OEM programs and size of opportunities

The Supply Chain

1. The current supply chain and market participants in the supply chain
2. Advantages and disadvantages of the current supply chain structure
3. How is design, software and hardware procured and integrated. Role of partners and OEM in the final product?
4. Partners supporting and fulfilling current demand
5. Role played by Captives in the evolution
6. Insights on pricing
7. OEM’s strategies for the future and supply chain partner strategies
8. Impact of Atmanirbhar Bharat vision by GoI on supply chain strategy (localization strategy)
9. Impact of de-risking current supply chain (from China to other countries) on India with focus on automotive
electronics
10. OEM’s sourcing strategy and preference for automotive tier 1 & 2’s. Global experience in dealing with non-
automotive suppliers, areas of preference
11. Scope for additional supply chain partners and expectations (design, innovation, cost, delivery etc)
12. Capabilities that are required by Indian companies to effectively compete for business
13. Any current programs open for new supply chain partners
14. Preference towards location of supplier

The Component Ecosystem

1. Component supplier’s ecosystem in India – automotive tier1/2 and electronic component companies
2. Capabilities of electronics components supplier
3. Key issues faced by component supplier to explore business opportunities with automotive industry
4. Companies that have capabilities to deliver (30 key companies in electronics system, design, and components)

Opportunities in India, for India and Strategies/ Solutions

• Products & Modularization

• Technologies
• Components
• Companies
• And roadmap for the industry to develop, Government support etc

Scope and Coverage

Vehicle Segments – Passenger Vehicles, 2 Wheelers and Commercial Vehicles

Value Chain – OEM’s, Tier 1 Suppliers, Component Suppliers, Electronics Design Firms, Industry Associations

Forecast: Till 2026-27

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About Avanteum Advisors LLP

Avanteum Advisors has extensive background in the domains of automotive and electronics advising
companies and policy makers. Avanteum Advisors key differentiator is its ability to bring subject matter
expertise to conduct deep dive into problem solving. All our engagements are driven by highly experienced
domain experts to bring clear understanding of business issues and solutions.

Our Automotive vertical is led by V. G. Ramakrishnan who brings in nearly 25 years of experience in
consulting and advising companies in the manufacturing domain comprising the automotive, industrial and
supply chain sectors. He has advised Vehicle Manufacturers, Tier 1 suppliers, and component companies on
corporate strategy, product strategy, growth opportunity, supply chain, consumer strategy, distribution
strategy and technology. Ramakrishnan was the Managing Director, South Asia of a global research and
consulting firm as well as their Global Co-Lead for its Automotive & Transportation Practice.

Our Transportation and Logistics vertical is led by Vijay Kakade who brings in 30 years of experience in
consulting and advising companies in the manufacturing domain comprising of transportation, logistics,
automotive, engineering, and industrial goods. He has advised several global companies and large Indian
companies on product strategy, pricing strategy, growth opportunities, and consumer strategy. Vijay Kakade
was the Vertical Head of global research and consulting firm for its Automotive & Transportation Practice.

Our electronics business vertical team lead is Niju Vijayan, who has over 20 years of experience in working with
electronics companies across consumer, commercial, industrial, and automotive domains. He was the P&L leader
for Electronics Business Unit of a global research and consulting firm. He has consulted some of the top global
organizations in electronics.

As an industry expert, he has consulted for the Electronics Sector of Confederation of Indian Industry (CII) and
the Ministry of Electronics and Information Technology (MeitY) as well as worked closely with industry
associations. Like India Electronics & Semiconductor Association (IESA), Consumer Electronics and Appliances
Manufacturers Association (CEAMA), Electronics Industries Association of India (ELCINA), Electronics Sector
Skills Council of India (ESSCI). Recently he presented a Strategic roadmap for development of electronics
components manufacturing in India to the Department of Investment Policy & Promotion, Ministry of Industry
and Commerce.

This report will be authored by Ramakrishnan, Vijay Kakade and Niju Vijayan and will bring their combined
expertise and experience.

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