With the government laying the groundwork to woo global MNCs, the SMT segment has an important role to play. Support for it is critical if Indian electronics manufacturing has to reach its full potential.
By Nijhum Rudra
The Indian electronics sector accounts for 2.5 per cent of the country’s GDP, and employs over 13 million people, directly and indirectly. It is one of the fastest growing industries in India and around the world. According to MeitY, this sector was expected to contribute US$ 400 billion by the end of 2020, though the outbreak of COVID-19 has impacted all sectors adversely. In order to boost the sector and attract FDI, government bodies are working on several export-oriented policies that will further reduce the complex taxation policies within the nation. Though the electronics industry has strengthened its roots, 80 per cent of components are still being imported from China and other countries, and we continue to lack sophisticated manufacturing facilities.
Why SMT is gaining momentum
As technology is advancing continuously and since demand has increased, the use of PCBs has increased considerably across the consumer electronics segment, covering smartphones, tablets, computers, liquid crystal displays (LCD) and LEDs. According to experts and electronics associations such as ELCINA, the market share of consumer electronics is much higher than industrial electronics and this is expected to spearhead the sector. Soldering and placement equipment is being increasingly used in the manufacture of various consumer electronics products, which in turn has escalated the demand for and application of surface mount technology (SMT) equipment. With the invention of smart and industrial electronic devices, the SMT cleaning market too has evolved because of greater demand for cleaning equipment required during the production process. As the form factor of electronic devices has shrunk, SMT placement equipment have overtaken soldering equipment in market share.
Suresh Nair, director, Leaptech Corp. says, “SMT manufacturing has been growing very well in India, of late, mainly due to the higher digitisation of Indian society and also because of the government’s push for local manufacturing. Things have slowed down recently due to the pandemic but will bounce back once we get over this. The push from the government is greater with the ‘Vocal for local’ policy, which will lead to the SMT industry growing even further. We can expect an average growth rate of anything from 20 to 50 per cent every year, in the coming five years, provided things go as planned.”
market in India between 2017 and 2022 (Source: electronicsforyou.biz)
The growth of the SMT industry in India and globally
Electronics experts in India feel that if India wants to boost domestic manufacturing to the utmost level possible, then it is imperative to understand the importance of the SMT industry. A Frost and Sullivan report last year stated that due to the growing smartphone and set-top box industries, the nation is going to witness a colossal growth in the SMT industry. It added that the global SMT market is likely to witness about a 9 per cent growth rate between 2018 and 2022. India’s large and diverse population offers a vast market that can give an impetus to technology and electronics companies to commence their operations here, to manufacture both expensive and entry-level gadgets.
A few important schemes and incentives launched by the government that have attracted global companies to India are:
- Modified Special Incentive Package Scheme (MSIPS)
- Electronics Manufacturing Clusters scheme (EMC)
- Skills Development Scheme
Other factors that make an Indian manufacturing base a good business decision are:
Huge consumption in the Middle East and in emerging markets across the African continent
Existing R&D capabilities can be encouraged to develop ‘Made in India’ products and generate local IP
Highlighting the growth of the SMT segment, Praveen Madan, general manager (SMT division), Juki India, says, “Currently, the growth of SMT is being driven by the telecom sector (mobiles and the 5G rollout) and by high-end medical/consumer electronics (LED TVs, LED lighting, security and automation products, laptops, etc). Due to COVID-19, many products currently being manufactured in China will relocate. In 2021-22, we are expecting growth in the SMT industry to be about 25-30 per cent.”
| What the experts say regarding the challenges in SMT manufacturing | |
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The biggest challenge is the non-availability of locally manufactured electronic components, PCBs, raw materials, etc. There is a high dependence on imports. The government should ask the big EMS companies or OEMs to invest in the whole supply chain, and aim to develop local suppliers to fulfil the demand. For example, for mobile manufacturing, LCD displays, housings, PCBs and components should be sourced locally. Basically, there should be 80-90 per cent local content for a company to get the incentive from the government. India should invest in the innovation of new products keeping in mind the global market. We also need to have institutions and training courses to meet the demand for skilled manpower. |
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The challenges are many, apart from the low demand in the market due to the current pandemic and slow economic growth. The main problem is cheap imports from China and also the lack of a local component ecosystem. The government should focus on the local manufacture of electronic components, including semiconductor fabs, immediately. We are already too late in this segment. Also, the government should support the SMT industry by way of easy financing and a better ecosystem. |
When it comes to SMT equipment, experts believe that pick-and-place machines will be the most pivotal segment to enhance the growth of this sector in India, because these are used in various verticals such as automotive and consumer electronics. Apart from this, experts also speculate that printing and soldering equipment will have similar demand. It should be noted that it is important to have accurate software along with the hardware, since online quality assurance remains a crucial aspect of SMT systems. Automatic online inspection and X-ray inspection systems are the preferred quality assurance options in India.
According to Markets and Markets, the SMT market in India is expected to reach a turnover of US$ 5.42 billion by 2022, growing at a CAGR of 8.9 per cent between 2017 and 2022. The market’s growth will be primarily driven by higher demand for miniaturised consumer electronics products and the enhanced adoption of electric vehicles with advanced features for connectivity, entertainment and safety. Apart from the demand for computing on smaller devices, the other main reason for the reduced weight of consumer electronics devices is the use of surface mount technology. Surface mounted components are smaller, thinner and lighter than through-hole packages, which consume more space and power and contribute considerably to the total weight of the product.
The increasing wireless communication standards and the rising demand for 3G/4G networks are boosting the demand for SMT in the telecommunications sector. China is one of the fastest-growing economies in the world and its market for SMT is expected to grow primarily because of the vast number of SMT manufacturing companies. The growth of the SMT market is also being driven by the growth of electric vehicles in the automotive sector in the APAC region.
Companies operating in the surface mount technology market employ several growth strategies such as new product launches and developments, agreements, partnerships, collaboration, and acquisitions to gain a competitive edge and expand their distribution networks, reports Markets and Markets.
Challenges of SMT manufacturing
The SMT industry will continue to face a couple of major hurdles that need to be addressed for its unhindered growth. First, SMT machine precision will be a major challenge. Second, the demand is likely to be more for integrated machines as they can offer one-stop solutions for various requirements. Sophisticated machines coupled with cutting-edge features that can offer solutions to multiple industries will witness a sudden surge in demand. The domestic companies as of now are heading towards the 0201 geometry, which will help them make massive SMT equipment. Machines that can withstand the speedy miniaturisation of electronic circuits will witness a colossal demand.
