“Electronics manufacturing alone can contribute USD 1 trillion to India’s economy by 2025,” said Ravi Shankar Prasad, the Minister of Communications, Electronics and Information Technology, at an event organized by ASSOCHAM. The manufacturing of electronic devices including mobile phones and components, laptops, tablets and TVs has the potential to contribute to one-fifth of Prime Minister Narendra Modi’s vision of USD 5 trillion economy by 2025, said the Minister.
The government aims to make India a top investment destination for electronics manufacturing in the world. It has set a target of producing 1 billion mobile phones, 50 million TVs and 50 million hardware devices such as laptops, tablets and others in the next five years.
Government’s Push to Promote Domestic Manufacturing
The Government of India has been pushing to boost manufacturing in the country over the past few years by encouraging companies through Make in India program. After the coronavirus pandemic that exposed India’s heavy dependence on imports, domestic manufacturing has once again come to the central stage in the country. The government has announced to make India self-reliant by promoting the domestic manufacturing industry.
In line with the vision of ‘Atmanirbhar Bharat,’ the government has announced several incentives for the manufacturing sector, including electronics manufacturing. This has allowed the electronics manufacturing industry to make significant progress over the past few months.
Having said that, now let us examine how India can become a global manufacturing destination for electronics, with electronics manufacturing contributing USD 1 trillion to India’s economy by 2025.
India is one of the largest electronics markets in the world in terms of consumption. The Indian electronics industry has come a long way from a USD 69.6 billion market in 2012 to USD 400 billion market in2020. Today, the number of mobile manufacturing units in the country is more than 200, which was just 2 in 2014. Currently, India is the second-largest smartphone manufacturer in the world. Xiaomi, Samsung, Apple, LG, Oppo, Vivo, Intex and LAVA are some of the major players in the Indian electronics industry.
PLI Scheme Boosting the Electronics Manufacturing
The government has recently announced the PLI scheme as a part of ‘Atmanirbhar Bharat’ initiatives to mobile phones and specified electronic components manufacturing in the country, providing incentives on the incremental sales over the next five years.
The PLI scheme has been highly successful in the mobile phones and specified electronic components manufacturing segment. It has attracted investments from both domestic and foreign companies such as Foxconn, Samsung, Rising Star, Wistron, Lava, Micromax, etc. These companies are expected to manufacture products of worth INR 10 lakh crore in the next five years. The government plans to extend the PLI scheme to the manufacturing of laptops and tablets in the country.
Apart from the PLI scheme, there are two other schemes for electronics manufacturing in the country. First one is the Scheme for Promotion of Manufacturing of Components and Semiconductors directed at the domestic electronics supply chain of components. Second one is the Electronics Manufacturing Cluster Scheme (EMC 2.0) directed at the infrastructure and common facilities. The government also allows 100% FDI into the electronics systems under the automatic route.
After the Covid-19 outbreak, a large number of companies are looking for an alternative to China. India is seen as a reliable alternative to China to shift their manufacturing bases by many companies in the world. So, India must improve its industrial infrastructure and capabilities to establish itself as the next global manufacturing hub. Only then can electronics manufacturing contribute USD 1 trillion to India’s economy by 2025.
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