Growth and Future of Indian Electronics Industry: Insights and Developments

The electronics industry in India is one of the fastest growing sectors. Despite the devastation wrought by COVID, the electronics industry has grown at a healthy pace of 15 per cent over the last seven years. While the government has set an overall production target of $300 billion by 2026, the strongest growth in electronics manufacturing was witnessed in 2021-22. This growth was largely driven by the Rs 275,000 crore mobile phone manufacturing in India, accelerated by the Production Linked Incentive (PLI) and Phased Manufacturing Programme (PMP). Mobile phones, consumer electronics and industrial electronics account for the major component demand in India. This is followed by strategic electronics, computer hardware and lighting industries, which contribute to the balance of the market. Industries like mobile phones, industrial electronics (due to the emergence of electric vehicles) and strategic electronics are expected to witness significant growth in the near future. Pankaj Mohindroo, Chairman, Indian Cellular and Electronics Association (ICEA) highlighted the prospects of the Indian electronics industry, its contribution to the global value chain and how ongoing investments and subsidies will boost the growth of the sector.

Transformation of the Indian Electronics Industry in the Last 7-10 Years

You must know that around fifteen to twenty years ago, the industry was nowhere in the global picture and the growth was slow. The industry has transformed a lot in the last seven to ten years. The government is aiming to achieve a total production target of $300 billion by 2026 and another $200 billion by 2029-30. Interestingly, India is currently one of the largest users of mobile phones in the world and around 995-97 percent of mobile phones are now manufactured entirely domestically. Then you must see India developing its semiconductor industry as well. The investment by Tata, Micron and CG Power is a significant step towards strengthening the sector. The Rs 76,000 crore programme and budget outlay is also a huge step. Most importantly, the government and all stakeholders are now actively involved in the development of the industry.

How the 2024-2025 budget proved to be a breakthrough for the electronics industry

The government has now proposed Rs 6,900 crore for semiconductor projects and has reduced customs duty on electronic components, which is a major step. The concessions are being given in the range of zero on existing BCDs by 10 to 2.5 per cent, depending on various critical metals. We also welcome the rationalisation of tariffs on silicon quartz and silicon dioxide from 5/7.5 per cent to 2.5 per cent. This is a key step to accelerate the establishment of a strong silicon wafer and power manufacturing ecosystem in the country. In fact, in our previous interaction, I had already said that the imposition of Anti-Dumping Duty (ADD) announced after the interim budget will be a well-considered decision. There has been strong evidence of dumping in the entry-level PCB segment all along. We have urged the government to strictly enforce this decision, otherwise, China’s dominance will never end.

India’s Share in the Global Value Chain (GVC) in Electronics Sector – A Future View

The Prime Minister has already announced across the country that “Local now becomes global”. Besides, Aatmanirbhar Bharat, Vikshit Bharat are some of the strong campaigns that are helping India to move ahead in the global value chain. The Prime Minister also emphasised on the importance of “increasing India’s share in the global export value chain multi-fold” and ensuring that our share in global value chains increases and export hubs are set up in the state. There are four key factors to boost exports. First, an environment that makes Indian manufacturing qualitatively competitive, along with increased production. Second, ending logistics-related problems and thereby reducing costs. Third, encouraging collaboration between the Centre, states, including export boards, and the private sector. Fourth, improving access to international markets.

Future prospects of India in electronics manufacturing

India is now on the wish list of many global electronics companies who are now very keen to move out of China which is the largest manufacturing location in the world. The country is very close to becoming a $1 trillion electronics market. For a long time India was developing and manufacturing products and services for foreign companies but now it is creating an ecosystem for designing semiconductor products, educating the workforce on semiconductors and now setting up ATMP plants and developing factories. This is a huge achievement for the country. Now talking about factories, there are many verticals and display is the main one which is being focused on seriously as this sector was dominated by a particular geographical location which is not a good sign for the international market.