India has an unprecedented opportunity to grow electronics manufacturing, on scale, competitiveness and large market, to USD 300 billion in the next three to four years, says Minister of State for Electronics and IT Rajeev Chandrasekhar.
Highlighting that the world is seeking more trusted sources for electronics manufacturing post the outbreak of COVID-19, he said India has all the essential elements in place to seize the opportunity. India has the ability to leverage its strengths in electronics design, systems design and software design along with manufacturing, to gain global market share. The opportunity is very much real for India.
Chandrasekhar released a vision document on ‘Increasing India’s Electronics Exports and Share in Global Value Chain’. It outlines the sheer scale of opportunity along with challenges, and suggests a policy prescription for India to grow from current about USD 75 billion in 2020-21 to USD 300 billion by 2025. The document states that the electronics sector has the potential to become one of the top exports of India in the next three to five years, together with a number of products for which important export hubs could be created in the country.
“The geographical concentration of the electronics Global Value Chain (GVCs) shows that most participants are in Asia. China and Vietnam are the most prominent amongst these,” it said. The document stated that attracting GVCs requires open trade and investment policies. “Tariff and non-tariff barriers can deter the movement of component and sub-assembly manufacturers, it cautioned. Any constraint on investments will also be a barrier to attracting GVCs. Stability of policies, reducing delays in processes, and incentives, are key to attracting FDI and ensuring efficient operations.”
The minister pointed out that the IT Ministry is committed to providing full support to the industry by way of Production Linked Incentive (PLI) schemes, logistics efficiencies and enabling policy to help the industry in achieving the targets.
“To be faced with once in a lifetime opportunity where global value chains for electronics are diversifying and looking for alternate trusted suppliers and sources of products; for India this is an unprecedented opportunity,” Chandrasekhar said.
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Moreover, the report bats for ‘co-location’ for rapid increase in scale and skill development, seeks lowering of inputs tariffs and reduction of policy-related operational burden and delays. “Stability and credibility of a policy regime requires that the announced policy be effectively implemented. This requires a monitoring mechanism that does not itself become burdensome, together with emphasis on addressing the shortcomings in policy implementation,” it said.
The report acknowledged the role of domestic firms in sustaining and expanding the ecosystem, even as global firms offer foundation and momentum for India’s exports and GVCs in electronics.