India Sets Ambitious IT Goal

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Setting out an ambitious target of achieving 300 billion dollar worth of electronics manufacturing by 2026, India released a five year roadmap and Vision Document for the electronics sector.

Titled “$300 bn Sustainable Electronics Manufacturing & Exports by 2026,” the roadmap is the second volume of a two-part Vision Document – the first of which titled “Increasing India’s Electronics Exports and Share in GVCs” was released in November 2021.

The document provides a year wise break up and production projections for the various products that will lead India’s transformation into a US$300 billion electronics manufacturing powerhouse, from the current US$75 billion.

KEY PRODUCTS

Amongst the key products that are expected to lead India’s growth in electronics manufacturing include Mobile Phones, IT Hardware (laptops, tablets), Consumer electronics (TV and audio), Industrial electronics, Auto electronics, Electronic components, LED Lighting, Strategic electronics, PCBA, Wearables and hearables, and Telecom equipment (see chart). Mobile manufacturing that is expected to cross US$100 billion annual production – up from the current US$30 billion – is expected to constitute nearly 40% of this ambitious growth.

BROADENING

Speaking on the occasion, Union Minister of Electronics & Information Technology, congratulated and lauded the entire team of Ministry of Electronics & Information Technology for their efforts in bringing out the documents and policy framework items at this remarkable speed.

Minister of State, Electronics and IT Rajeev Chandrasekhar said that Ministry is focusing on broadening and deepening of electronics industry in India in line with Prime Minister’s recent statement at World Economic Forum, where he said that India is emerging as a reliable and trusted partner in value chains.

Talking about the objective of the volume-2 of the vision document releases today, Shri Rajeev Chandrasekhar, said, “New markets, new customers and being a player in Global Value Chain (GVC) is the goal and mission of the 2nd phase. This volume along with the 1st Volume on electronics manufacturing, represent an excellent example of goal setting, detailed strategy making after hours of deep engagement between government and industry. He further added that the numbers in the 2nd Volume of vision document confirms that there is a real opportunity in electronics sector, driven by 2 factors: growth of digital consumption and growth and diversification of global value chains.

STRATEGY

The domestic market is expected to increase from US$65 billion to US$180 billion over the next 5 years. This will make electronics amongst India’s 2-3 top ranking exports by 2026. Of the US$300 billion, exports are expected to increase from the projected US$15 billion in 2021-22 to US$120 billion by 2026.

The five-part strategy to reach the US$300 billion goal, based on an “all of the government” approach, sharply focuses on broadening and deepening electronics manufacturing in India. This, by building competitiveness and scale by attracting global electronics manufacturers/brands, shifting and developing sub-assemblies and component ecosystem, building a design ecosystem, nurturing Indian champions and steadily removing cost disabilities faced by India.

The US$300 billion electronics manufacturing comes on the back of US$10 billion PLI Scheme announced by the government to propel forward the Semiconductor and Display ecosystem. The government has committed nearly US$17 billion over the next 6 years across four PLI Schemes – Semiconductor and Design, Smartphones, IT Hardware and Components. The Vision Document makes a strong recommendation on the need to focus on aggregate domestic value addition in the electronics sector, as India transforms from its current state to one that is gearing to compete with the likes of China and Vietnam. It also details the importance of the key role Indian champions will play in addition to global companies – both of whom are already part of the PLI Schemes.

TARIFF

The report seeks a competitive tariff structure on electronic components and removal of all regulatory uncertainty to put India on the path to US$300 billion electronics manufacturing. The report recommends a “winner takes all” strategy backed by economies of scale and global competitiveness, new and revised incentive schemes for some sectors, and the need to address issues of sustainability and ease of doing business.

 

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