The smart card market in India is expected to generate Rs 5,276.6 crore ($1 billion approx.) in revenues by 2015, an increase of Rs 2,173 crore from Rs 3,103.6 crore revenues in 2011. During the same period (from 2012-15), the market is set to grow at a compound annual growth rate (CAGR) of 12.3 per cent, according a report released by CyberMedia Research (CMR). As of now, smart cards are used for a wide range of applications across government, transportation, telecommunications, banking, IT-ITeS and healthcare sectors.
Contact versus contactless smart cards
Smart cards run on automatic identification and data capture (AIDC) technology that enables identification and authentication of individuals. The cards in use essentially fall under three categories – contact, contactless and hybrid smart cards.
“Traditionally, contact smart cards have played a crucial role in defining the growth of the market. But in the coming years, we expect to see a major shift towards contactless and hybrid smart cards,” said Anirban Banerjee, associate VP (research and advisory services) of CMR. He also mentioned that the government initiatives and demand for advanced public transportation systems are spurring the growth of smart cards in India.
Telecom is the leading vertical
“Over the years, telecom apps have ruled the India smart card market (most are used as mobile phone SIM cards) and they generate more than 55 per cent of the market revenues. However, going forward, we expect government, transportation and banking applications to contribute significantly to drive market growth,” said Faisal Kawoosa, lead analyst at CMR semiconductor and electronics practice.
According to the report, the prominent factors responsible for the growth of the smart card market in India include government projects, advanced public transportation systems, increasing mobile penetration, demand for plastic money, etc. Some of the government projects which are likely to boost market growth include the UID/Aadhar scheme, Rashtriya Swasthya Bima Yojana (RSBY), National Rural Employment Guarantee Scheme (NREGS) and Public Distribution System (PDS), driving licence, e-passport and e-visa.
In addition, consumers’ shift towards plastic money (fuelled by the need for safe and secure financial transactions) will also help grow the smart card market in India. Other key trends in this space would include a shift towards contactless smart cards, application add-ons and the widespread use of e-purse/e-wallet.
Technology and manufacturing
Currently, two types of smart card technologies are available in the market – the Mask ROM technology and the Flash technology. While the Mask ROM technology is widely used, factors like reducing lead time for production and development, demand for higher flexibility and reducing total cost of ownership are expected to spur the market for smart cards based on the Flash technology. These will be primarily used in sectors like banking, telecommunications and transportation.
While a majority of the smart cards used in the country are now imported (players like Gemalto, Oberthur, Sagem Morpho and Giesecke & Devrient are popular foreign smart card brands in India), domestic manufacturing of these cards will bridge the gap between demand and supply.
“The Indian government is encouraging local players to manufacture smart cards within the country. Also, foreign players have started to set up facilities in India and that will bring down the cost even more,” noted Rajat Kharbanda, analyst at CMR semiconductor and electronics practice, a key factor that will help the market grow further in the near future.
(Edited by Sanghamitra Mandal)