Electronics manufacturing is one of the largest and fastest growing industries in the world and demand for electronics manufacturing has rapidly gone up along with the increased pace of digitalization over the last few years. The sector is also heavily prioritised in global value chains, with extensive and deep linkages across key manufacturing nodes in the world.
India’s electrical machinery and equipment sector has expanded over the years and between 2012 and 2021, its exports increased from US$ 10.76 billion to US$ 18.84 billion. The domestic electronics sector in India received an impetus in 2014, with the announcement of the Make in India campaign which aimed to catalyse and transform India’s manufacturing economy into a global hub.
Electronics has been a major area of emphasis and the sector has received focussed attention over the years, with the Government announcing several policy measures to promote and expand the sector. Taking cognizance of the sector’s potential, opportunities and challenges, the Government of India notified the National Electronics Policy (NEP) in 2012, which provided a roadmap for the development of the domestic electronics sector. The NEP was approved in 2019, and envisioned positioning India as a global hub for Electronics System Design and Manufacturing (ESDM) by driving capabilities in the country for developing core components and creating an enabling environment for the industry to become globally competitive.
These included large scale electronics manufacturing, Scheme for Promotion of Electronic Components and Semiconductors (SPECS), the Modified Electronics Manufacturing Clusters Scheme notified in 2020 and the Production Linked Incentive (PLI) scheme for IT hardware, notified in March 2021. These schemes gave a strategic heft to India’s domestic electronics sector with the objectives of increasing the scale of manufacturing as well as enhancing the global quality and efficiency of electronic products. The schemes also aim to attract global companies to set up manufacturing in India, which in turn will help India’s further integration into Global Value Chains (GVCs).
A key challenge facing the Indian electronics sector has been the high dependence on imports for components and parts. The electronics industry continues to be one of the largest contributors to India’s merchandise imports and the gap between the country’s electronics demand and its domestic production capabilities has been widening over the years (Francis, 2018). It is estimated that India’s imports of electronic goods increased from US$ 0.9 billion in 1993-94 to US$ 51.5 billion in 2017-18, recording an annual growth rate of over 15% (Gupta et al., 2021). It is therefore important to put in place enabling policies and interventions that reduce India’s dependence on Asian economies, especially China.
At the same time, it is also important for India to learn from other countries’ experience, such as Vietnam and China, which have been able to increase their domestic manufacturing as well as achieve global scale over time through macro, trade and industrial policies.
Given that the world economic environment and the global geopolitical landscape have undergone massive transformation over the last few years, the current setting also provides a number of challenges as well as opportunities for the Indian electronics industry. Thus, it is crucial for the country to diversify its exports basket and also look for alternative suppliers instead of relying on limited sources for inputs. It is also an opportune time for India to take advantage of the rising demand for electronics goods and cater to the huge domestic as well as international market.
Given this backdrop, CII has brought out the report “Enhancing Competitiveness of India’s Electronics Exports”, which undertakes the following studies:
• Current domestic and global trends in the Indian electronics sector, specifically the broad HS 2-digit level category of electrical machinery and equipment (HS 85)
• Competitiveness of the sector’s products at the HS 6-digit level
• Identification of high-potential electronics exports that have the ability to achieve global scale through a Revealed Comparative Advantage (RCA) analysis
• Outlining the top export destinations and markets for these products
• Recommendations which have the potential to enhance the competitiveness of the industry as well as the identified products
Download the report “Enhancing Competitiveness of India’s Electronics Exports”.