Sri Lanka’s Electrical & Electronic Industry

Overview

The Electronic and Electrical industry is well positioned as a sector that is seamlessly enabled to ‘generate ideas’ and ‘to give life to them’. The sector possesses the unique capacity and capability to ‘innovate, design, develop, produce and market’, its products and services.

The Sri Lankan Electronic and Electrical sector has been identified as an important contributory sector within the integrated, export-led, national economic development strategy. EE components industry alone is placed as the seventh largest merchandise export revenue earner which amounts to 0.012% of the global exports.

Unblemished delivery records of the local industry players, the flexibility exhibited in production and service delivery in the small-medium sized market-demand niche, has been a hallmark and a key differentiator for Sri Lanka in the global supply chain in Electricals & Electronics.

History & Evolution

A relatively new player in the Sri Lankan export market, over the past five decades or more, Sri Lanka’s Electrical and Electronics industry has grown to be a vital contributor towards the export oriented economic growth in the country. Being a basic assembler of consumer electronics and products during its beginnings, this sector is now classified as medium-high technology and high technology industries, according to the OECD classification of manufacturing industries

During the recent years, development of infrastructure, knowledge enabled workforce and developments in research and innovation contributed towards the growth in exports within the sector. Keeping pace with global developments, its rapid evolution and progression, the Electrical and Electronics sector has made significant strides in Electronic Manufacturing Services (EMS), Electrical and Electronic component manufacturing, Original Product manufacturing, and Design Services that include substantial R&D components.

Industry Span

Development and evolving trends within the Electronic and Electrical sectors are closely linked to the Software and Hardware industries. Therefore, ‘Digitization'; ‘Automation’; ‘Miniaturisation’; driven by affordability, will determine the direction this sector will take, how it will get defined, and the manner in which it grows in the future. Sri Lanka's current product and service offerings in Sri Lanka’s Electrical and Electronics Exports industry are taking giant strides in embracing such trends. The industry encompasses fourteen (14) subsectors and fall within the following four, broad classifications

• Electronic Manufacturing Services (EMS)
• Electrical and Electronics Component Manufacturing
• Original Equipment Manufacturing (OEM)
• Design Services, and Research & Development

Leveraging on established capacities in the Electronics Manufacturing Services, Sri Lanka has established its footprint as a component manufacturing base for global giants and large multinationals. The expansion and capacity enhancement in the country’s IT industry helps Sri Lankan producers to move up the value chain. Utilising the wealth of innovative ideas generated by the academia and industry, coupled with research backed design service capacities presently available, the sector focus is expanding towards high-tech products such as robotics and IOT (Internet of Things) devices.

Sri Lanka’s Electronic and Electrical industry has embraced industry 4.0 with vigour and is ready to facilitate migration into any industry 4.0 ecosystem, whilst some industry players are already integrated.

The EEC sector has strong potential to make a socio-economic impact through export-led growth and is poised to stimulate innovation, R&D and investment. It is also well positioned to benefit from the growth in electronic and manufacturing production in Asia.

Statistics & Markets

The Electronic and Electrical sector is one of the fastest growing sectors in the world, valued at over 5 trillion US$ in 2019. In the local context the sector possesses high potential to attract FDI, generate large export earnings, stimulate innovation, and research & development. In the recent past Sri Lanka’s Electrical and Electronics Components sector has exhibited considerable growth compared to the past. With over one hundred (100) manufacturers and service providers, employing more than 37,000 persons nationwide, the industry mainly caters to the automobile, industrial automation, telecommunication, medical, consumer electronics and industrial application sectors.

Electrical and Electronics: Export Revenues

Export value (US$ Mn)							Future forecast (US$ Mn)
Year	2016	2017	2018	2019	2020	2021	2022	2023	2024	2025
Value	300	345	410	435	330	422	500	650	800	1000

Source: Sri Lanka Customs

Sri Lanka’s main export destinations for this sector (figure x) are Switzerland, India and China, including Hong Kong SAR. Exports to the United States, the EU and Japan are comparatively low, but are growing.

Global brand associations in Sri Lanka

A multitude of global brands in automobile, telecommunication, hospitality, medical, food, and transportation sectors from around the world procure electronic and electrical components and products from Sri Lanka. Some renowned brands have established partnerships as JV’s and technology providers with the local industry, exhibiting confidence in the industry competencies and capacity.

Reliance, NEXANS, Danfoss, Flextronics, Foxconn, Renault, Nissan, Toyota, Daimler, Hyundai, Ritz Carlton, RIU, Shangri La, TDK, Nokia, Motorola, Samsung, TATA, Delhi Metro, Nestle, Cooper. Surgical, and ESCO Medical are few amongst many other global brands that procure from the EE sector of Sri Lanka

Research & Development

Talent nurturing and innovation towards a sustainable, knowledge-based future is a key differentiator that is present within the Sri Lankan Electronic and Electrical sector. In addition to ever growing research & development efforts within the sector, the inherent capacity and continuous knowledge inflow has enabled the industry players to offer unparalleled design & development services.

With the support of its reputed university system, research institutions, and global affiliations, the Sri Lankan electronic industry is geared towards producing innovative and sustainable solutions that suit the demands of the future (associated universities/institutions /organizations) 

The industry is expected to transit mere assembly of electronic and electrical components and products, and invest in producing knowledge-based electronics related to embedded software.

Supported by global R&D partners, the Electronic and Electrical sector is rapidly working towards developing medical services equipment including IVF workstations, and energy related products to the global market with the expectation of acquiring substantial market share of the sector, internationally. The Research and Development within the sector is bolstered by the investments made into state-of-the-art testing and design equipment. It has also had a direct positive impact on the South Asian within the electronic industry

Future and Trends

One of the largest industries in the world, the global Electronic and Electrical sector is contributing towards affordable high-end technology, increased efficiency, and reduced carbon footprint, driving growth of an economical and sustainable industry. With commerce, business, education and every other domain of activity in the modern world rapidly embracing digitisation, automation and IOT devices, the dependency and integration of Electronic and Electrical products and services into every aspect of human life, is a foregone conclusion.

Sri Lanka's contribution to these areas is made possible by the skilled design workforce, locally developed products aligned with such emerging trends, and the Sri Lankan education, vocational education and higher education systems recognizing the future global demands and making suitable changes. Ability to cater to varying time zones globally, to meet low MOQs with high quality offerings, and capacity to provide R&D services to Original Equipment Manufacturers (OEMs), coupled with language proficiency in the industry workforce, enhances the overall value proposition the Sri Lankan EE industry offers. 

Global partnerships, emphasis on quality, investment in R&D along with the quick adaptability has enabled the Sri Lankan EE sector to become one of the fastest growing export industries in the region. 

Presently the country has established itself as a centre of excellence for Electronic Design and Development, embracing emerging technologies such as IoT, Robotics, Bio-medical, Analytics, and advanced Research & Development

Export Market Potential

The global Electronic and Electrical industry, valued at around US$ 5.0 trillion in 2019, is one of the largest and fastest growing sectors in the world. It is expected to reach US$ 5.8 trillion by 2025.

Recognized as one of Sri Lanka’s high potential sectors for export growth and social impact, and as an aspiring regional hub in the global industry, the Electronic and Electrical sector is strengthened with multiple enablers. The country has great potential to develop a competitive electronics industry thanks to skilled technology workforce, well-developed infrastructure, preferential access to key destination markets through trade agreements, ease-of-doing business, attractive investment incentive schemes, proximity to key markets, its strategic location and the logistical wherewithal.