By Shiv Bhambri
India has established itself as one of the economies in the world with the quickest rate of economic growth. Due to this, companies from all over the world have started listing the Indian market as one of the key markets in their expansion plan. Furthermore, due to the easy access of best-in-class tech, management and research experts and favourable policies by the government, companies across sectors including electronics have also started setting up their R&D and other manufacturing hubs in the country. Thanks to this trend, demands for electronic products are being met far more easily.
Making India ‘Atmanirbhar’
The key economic mandate for India Inc. over the last few years has been to become “Atmanirbhar” in the business world. The ability to produce electronics independently is essential to and a facilitator for practically all other sectors. Being independent will render our products cost-efficient and have a direct impact on improving our speed to market by reducing supply dependencies in an uncertain global environment. India has resolved to break free of the shackles of dependence on other markets and made significant progress in developing its own markets.
With a CAGR of 17.9%, domestic electronic goods production has grown significantly from 2,43,263 crores in 2015-16 to 5,54,461 crores in 2020-21 and the electronic manufacturing industry is expected to quadruple by 2026 to $300 billion, The Indian Cellular and Electronics Association (ICEA), the country’s top electronics industry body, has set a goal of $300 billion of manufacturing and $120 billion in exports as a baseline.
The government is taking strong measures to attract large-scale investments in the electronics value chain and has introduced many steps to ensure that we achieve self-reliance in electronics manufacturing.
To enable and propel this vision the government has announced and acted upon landmark decisions right from infrastructure development backed by initiatives by the Labour Ministry to facilitate operation of mega factories which would hire 40,000 to 100,000 workers.
Driving Innovation and serving global needs
The electronics sector is changing as a result of new technologies including artificial intelligence, machine learning, the internet of things, augmented reality (AR), virtual reality (VR), and robotics. India is already a major participant in the world of software development, and by improving its hardware production capabilities, India has the chance to become a major player in the electronics industry as well.
The Indian electronics sector, which was projected to be worth $75 billion last year, is currently anticipated to expand by 6-7% yearly over the following six years. Numerous plants are being built in India for end-to-end production thanks to a number of PLI initiatives and the Make-in-India push. The increased production in the consumer electronics sector is due to a number of factors in addition to COVID. With the help of the US-China trade war, the Russia conflict, corporate work-from-home policies, retaliation spending, and global trade policy changes, Indian electronics manufacturers are now able to meet not only domestic but also international manufacturing demands.
India is poised to become a major value add player globally for the electronics manufacturing market. Some initiatives in this direction are
- Production Linked Incentive (PLI) Scheme
- Scheme for Promotion of Manufacturing of Electronic Components
- Semiconductors, and Modified Electronics Manufacturing Cluster (EMC 2.0)
- Production Linked Systems (PLS)
- Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS)
- Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme
- Semiconductor & Display Fabs Scheme, Design Linked Incentive Scheme
- 100% FDI under the automatic route for electronics manufacturing
- Setting up of an Electronics Development Fund (EDF) to participate in professionally managed funds which in turn will provide capital to start-ups and companies developing new technologies in the area of electronics and Information Technology (IT)
- Rationalisation of the Tariff Structure to promote domestic manufacturing of electronic goods
- Exemption from Basic Customs Duty on capital goods among many other incentives.
- Approval of “the Semicon India programme” with an outlay of INR 76,000 crore for the development of semiconductor and display manufacturing ecosystem in our country by the Union Cabinet
India’s Semiconductor Mission
As a landmark change which shows our commitment to this cause, approvals are in motion for setting up India Semiconductor Mission (ISM) as an Independent Business Division within Digital India
The quality initiatives and investment in capabilities development will increase the forex reserves eventually and India will become a force to reckon with in the global ecosystem of electronics.
This year has seen a significant change in the geopolitical landscape. China dominated the electronics market for the past few decades but post covid the equation has changed and India, among some others, has a huge potential to establish itself as a reliable partner and in the not-so-distant future be in a position to supply technology goods and services to the rest of the world.
Disclaimer: (The author is the country manager, RS India. Views expressed are personal.)