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India Electronics Manufacturing Could Reach $300 Billion by 2025

The Ministry of Electronics and Information Technology (MietY) recently released Volume-I of a vision document or report on increasing India’s electronics exports and share in global value chains (GVCs). It outlines opportunities, challenges, and suggests policies for India to grow from US$75 billion (2020-21) to US$300 billion by 2025. Of the multi-billion-dollar target, nearly 40% would be from exports. The document is part of the Ministry’s target for India to have a US$1 trillion digital economy.

The report explores ways to build large-scale manufacturing capabilities to occupy a substantial share in global electronics exports. It was created by the Indian Cellular Electronics Association (ICEA) in consultation with the industry. The electronics sector has the potential to become one of India’s top exports in the next 3-5 years along with several products for which export hubs could be created.

According to a news report, the MietY Minister has said that the industry needs to focus on expanding product categories to serve new markets and consumers. India has an “unprecedented opportunity” to grow electronics manufacturing to US$300 billion in the next 3-4 years, building on scale, competitiveness, a large market, and enabling policies. The geographical concentration of the electronics GVCs shows that most participants are in Asia, China and Vietnam are the most prominent. In 2020, China’s and Vietnam’s electronics exports were respectively 70 and 11 times that of India’s.

Attracting GVCs requires open trade and investment policies. Tariff and non-tariff barriers can deter the movement of component and sub-assembly manufacturers. Any constraint on investments will also be a barrier to attracting GVCs. Stability of policies, reducing delays in processes, and incentives, are key to attracting FDI and ensuring efficient operations. India’s policies should be WTO-consistent as the inconsistent ones can be challenged by competitors and create an uncertain investment environment.

The news report explained that the document is the first of a two-part series. The second volume will present product-wise strategies and forecasts as part of the campaign to build a US$1 trillion digital economy, in pursuit of reaching a US$5 trillion GDP. It recommends short-term (1-4 years) and long-term (5-10 years) strategies to increase electronics exports, shift the electronics manufacturing ecosystem investments, and expand exports by increasing competitiveness and scale.

The document critically analyses the impact of tariffs on inputs on India’s competitiveness and makes specific recommendations, given the goals set by the Prime Minister. It emphasises strategies to support local enterprises the need for linking their products with global players. It seeks to protect domestic firms from unfair trade practices while requesting policy support for finance and design development. As per the news report, it identifies key electronic products, namely mobile phones, IT hardware, and wearables that provide the highest potential for exports, in view of the massive global demand for these products.

The push for the ESDM sector is preceded by India emerging as the second-largest manufacturer of mobile handsets in the world in terms of volume, producing 300 million handsets (2020-21) as against 60 million handsets in 2014-15. Over 200 units are manufacturing cellular mobile phones and parts in the country, up from only two units in 2014. The production of mobile handsets has grown from IN 190 billion (US$2.5 billion) in 2014-15 to 2.2 trillion (US$29 billion) in 2020-21.


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