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Electronics Manufacturing in India Could Reach $300 Billion by 2026

Image credit: Electronics_GoI; Twitter

The Ministry of Electronics and Information Technology and the India Cellular and Electronics Association (ICEA) recently released a five-year roadmap and vision document for the Indian electronics sector. The document, titled “$300 bn Sustainable Electronics Manufacturing & Exports by 2026”, is the second volume of a two-part report, the first of which, “Increasing India’s Electronics Exports and Share in GVCs”, was released in November 2021.

This second volume provides year-wise break-up and production projections for several products that are expected to lead India’s transformation into a US$ 300 billion electronics manufacturing powerhouse, from the current US$ 75 billion. Key products that may drive growth in the sector include mobile phones, IT hardware, consumer electronics, industrial electronics, auto electronics, electronic components, LED lighting, strategic electronics, PCBA, wearables, and telecom equipment. Mobile manufacturing, which could cross US$100 billion annual productions (up from the current US$30 billion), is expected to constitute nearly 40% of the growth.

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

Image credit: Press Information Bureau

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

The Minister explained that the second phase of the mission aims to reach new markets and customers and become a player in the global value chain (GVC). According to him, the goals and detailed strategy is the result of hours of deep engagement between government and industry. The numbers in the document confirm that there is a real opportunity in the electronics sector, driven by the growth of digital consumption and the growth and diversification of GVCs.

As per a press release, the five-part strategy to reach the US$300 billion target, based on an “all of the government” approach, particularly focuses on strengthening electronics manufacturing in India. This will be achieved by building competitiveness and scale by attracting global electronics manufacturers/brands; shifting and developing sub-assemblies and the component ecosystem; building a design ecosystem; nurturing Indian entrepreneurs; and gradually reducing cost disabilities.

The multi-billion target comes on the back of the government’s US$10 billion Production Linked Incentive (PLI) scheme to boost the semiconductor and display ecosystem. The government has committed nearly US$17 billion over the next six years across four PLI schemes: semiconductor and design, smartphones, IT hardware, and components. The vision document emphasises the importance that key role Indian champions will play in addition to global companies, both of whom are already part of the PLI schemes. The report seeks a competitive tariff structure on electronic components and the removal of all regulatory uncertainty. It 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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