Electronic Production in India

• 31 Aug 2022

Why in News?

Recently, the Minister of State for Electronics & Information Technology launched a report titled ‘Globalise to Localise: Exporting at Scale and Deepening the Ecosystem are Vital to Higher Domestic Value Addition’.

• Further, the government is focused on achieving the target of USD 300 billion in electronic production by 2026.

What are the Key Highlights of the Report?

• About:
  • The report was prepared by the India Council for Research on International Economic Relations (ICRIER), in collaboration with the India Cellular and Electronics Association (ICEA) explores how India can achieve an electronics production target of USD 300 billion and exports of USD 120 by 2025-26.
    • It examines the empirical relationship between exports and the share of domestic value addition in successful exporting nations.
    • It emphasizes strengthening the domestic manufacturing ecosystem to make India more resilient to supply chain disruptions and the aim is to emerge as a reliable and trusted partner in Global value chains.
• Present Status:
  • India’s electronics exports crossed USD 16 billion in Financial Year 2021-22.
    • Electronics as a sector has jumped to the 6^th largest export from India in 2022.
      • Mobile phones constitute the single largest component of electronics exports from India.
      • They are expected to contribute nearly 50% of the total electronics exports by next year.
• Issue:
  • Shift in Global value Chain:
    • Post Covid-19 world is undergoing deep tectonic irreversible changes in the value chains of electronics.
      • As major manufacturing firms are venturing out of China due to uncertain Chinese government policies and US-China rivalry.
• Opportunities:
  • India should grab the opportunity of shifting supply chains out of China and export aggressively to reach the scale in electronics manufacturing.
    • Rising exports will create a network effect of creating the supply chain interests, and supply chain investments that in turn will increase the value added in the Indian electronics segment.
• Recommendations:
  • Adopt Policies of Other Countries:
    • The study finds that China and Vietnam have adopted the mantra of ‘first globalize, then localize’, which means in the initial years they were determined to achieve global scale in exports, and then shifted their emphasis to greater use of local contents.
    • The report, therefore, recommends a sequential approach that can put India’s exports in the same trajectory as China and Vietnam.
  • Indian Policy Measures:
    • It suggests several steps and policies needed for deepening the broader electronics ecosystem within India.
      • Additionally, policies such as Gati Shakti, and Production Linked Incentives (PLI) will also help increase India’s competitiveness.
  • Competitive Domestic Ecosystem:
    • It points to an urgent need for India to create a competitive domestic ecosystem of ancillary suppliers through technology upgradation programmes, holding sourcing fairs and introducing supporting industry development programmes.

What are the Other Related Schemes for Manufacturing?

• Related Initiatives:
  • Scheme for Promotion of Manufacturing of Electronic. Components and Semiconductors (SPECS).
  • Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme.
  • Design Linked Incentive (DLI) Scheme.

What is India Council for Research on International Economic Relations ICRIER?

• About:
  • It is an autonomous economic policy think tank, in operation since 1981.
• Goal:
  • To help Indian policymakers make informed decisions, facilitated through rigorous analytical research, objective policy advice and extensive networking events.

What is India Cellular and Electronics Association ICEA?

• About:
  • It is the apex industry body for the mobile and electronics industry comprising manufacturers, brand owners, technology providers, VAS application & solution providers, distributors, and retail chains of mobile handsets and electronics.
• Vision:
  • It is committed to carrying forward its vision of building Indian manufacturing and design in verticals other than mobile handsets while consolidating the gains made in the mobile handset and components industry.
  • ICEA is entirely devoted to improving the competitiveness and growth of the industry by closely working with the Government's ministries to create a robust, legal, and ethical electronics industry, thereby creating an innovative market environment in the country.

Source: PIB