India’s aspiration to become the third-largest global economy requires a significant leap in its technology-driven sectors. According to a NITI Aayog report released on Thursday, the nation aims to achieve a $500 billion target in electronics manufacturing by FY 2030, potentially creating up to 6 million jobs.
The ambitious target includes $350 billion from finished goods manufacturing and $150 billion from components manufacturing. This growth is projected to generate employment for an estimated 5.5 to 6 million people, significantly boosting job opportunities across the country. Additionally, electronics exports are expected to reach $240 billion, with domestic value addition increasing to more than 35%.
Emphasis Electronics Manufacturing Sector on Established Segments and Emerging Areas
The NITI Aayog strategy underscores the importance of scaling up production in established segments like mobile phones while also establishing a strong presence in component manufacturing. Moreover, there is a strong focus on diversifying into emerging areas such as wearables, IoT devices, and automotive electronics. This strategic diversification aims to capitalize on evolving consumer demands and technological advancements, positioning India as a leader in innovative electronic products on the global stage.
The report recommends strategic interventions across fiscal, financial, regulatory, and infrastructure domains to support this ambitious growth trajectory. These interventions include promoting components and capital goods manufacturing, incentivizing R&D and design, tariff rationalization, skilling initiatives, facilitating technology transfers, and infrastructure development to foster a robust electronics manufacturing ecosystem in India.
Strengthening India’s Role in Global Value Chains
The report, titled “Electronics: Powering India’s Participation in Global Value Chains,” extensively analyzes India’s electronics sector, highlighting its potential and challenges. It outlines specific interventions needed for India to emerge as a global manufacturing hub for electronics.
Global Value Chains (GVCs) play a crucial role in modern manufacturing, involving international collaboration across design, production, marketing, and distribution. GVCs represent 70% of international trade, underscoring India’s urgent need to enhance its participation, particularly in electronics, semiconductors, automobiles, chemicals, and pharmaceuticals. Electronics is especially pivotal, with 75% of its exports originating from GVCs.
India’s electronics sector has experienced rapid growth, reaching $155 billion in FY23. Production nearly doubled from $48 billion in FY17 to $101 billion in FY23, driven primarily by mobile phones, which now constitute 43% of total electronics production. India has significantly reduced its reliance on smartphone imports, now manufacturing 99% domestically.
Initiatives like Make in India and Digital India, coupled with improved infrastructure and ease of doing business, supported by various incentives, have stimulated domestic manufacturing and attracted foreign investments. Despite these strides, India’s electronics market remains relatively moderate, accounting for only 4% of the global market, primarily focused on assembly with limited capabilities in design and component manufacturing.
The global electronics market, valued at $4.3 trillion, is dominated by countries like China, Taiwan, the USA, South Korea, Vietnam, and Malaysia. India currently exports approximately $25 billion annually, representing less than 1% of the global share despite a 4% share in global demand. To enhance competitiveness, India needs to localize high-tech components, strengthen design capabilities through R&D investments, and forge strategic partnerships with global technology leaders.
The current value of electronics manufacturing stands impressively at $101 billion as of FY23, comprising $86 billion in finished goods production and $15 billion in components manufacturing. During the same period, exports totaled around $25 billion, reflecting India’s increasing role in the global electronics market. The sector has also contributed to domestic value addition, ranging between 15% to 18%, and has generated approximately 1.3 million jobs.
In a Business As Usual (BAU) scenario, projections indicate that India’s electronics manufacturing could escalate to $278 billion by FY30. This forecast includes $253 billion from finished goods and $25 billion from components manufacturing. Employment generation is expected to grow substantially to around 3.4 million, with exports reaching $111 billion.
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