India's Ambitions in the Global Electronics Market

Understanding Global Value Chains in Electronics

Global Value Chains (GVCs) in the electronics sector represent a network of production processes distributed across various countries. These chains encompass stages such as design, manufacturing, marketing, and distribution of electronic goods. This approach optimizes efficiency and cost, with GVCs being crucial in the electronics industry, accounting for a significant 75% of global electronics exports.

India's Position in the Global Electronics Market

India is steadily carving out a space in the global electronics sector, though its current market share remains modest. As of FY23, the Indian electronics industry was valued at USD 155 billion, contributing roughly 4% to the global market. Despite a small share, the industry's growth is notable, with production nearly doubling from USD 48 billion in FY17 to USD 101 billion in FY23. However, India's export share remains under 1%, indicating substantial potential for expansion in international markets.

Key Policies Fueling India's Electronics Growth

The growth of India's electronics sector is driven by several strategic policies and initiatives:

• Make in India: Launched in 2014, this initiative aims to establish India as a global manufacturing hub, including electronics.
• Digital India: Focuses on enhancing digital literacy and infrastructure, indirectly boosting electronics demand.
• Production Linked Incentive (PLI) Scheme: Introduced in 2020, offering incentives for manufacturers in segments like mobile phones and semiconductors.
• Modified Special Incentive Package Scheme (M-SIPS): Provides capital subsidies for investments in electronics manufacturing.
• Electronics Manufacturing Clusters (EMC) Scheme: Supports creating world-class infrastructure for electronics manufacturing.
• Phased Manufacturing Programme (PMP): Promotes domestic manufacturing of mobile components and sub-assemblies.
• National Policy on Electronics (NPE) 2019: Aims to position India as a global hub for Electronics System Design and Manufacturing (ESDM).
• Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS): Offers financial incentives for component manufacturing.
• Design Linked Incentive (DLI) Scheme: Encourages the growth of domestic semiconductor design companies.

India's Electronics Sector Goals for FY30

By FY30, India aims to reach ambitious targets:

• Achieve a total electronics manufacturing value of USD 500 billion
• Target exports worth USD 240 billion
• Increase domestic value addition to over 35%
• Create 5.5-6 million new jobs

Enhancing India's Integration into Global Electronics Value Chains

To enhance its role in global electronics value chains, India can focus on:

• Localizing high-tech component production to reduce import dependency
• Strengthening design capabilities through enhanced R&D investments
• Forming strategic partnerships with global technology leaders
• Diversifying into emerging sectors like wearables, IoT devices, and automotive electronics
• Implementing supportive policies to attract foreign investments and technology transfers
• Developing a skilled workforce through targeted training programs

Recommended Strategic Interventions

Strategic interventions to achieve India's goals include:

• Providing fiscal incentives for component and capital goods manufacturing
• Implementing regulatory reforms to ease business operations
• Developing world-class electronics manufacturing clusters
• Incentivizing R&D and design activities
• Launching skill development initiatives for the electronics workforce
• Facilitating technology transfer through partnerships with global leaders
• Adjusting import duties to support domestic manufacturing while ensuring competitiveness

Impact of Electronics Sector Growth on India's Economy

The expansion of India's electronics sector holds significant implications for the broader economy:

• Job creation: Expected to generate millions of new jobs, both directly and indirectly
• Economic growth: Increased production and exports will significantly enhance GDP growth
• Technological advancement: Growth can spur innovation across industries
• Reduced import dependence: Stronger domestic manufacturing can improve the trade balance
• Global competitiveness: A robust electronics sector can elevate India's stature in global trade

By leveraging these strategies and policies, India aims to transform its electronics sector into a critical driver of economic growth and establish itself as a formidable player in global electronics value chains.