Burgeoning SIM Use to Spark Expansion of Indian Smart Card Market

Tuesday 26 April 2005 09:51 CET | News

Three key mass market applications including subscriber identity module (SIM), driving licence and vehicle registration certificate and national ID cards are expected to power the expansion of the Indian smart card market.

SIM in the cellular industry is expected to be the most prominent of these applications, continuing as the single most dominant segment for smart cards in India. The country commonly uses a global system for mobile (GSM) based mobile network, which requires the SIM. The rapid expansion of this segment, in turn, has been offering significant growth potential for Indian smart card manufacturers. Such positive trends are being reinforced by government policies. For instance, the recent decision to hike the foreign direct investment (FDI) limit up to 74.0 per cent in the telecom sectors is set to boost the smart cards market. In 2004, the market share for SIM shipments was estimated at 89.5 per cent. This dominance is expected to wane to some extent over the next five years following the strong performance of applications such as retail loyalty and identification. Among other markets gaining prominence are driving licences and vehicle registration certificates. Already, states such as Madhya Pradesh and Gujarat have indicated a keen interest for chip-based infrastructure for these applications. The growth prospects for smart cards deployment are expected to soar following the likely adoption of these schemes by other states. Such initiatives are being supported by efforts to develop a clear, uniform and interoperable system for such applications. The year 2006 is likely to be a pivotal time for the Indian smart cards industry with the likely launch of pilot schemes for the national ID card project in 2005. Large-scale rollout is anticipated from 2007 with the project expected to result in the issue of over 600 million national ID cards. However, financial and operational considerations attached to this mammoth project are likely to hamper rapid growth. Overall, the Indian smart cards market is expected to expand rapidly both in terms of revenue and unit shipments. In revenue terms, the market is forecast to grow from $47.5 million in 2004 to $248.0 million by 2009. Unit shipments are to register an impressive annual average growth rate of 48.4 per cent, expanding from 43.1 million units in 2004 to 310.0 million units. Retail loyalty, closed user group corporate segments and increasing mobile-to-mobile payments are all expected to support market growth. At the same time, a large population base accompanied by an increase in consumption expenditure is likely to be a major factor sustaining the continued expansion of the Indian smart cards market. However, obstacles still remain. Among the key challenges that the Indian smart cards market have to contend with include the growth of non-subscriber identity module (SIM) - code division multiplex access (CDMA) mobile subscribers, with competition from cheaper alternative technologies and current operational systems also expected to have slow growth rates. Moreover payment applications is unlikely to develop as a major user segment in the near future.

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Categories: Payments & Commerce | Cards
Countries: World
This article is part of category

Payments & Commerce