A major thrust for electronics manufacturing in recent years has paved the way for a significant influx of original equipment manufacturers and electronic manufacturing services (EMS) companies in India. Today most of the global majors in EMS have a presence in the country. The growing demand in manufacturing of electronic products directly influences the sale of surface mount technologies (SMT) equipment. The SMT equipment market is witnessing steady growth bolstered by the demand from various end user sectors such as communications, consumer, industrial, automotive and medical where electronics penetration has been on the rise.

New analysis from Frost & Sullivan Indian Surface Mount Technologies Market finds that the market earned revenues of $54.1 million in 2008 and estimates this to reach $88.8 million in 2012 growing at a CAGR of 13.2%.

"Availability of cost effective and skilled labor is positioning India as a preferred destination for EMS and OEM companies," explains Frost & Sullivan Research Analyst Bharath K. "With an increase in the perks awarded to foreign direct investments (FDI) by the government of India, many of the global companies are anticipated to set up their manufacturing facilities in the country, thereby augmenting the demand for SMT equipment."

Telecom and automotive are the most prominent industries in India, contributing significantly to the country's GDP, and this expected to continue in the coming years. The mobile revolution and increasing attractiveness of technologies such as WiMax, and VOIP is necessitating indigenous manufacturing of the various telecom products such as handsets, base stations, modems and VOIP phones thus creating demand for SMT equipment.

The automotive industry too is replacing its older technology equipment with more advanced technology that includes numerous electronic components and control units. The local manufacturing of the automotive electronic products is seen as further driving the need for SMT equipment to improve efficiency in the production process.

However, increase in the usage of miniature printed circuit boards (PCBs) in various application segments forces the SMT equipment vendors to develop and offer cost effective and high technology solutions to their OEM and EMS customers. The continuous evolution of the electronics manufacturing processes compels SMT equipment suppliers to keep themselves abreast of these developments and upgrade their products accordingly. This makes the market more challenging as SMT equipment suppliers need to provide the most advanced equipment but at competitive prices.

Value added services are a major differentiator in the SMT market enabling equipment suppliers to keep their prices at a marginal premium while being a major selection criterion that customers look for. "SMT equipment vendors need to strike the right balance between technology and price in order to gain a competitive edge," explains Bharath. "The best strategy in pricing lies in being cost effective while ensuring provision of value adding services for customers."

Despite the recent slowdown in demand caused by global economic conditions and technology upgrades, the SMT equipment markets in India are expected to rebound. There are ample indicators for strong growth in the SMT placement, screen printers, soldering, and inspection equipment product markets.