Ministry of Electronics and Information Technology (MietY) in collaboration with ICEA has released a 5-year roadmap and Vision Document for the electronics sector titled “$300 bn Sustainable Electronics Manufacturing & Exports by 2026.
This is the second volume of a two-part Vision Document – the first of which titled “Increasing India’s Electronics Exports and Share in GVCs” was released last year in November.
The report gives a year-wise break-up and production projections for multiple products to boost India’s transformation into a US$300 billion electronics manufacturing powerhouse, from the current US$75 billion.
Mobile phones, IT hardware (laptops, tablets), Consumer electronics (TV and audio), Industrial electronics, Auto electronics, Electronic components, LED Lighting, Strategic electronics, PCBA, Wearables and hearables, and Telecom equipment are among the key products that are expected to lead India’s growth in electronics manufacturing.
Here, Mobile manufacturing that is expected to cross US$100 billion annual production – up from the current US$30 billion – is expected to constitute nearly 40% of this ambitious growth.
A Call to Action for Broadening & deepening electronics manufacturing
The electronics industry is one of the largest and fastest-growing industries in the world. The global electronics industry is estimated at US$ 2.9 trillion in 2020. The global value of the electronics industry is almost equal to the economic size of India, which currently stands at US$ 2.9 trillion.
The approach and the entire strategy of the Government to develop the electronic manufacturing industry has undergone a change in 2022. Till 2011, India was a major manufacturing and export hub for mobile phones, however, the pace of exports reduced significantly post-shutdown of Nokia’s manufacturing facility in 2014. As a result, domestic manufacturing also suffered tremendously wherein imports grew and India’s mobile industry became largely import-dependent.
The government has changed gears since 2019, with National Policy for Electronics (NEP 2019). NPE was launched with a vision to position India as a global hub for Electronics System Design and Manufacturing (ESDM) by creating an enabling environment for the industry to compete globally amongst others.
The change can be perceived from PMP (import substitution) to the Production Linked incentive (PLI) approach aimed at transforming India into a global hub for mobile and electronics manufacturing.
In his address to the Heads of Indian Missions on August 6 2021, Prime Minister Narendra Modi made a clarion call to focus on export-led policies from India to increase the country’s share in global value chains.
Currently, the Ministry of Commerce and Industry is undertaking a major restructuring exercise to support India’s outlook towards exports and Free Trade Agreements (FTAs). The trade policy is exploring half a dozen new bilateral FTAs with UAE, UK, Australia, Canada and EU in 2022. It has also launched a revitalised India-US Trade Policy Forum in November 2021.
Beyond the vision of import substitution to “Make in India for the World”
At the launch of Vision Document Volume 2, Minister of State, Electronics & IT and Skill Development & Entrepreneurship, Rajeev Chandrasekhar iterated that Ministry is focusing on broadening and deepening of the electronics industry in India in line with PM Modi’s recent statement at World Economic Forum, where he said that India is emerging as a reliable and trusted partner in value chains.
By importing components and assembling them in China for the world, China created jobs at an unprecedented scale. Similarly, by integrating “Assemble in India for the world” into Make in India, the nation can raise its export market share to about 3.5 per cent by 2025 and 6 per cent by 2030.
“In the process, India would create about 4 crore well-paid jobs by 2025 and about 8 crore by 2030,” – Vision Document Volume 2
The incremental value added in the economy from the target level of exports of network products, which is expected to equal $248 billion in 2025, would make up about one-quarter of the increase required for making India a $5 trillion economy by 2025.
Objective of Vision Document Volume-2
The roadmap in the second phase focuses upon New markets, new customers, and making India a major player in the Global Value Chain (GVC). There is a real opportunity in the electronics sector, driven by 2 factors, i.e growth of digital consumption and growth and diversification of global value chains.
The government has committed nearly US$17 billion over the next 6 years across four PLI Schemes – Semiconductor and Design, Smartphones, IT Hardware and Components. With this,
As India transitions from its current position to one that is ready to compete with China and Vietnam, the Vision Document makes a strong suggestion to focus on aggregate local value addition in the electronics sector. It also emphasises the critical role that Indian champions would play alongside global firms, both of whom are already members of the PLI Schemes.
To put India on the path to US$300 billion in electronics manufacturing, the research calls for a competitive tariff structure on electronic components and the removal of all regulatory ambiguity.
It recommends a “winner takes all” strategy backed by economies of scale and global competitiveness, new and revised incentive schemes for some sectors, and the need to address issues of sustainability and ease of doing business.