Electronics is the entire world’s most extensive and fastest expanding industry, with usage in every area. The Indian Government emphasizes electronics hardware production, which is a pillar of both the ‘Make in India’ and ‘Digital India programs.’
India’s electronics industry benefits from growing domestic demand, rising disposable incomes, falling manufacturing costs in other industrialized countries, rising Middle Eastern consumption, and worldwide demand driven by emerging economies. There has been a significant change in thinking towards Chinese investments in the last year. New measures to monitor Chinese investments in India. Two instances include e-commerce firms being required to disclose product sourcing information and revisions to the FDI policy removing automatic routes for investments from nations India shares a border with. Chinese firms were excluded from the 5G auction, and national ministers have publicly said that they would no longer accept Chinese proposals for government projects.
The National Policy on Electronics (NPE 2019) of the Indian Government is aiming to produce $400 billion in domestic production by 2035 by developing full-value clusters and employing more than 10 million people directly or indirectly. The electronics industry is valued at about $2 trillion worldwide.
The National Policy on Electronics for 2019 seeks to boost domestic production and exports throughout the whole value chain of Electronics System Design and Manufacturing (ESDM) to reach a $400 billion (Rs 26 lakh crore) turnover by 2025.
“So far, 212 projects worth Rs 55,182 crore have been authorized. Rs 5,635 crore has been committed as incentives for these 212 projects, “The Indian telecom Minister said. The Indian Government’s National Policy on Electronics (NPE 2019) aims to generate $400 billion in revenue from local manufacturing by 2025 by establishing clusters for the whole value chain and directly or indirectly employing over 10 million people. The global electronics industry is estimated to be worth around $2 trillion.
The manufacturing sector of electronics grew by 5.5% in 2015. In 2017-2018, it rose to 26.7%. The contribution of India towards the world’s electronics production was 1.31% in 2012-2013, rising to 3%. The Association of the Manufacturers of Consumer Electronics and Appliances (CEAMA) and Frost & Sullivan consulting firm recently published research predicting an annual growth rate compound of 9.5 percent (CAGR) of the consumers’ electronics industry through 2021.
The NPE 2019 also seeks to facilitate commercial activities for the electronic system design and manufacturing (ESDM) sector and to encourage research, growth, and innovation in all subsectors of electronics across the industry. India’s ESDM industry is projected to reach USD 230 billion by 2020, increasing at a pace of between 16% and 23% per year, given the rising demand for electronic goods. To promote innovation and growth in the ESDM Industry, the Electronics Manufacturing Clusters (EMC) Scheme seeks to stimulate the establishment of new and current electronics manufacturing clusters. With greenfield EMCs, the aid is restricted to 50% of the project’s cost, up to USD 7.6 million per 100 acres of land. Support for current projects will be granted with a ceiling of USD 7,6 million and a project limit of 75%.
India’s growing workforce and infrastructural expenses are other aspects that are advantageous in China. When China loses its cost advantage, some of its domestic electronics manufacturing will move elsewhere, placing India at a competitive disadvantage. Our contribution to the global consumption of electronics in value terms is expected to reach 7 % by 2026, with India expected to rise to about 200 billion dollars in domestic consumption, and the import components represent 60 % of value. Even in that scenario, India would be worth about 280 billion dollars in net foreign currency earnings.
Centre launches three new schemes to promote electronics manufacturing in India.
The trilogy of programs will assist domestic electronics production, strengthening the country’s electronics manufacturing ecosystem.
Through a trilogy of initiatives, the limitation of domestic electronics production will counterbalance the nation’s electronics ecosystem. Three projects will enable the manufacture of large-scale electronics, local supply chains, and state-of-the-art infrastructure for larger anchor units and their supply chain partners. These initiatives may help the nation achieve a digital economy of $1 trillion and a GDP of $5 trillion by 2025. By 2025, mobile devices would be produced to approximately RS 10,000, and 5 lakhs direct and 15 lakh indirect employment will be created.
India has surpassed China to become the world’s second-biggest mobile phone producer. In 2014-15, the value of 6 crore mobile phones manufactured was Rs 18,992 crore. It rose to Rs 1.7 lakh crore in terms of value and 30 crores in units in 2018-19. “When the Modi government came to power in 2014, electronics manufacturing production in India was valued at Rs 1,90,366 crore; today, in 2018-19, it is valued at Rs 4,58,000 crore,” the Minister added.
