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Indian Electronics Sector to Double Its Contribution to GDP

The electronics sector in India is expected to nearly double its contribution to the gross domestic product (GDP) as the government has been increasing its focus on the domestic manufacturing of electronics components, according to a recent news report. The Indian electronics market is considered one of the largest in the world and is expected to hit US$400 billion by 2025.

Industry experts estimate that with series of government interventions like the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) and the Production Linked Incentive (PLI) scheme, India is set to become the global hub for electronic products. Further, with an economy of this size, the country needs to have its own component manufacturing and echo system. Currently, the sector today contributes 3.4% to GDP and is expected to contribute 6.4% in the next few years, a representative from the India Electronics and Semiconductor Association (IESA) explained.

IESA is the key industry body representing the electronics systems design and manufacturing (ESDM) and intelligent electronics industry in India. Through its deep connection with its member companies, IESA aims to grow the ESDM and electronics business segment in the country while making it the preferred destination for electronics and semiconductor design and manufacturing. Over the last few years, the government has come out with a number of policies towards subsidising and incentivising the manufacture of critical electronics. Currently, the electronics import bill for India is the second-highest after petroleum and petroleum products.

The government has released a number of policies towards significantly increasing India’s domestic electronics manufacturing and is continually improving on these policies. These policies include the National Policy on Electronics (NPE), which aims to make India a global ESDM hub, and PLI and SPECS, which incentivise the domestic manufacturing of electronics. The ESDM sector is a crucial part of the government’s goal of generating US$1 trillion of economic value from the digital economy by 2025. Smartphone shipments in India reached 150 million units and 5G smartphone shipments crossed four million in 2020.

As per data available from Invest India, the agency responsible for investment promotion in India, electronic component production has risen by as much as US$4 billion from 2014 to 2018. While the global market for electronic components is expected to reach US$191.8 billion by 2022, India’s share in global electronics manufacturing has grown from 1.3% in 2012 to 3.6% in 2019. Growth in the Indian electronic components market is driven by the rising domestic demand and a growing electronics ecosystem coupled with government flagship initiatives like ‘Make in India’ and ‘Digital India’. This has resulted in the Indian Electronic Components Market increasing from US$11 billion in the financial year 2009-10 to US$20.8 billion in the financial year 2018-19, showing an annual growth rate of around 7%. The government aims for the country to be among the top three countries in the ESDM consumption and the top five countries in electronics production.

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