India is poised to achieve an electronics production worth USD300 billion by 2026, a notable dropping from the envisioned target of USD400 billion by 2025, as outlined in the 2019 National Policy on Electronics (NPE). This projection is derived from a comprehensive “USD300 bn Sustainable Electronics Manufacturing & Exports by 2026” roadmap, developed through collaboration between the Ministry of Electronics and IT (MeitY) and the India Cellular & Electronics Association (ICEA).
Growth Potential of Electronics Manufacturing
The revised target still anticipates a promising 400% increase from the current level of production. A game-changer in this regard will be mobile manufacturing, touted to surpass an annual production of USD100 billion, from its present USD30 billion. This lucrative sector is predicted to account for about 40% of the overall growth.
Featured Products for Growth
Numerous products are set to spearhead India’s future growth in electronics manufacturing. These include Mobile Phones, IT Hardware (laptops, tablets), Consumer electronics (TV and audio), Industrial electronics, Auto electronics, Electronic components, LED Lighting, Strategic electronics, PCBA (Printed Circuit Board Assembly), Wearables and hearables, and Telecom equipment.
Challenges and Solutions
The industry faces numerous hurdles, both qualitative (non-tariff, infrastructure related) and quantitative (tariff, free trade agreements etc.). To reach the USD300 billion manufacturing target by 2025-26, emphasis must be placed on incentive-driven scaling and elimination of cost disabilities. It’s crucial to adjust existing policies within the next 1,000 days, focusing on areas such as tariff stability, tariff reduction for components lacking Indian manufacturing bases, skill enhancement, and enticing international manufacturers to establish component ecosystems in India.
Role of Domestic and Global Companies
The roadmap underscores the need to concentrate on boosting domestic value addition in electronics. It also highlights the pivotal roles both Indian and global companies will play under the Production-Linked Incentive (PLI) Schemes, amid the country’s transformational journey to compete with global players like China and Vietnam.
Towards a USD300 Billion Electronics Manufacturing Industry
This USD300 billion vision for electronics manufacturing is backed by a USD10 billion PLI Scheme, geared towards propelling the Semiconductor and Display ecosystem. The government has committed approximately USD17 billion over the next six years under four distinct PLI schemes – Semiconductor and Design, Smartphones, IT Hardware and Components.
The Current State of India’s Electronics Manufacturing Industry
Between 2015-16 and 2020-21, electronics manufacturing expanded from USD37.1 billion to USD67.3 billion. However, because of Covid-19 disruptions, 2020-21 experienced a drop in manufacturing output to USD67.3 billion. The industry’s strategy has experienced a transformation, moving beyond solely importing to “Make in India for the World”. This fresh perspective aims at enhancing India’s manufacturing abilities with a focus on competitiveness, scale, and exports.
Future Projections and Importance
In light of increasing labour costs in China, geo-political trade and security issues, and the fallout from the Covid-19 pandemic, many international electronics firms are scouting alternative manufacturing locations and diversifying their supply chains, with India being a leading prospect. Earning significant foreign exchange and generating employment, electronics exports have the potential to become one of India’s top exports within the next 3-5 years.
