NITI Aayog released a report on Thursday (18 July, 2024) titled “Electronics: Powering India’s Participation in Global Value Chains,” aiming to transform India into a global hub for electronics manufacturing.
The report outlines a roadmap to achieve $500 billion in electronics production and create six million jobs by financial year 2030.
According to the report, India’s electronics sector has shown significant growth, reaching $155 billion in financial year 2023. The production has nearly doubled from $48 billion in FY17 to $101 billion in FY23. Mobile phones have been a major driver, now making up 43% of the total electronics production. Notably, India now manufactures 99% of its smartphones domestically, especially reducing its dependence on imports.
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Challenges and Global Position
Despite the progress, India still holds a modest 4% share of the global electronics market, which is valued at $4.3 trillion. India’s exports are around $25 billion annually, representing less than 1% of the global share.
To enhance its competitiveness, India needs to focus on making high-tech components, boosting R&D for design capabilities, and forming strategic partnerships with global technology leaders.
Future Projections
Under a “Business As Usual” scenario, India’s electronics manufacturing is projected to reach $278 billion by FY30, generating approximately 3.4 million jobs and $111 billion in exports. However, with an ambitious approach, India can aim for $500 billion in electronics manufacturing by FY30.
This includes $350 billion from finished goods and $150 billion from components manufacturing, potentially creating 5.5 to 6 million jobs and boosting electronics exports to $240 billion. The report also expects a boost in domestic value addition to exceed 35%.
To achieve this ambitious target, India needs to scale up production in existing segments like mobile phones and expand into emerging areas such as wearables, IoT devices, and automotive electronics.
The strategy emphasizes enhancing infrastructure, promoting R&D, facilitating technology transfers, and implementing skilling initiatives to create a robust electronics manufacturing ecosystem.
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Recommended Interventions
NITI Aayog report recommends several interventions across fiscal, financial, regulatory, and infrastructure domains, including:
- Promoting component and capital goods manufacturing.
- Incentivizing R&D and design.
- Rationalizing tariffs.
- Developing infrastructure.
- Supporting technology transfers.
India has great potential to become a global leader in electronics manufacturing. By taking advantage of new opportunities, improving its role in international supply chains, and addressing current challenges, India can turn its electronics industry into a major contributor to economic growth and job creation.
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