Electronics goods emerged among the top five commodity groups showing healthy exports at an annual growth rate of 55.1 per cent with mobile phone production in the country rising by five-fold in past seven years, the Economic Survey said on Tuesday.
The survey sees potential of production linked incentive schemes in supporting domestic players to achieve economies of scale in manufacturing facilities.
“Improvement in manufacturing and export over the past five years ensures that India is on the right trajectory to achieve this target. Electronic goods were among the top five commodity groups exhibiting positive export growth in November 2022, with the exports in this segment growing YoY by 55.1 per cent,” the survey report tabled in Parliament said.
“The major drivers of growth in the electronics industry are mobile phones, consumer electronics, and industrial electronics.
“In the mobile phone segment, India has become the second-largest mobile phone manufacturer globally, with the production of handsets going up from six crore units in FY15 to 31 crore units in FY22. These numbers are expected to improve as more domestic and global players set up and expand their bases in India,” the report said.
According to the survey, improved digitisation and robotics applications in Industry 4.0 are driving growth in industrial electronics and the impetus on Smart Cities and the Internet of Things (IoT) will streamline the demand for smart and automated electronics.
“Participation in the PLI scheme will help many more domestic players to attain economies of scale in production through localising. Hence, this will further enhance export competitiveness and increase India’s participation in the global value chain,” the report said.
The PLI scheme for large-scale electronics manufacturing has attracted an investment of Rs 4,784 crore and contributed to a total production of Rs 2.04 lakh crore, including exports of Rs 80,769 crore as of September 2022.
The survey mentioned the impact of semiconductor shortage which surfaced during the Covid-19 pandemic that has triggered the need for a policy response by countries towards diversifying the semiconductor supply chain.
It cited the US government policy on semiconductor — Creating Helpful Incentives to Produce Semiconductors and Science Act, 2022 (CHIPS and Science Act, 2022) which aims to catalyse investments in the domestic semiconductor manufacturing capacity with USD 280 billion in spending over the next 10 years.
The bulk of the investment in the US policy is earmarked for research and development.
India too has responded to the crisis with its own about USD 10-billion incentive scheme for setting up local electronic chip manufacturing unit.
“Israel-based International Semiconductor Consortium has signed a Memorandum of Understanding (MoU) to invest Rs 22,900 crore in Karnataka to set up India’s first chip-making plant. Domestic players such as Vedanta and Tata have also indicated plans to establish semiconductor fabs in the country,” the report said.
The survey calls for a dedicated government policy to support domestic industrialisation amidst foreign competition.
“The need for a dedicated government policy to support domestic industrialisation amidst foreign competition can be better appreciated from the industrialisation experiences of East Asian countries such as South Korea and Taiwan in 1960-1990. These countries supported their domestic industries during their high growth phase, while also ensuring healthy competition required for the industries to grow,” the report said.