New Delhi: India’s ambition to become the third-largest global economy necessitates a more ambitious vision for its technology-driven sectors. With a conducive business environment and robust policy support, including fiscal incentives and non-fiscal interventions, India should aim to achieve $500 billion in electronics manufacturing by value terms by the Financial Year 2030, a report, “Electronics: Powering India’s Participation in Global Value Chains”, released today by NITI Aayog, stated.
According to the report, this ambitious target comprises $350 billion from finished goods manufacturing and $150 billion from components manufacturing. Such growth is projected to create employment for an estimated 5.5 million to 6 million people, significantly boosting job opportunities across the country. Electronics exports are expected to reach $240 billion and domestic value addition to increase to more than 35%.
In parallel, the strategy emphasizes scaling up production in established technology segments such as mobile phones and establishing a foothold in component manufacturing. The report notes that India has significantly reduced its reliance on smartphone imports, now manufacturing 99% domestically.
“Additionally, there should be a strong focus on diversifying into emerging areas such as wearables, IoT devices, and automotive electronics,” the report recommends, adding that this strategic diversification will capitalize on evolving consumer demands and technological advancements, positioning India as a leader in innovative electronic products on the global stage.
The report extensively analyses India’s electronics sector, emphasizing its potential and challenges. It also outlines specific interventions needed for India to emerge as a global manufacturing hub for electronics.
India currently exports approximately $25 billion annually, representing less than 1% of the global share despite a 4% share in global demand. The global electronics market, valued at $4.3 trillion, is dominated by countries like China, Taiwan, USA, South Korea, Vietnam and Malaysia. To enhance competitiveness, India needs to localize high-tech components, strengthen design capabilities through Research and Development (R&D) investments, and forge strategic partnerships with global technology leaders, the report states.
The current value of India’s electronics production stands at USD 101 billion as of the Financial Year 2023. This figure comprises $86 billion in finished goods production and $15 billion in components manufacturing. During the same period, exports totalled ~$25 billion, reflecting India’s increasing role in the global electronics market. As regards domestic value addition, the sector has also contributed ranging between 15% to 18% and has generated approximately 1.3 million jobs.
Initiatives like Make in India and Digital India, improved infrastructure and ease of doing business, supported by various incentives, have stimulated domestic manufacturing and attracted foreign investments. India’s electronics sector experienced rapid growth, reaching $155 billion in the Financial Year 2023. Production nearly doubled from $48 billion in FY2017 to $101 billion in FY2023, driven primarily by mobile phones, which now constitute 43% of total electronics production.
However, according to the report, despite these strides, India’s electronics market remains relatively moderate, accounting for only 4% of the global market, which has so far focussed primarily on assembly, with limited capabilities in design and component manufacturing.
The report refers to Global Value Chains (GVCs) which are critical in modern manufacturing, involving international collaboration across design, production, marketing, and distribution. They represent 70% of international trade, highlighting India’s urgent need to enhance its participation, especially in electronics, semiconductors, automobiles, chemicals, and pharmaceuticals. Electronics, in particular, is pivotal, with 75% of its exports originating from GVCs.
In a Business As Usual (BAU) scenario, projections indicate that India’s electronics manufacturing could escalate to $278 billion by FY2030. This forecast includes $253 billion from finished goods and $25 billion from components manufacturing. Employment generation is expected to grow substantially to around 3.4 million, with exports reaching USD 111 billion.
The report recommends strategic interventions across fiscal, financial, regulatory, and infrastructure domains. These include promoting components and capital goods manufacturing, incentivising R&D and Design, tariff rationalization, skilling initiatives, facilitation of technology transfers, and infrastructure development to foster a robust electronics manufacturing ecosystem in India.
– global bihari bureau
