NITI Aayog released a report on Friday, titled “Electronics: Powering India’s Participation in Global Value Chains,” providing an analysis of India’s burgeoning electronics sector.
According to a press release, the report emphasizes the sector’s potential and the challenges it faces, while outlining specific interventions necessary for India to become a global manufacturing hub for electronics.
Global Value Chains (GVCs) play a crucial role in contemporary manufacturing, involving international cooperation in design, production, marketing, and distribution.
Accounting for 70 per cent of global trade, GVCs underscore India’s urgent need to boost its participation, particularly in sectors like electronics, semiconductors, automobiles, chemicals, and pharmaceuticals. Electronics are especially significant, with 75 per cent of exports linked to GVCs, read the press release.
India’s electronics sector has grown rapidly, reaching USD 155 billion in FY23. Production almost doubled from USD 48 billion in FY17 to USD 101 billion in FY23, primarily driven by mobile phones, which now make up 43 per cent of total electronics production.
The country has vastly reduced its dependence on smartphone imports, now manufacturing 99 per cent domestically.
Initiatives like Make in India and Digital India, along with improved infrastructure and business ease, backed by various incentives, have spurred domestic manufacturing and attracted foreign investment.
Despite these advances, India’s electronics market is relatively small, representing just 4 per cent of the global market. The focus has mainly been on assembly, with limited capabilities in design and component manufacturing.
The global electronics market, worth USD 4.3 trillion, is led by countries such as China, Taiwan, the USA, South Korea, Vietnam, and Malaysia, read the press release.
India currently exports about USD 25 billion annually, less than 1 per cent of the global share despite a 4 per cent share in global demand.
To enhance competitiveness, India needs to localize high-tech components, bolster design capabilities through R&D investments, and form strategic partnerships with global tech leaders.
As of FY23, India’s electronics production is valued at an impressive USD 101 billion, including USD 86 billion in finished goods and USD 15 billion in component manufacturing.
Exports during this period totaled around USD 25 billion, reflecting India’s growing role in the global electronics market, read the press release.
The sector has contributed between 15 per cent to 18 per cent in domestic value addition and has generated approximately 1.3 million jobs.
In a Business As Usual (BAU) scenario, projections suggest that India’s electronics manufacturing could soar to USD 278 billion by FY30.
This includes USD 253 billion from finished goods and USD 25 billion from components manufacturing. Employment is expected to rise significantly to around 3.4 million, with exports reaching USD 111 billion.
However, to become the third-largest global economy, India needs a more ambitious vision for its tech-driven sectors. With a supportive business environment and robust policy measures, including fiscal incentives and non-fiscal interventions, India should aim for USD 500 billion in electronics manufacturing by FY30, read the press release.
This target includes USD 350 billion from finished goods and USD 150 billion from components manufacturing. Such growth is expected to create jobs for an estimated 5.5 million to 6 million people, significantly increasing job opportunities across the country.
Electronics exports are projected to reach USD 240 billion, with domestic value addition rising to over 35 per cent.
The strategy also emphasizes scaling up production in established segments like mobile phones and establishing a presence in component manufacturing.
There should be a strong focus on diversifying into emerging areas such as wearables, IoT devices, and automotive electronics.
This diversification will capitalize on evolving consumer demands and technological advancements, positioning India as a leader in innovative electronic products globally.
The report suggests strategic interventions across fiscal, financial, regulatory, and infrastructure domains to support this growth trajectory.
These include promoting components and capital goods manufacturing, incentivizing R&D and design, tariff rationalization, skilling initiatives, facilitating technology transfers, and developing infrastructure to create a robust electronics manufacturing ecosystem in India, read the press release.
India has immense potential to become a global leader in electronics manufacturing. By seizing emerging opportunities, enhancing value chain integration, and overcoming existing challenges, India can transform its electronics sector into a cornerstone of economic growth and job creation.