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Making India Self Reliant In Electronics Manufacturing
The motto of a self-reliant India is only possible if there is large-scale adoption of manufacturing in various sectors of the country.
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India’s economy is witnessing a long-waited digital revolution with about the second-highest number of smartphone users in the world and highest data consumption as various apps and services are going digital across the sectors in India. But to sustain this historical revolution and make it meaningful, India needs a comprehensive approach and become, ‘Atmanirbhar’ in electronics manufacturing also because we can’t afford to spend billions of dollars on imports of electronic products. For a player from electronics manufacturing, who lead companies like Flex, Wistron in India, and have seen the manufacturing of early feature phones to the most advanced smartphones, it’s heartening to see our government making the right moves. Under the vision of our Honorable Prime Minister Narendra Modi with a focus on ‘‘Atmanirbhar Bharat’, the National Policy on Electronics positioning India as a global hub for Electronics System Design and Manufacturing followed by production linked incentive (PLI) schemes will prove a boon for India’s long term play in the global market.
Meeting The Target
The motto of a self-reliant India is only possible if there is a large-scale adoption of manufacturing in various sectors of the country. To achieve that, the Make in India initiative has enabled industries to facilitate investment, foster innovation, enhance skill development, protect intellectual property and build state-of-the-art manufacturing infrastructure in the country. Also to supplement, India’s human capital advantage of availability and productivity provides a crucial edge. In my experience and the perception of my global peers, the productivity of workers in India is second to none and truly gives us a unique lead.
Given the sheer size and scale of the Indian market, it is expected to have a robust future for manufacturing in the country, especially in the electronics segment. Just to give a perspective, India is expected to have a digital economy of $1 trillion by 2025 and in the last few years, we have emerged as one of the leading markets of electronic products around the globe. The export of electronic goods grew at 100 per cent YoY in Q1Y21 contributing to the highest share. In the coming five years, the Indian EMS (Electronics Manufacturing Services) market is likely to reach $152 billion. To exploit this opportunity, the PLI scheme for large-scale electronics manufacturing, with an outlay of Rs 40,951 crore likely to generate huge benefits. This will not only be a trailblazer for Atmanirbhar Bharat but can also give huge impetus to employment generation.
The Right Vectors
Despite a rough start amidst the Covid-19 pandemic, this initiative has proved to be a great success. Global giants, as well as domestic competitors, have pledged to lead a cumulative production of more than Rs 10.5 lac crore over a period of the next five years. Besides the rise of MNCs, even the Indian EMS industry has undergone a considerable change in the last year due to the geopolitical situation post the pandemic.
India now has more than six large MNC EMS companies in India and about 15 large Indian EMS companies and over 50 MSMEs that are catering to global markets out of India. Under this scheme, we at Optiemus electronics also see a huge opportunity and recently announced a partnership with global major Wistron to manufacture electronics and strengthen the related ecosystem in the country.
Today, India has already emerged as the second-largest mobile manufacturer in the world and currently, the EMS sector has about 100 captive electronic manufacturing units in India. Apart from the PLI schemes, other initiatives like SPECS, EMC 2.0 will be the key enablers to boost the production of indigenous electronics components, semiconductors and can create a world-class ecosystem.
Tapping the Potential
Keeping aside all these measures, India still has a lot to catch up to as well. While our neighbouring country remains the leading hub for the world’s manufacturing, despite facing multiple trade issues with several nations across the globe. India is all geared up, but if our economy aims to become an epicentre for electronics manufacturing, it will require a lift and shift from existing centres and therefore, the incentives should be in a range that can lure industries to set up their base in India. Despite the convincing financial incentives, India suffers from complications around land acquisition, non-availability of a local component ecosystem, and lack of a strong local supply chain, cost of power supply, connectivity to ports and airports etc.
With the PLI scheme, the government has set the ball rolling, but India also needs to look at removing the shortcomings, so that the country can become a competitive destination for global electronics manufacturing and lead the next decade by creating value for global players and the Indian economy.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.