Electronics manufacturing promotion has been a critical component of the Make in India initiative. According to the Government, India’s electronics production increased from $29 billion in 2014 to $70 billion in 2019 as a result of efforts such as the National Policy on Electronics, 2019, the Modified Special Incentive Scheme (MSIPS), Electronics Manufacturing Clusters, and the Electronics Development Fund. While electronics exports rose from Rs 38,263 crore in 2014-15 to Rs 61,908 crore by 2021, India’s contribution to global electronics output increased from 1.3 percent in 2012 to 3% in 2018.
According to a government plan, the PLI Scheme would provide qualifying businesses with a 4% to 6% incentive on additional sales (over the base year) of products produced in India and falling within the target categories for a period of five years after the base year.
If India wants to become a significant exporter of electronics, it would need a dedicated and robust policy push from the Government. MeitY has introduced a series of policies over the past couple of years, including NEP, PLI, M-SIPS, EMC 2.0, and EDF. This boost for electronics systems design and manufacture (EDSM) will offshoot future technologies such as artificial intelligence (AI), 5G connectivity, and computing.
- Production Linked Incentive Scheme (PLI):
- Production Linked Incentive Scheme for IT Hardware:
- The Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS):
- The Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme:
- Electronics Development Fund (EDF) Policy:
- Modified Special Incentive Package Scheme (M-SIPS):
The Government adopts a new national electronics strategy to create one crore employment by 2025.
India’s rise to prominence as a worldwide center for software services and solutions is one of the most significant achievements of contemporary, liberalized India. India’s software sector has risen to a value of $8.1 billion during the last four decades, employing about 4 million people. India’s ability to duplicate this achievement in hardware and electronics is being investigated. India is a significant importer of electronic products, particularly from Asia’s China, and Taiwan. On the other hand, the Government is eager to establish the nation as a leader in electronics and hardware. India’s electronic imports were Rs. 1.15 lakh crore in 2019, while exports totaled only $11.8 billion. Electronics exports may reach $180 billion by 2025. And this is achievable with long-term policy backing from the Government.
Will India ever be able to compete in electronics production with China, or even with smaller nations like Vietnam or Indonesia?
The Consumer Electronics and Appliances Manufacturers Association (CEAMA) said that even before the boycott call, many businesses looked for other suppliers due to supply chain problems caused by China’s coronavirus-induced shutdown. Around 95% of consumer electronics and appliances supplied in India are manufactured domestically, but the country’s reliance on China for components remains between 25% and 70%, which would be tough to eliminate overnight, according to industry group CEAMA. The reliance on China for components ranges from 25% to 70%, depending on the category. The least expensive are washing machines, while the most expensive are air conditioners.
Conclusion
There is something called ITA 1 listed goods in the electronics industry, which are exempt from tariffs under the WTO agreement. When the WTO was established, China signed a seven-year pact. When they realized that import and customs duties across all countries would be zero, they used the interim time to develop their manufacturing skills. That is how they enticed global manufacturing to relocate to China. We must now compete with these economies to maintain our attractiveness as a tourist destination. The administration has accomplished a great deal recently, including the recent announcement of a corporation tax cut.
However, we estimate that the total offset required to overcome the Indian disability is approximately 8%, which varies by nation and product. Thus, for a multinational corporation to come to India and produce, they must overcome this limitation.
That’s all, folks!
Numerous other industries believe that the size of the Indian domestic market is sufficient for development. However, you believe exports are critical to the electronics industry. ‘We have a geographic advantage, a population advantage, and the technological capabilities required.’ The issue is that the nation has relatively little electronics manufacturing. And the majority of components used in production are imported.
That is the issue we face as a nation as we consume electronics, most of which will be imported, placing the country in a net foreign currency negative oil deficit situation.
‘We have to get all of these together. Then, we can very well compete.’
India has long been recognized as a top location for IT services, but the IT hardware industry is also attempting to establish a foothold on the global stage. Demand for electronics goods is increasing at a compound annual growth rate (CPGR) of 22 percent. By 2022 the demand for electronic goods is expected to exceed $400 billion. Moreover, many steps to promote production and investment are taken by the Indian Government, which puts India at the top of the list of potential locations for investment.
