Electronics Manufacturing Industry is one of the largest & fastest growing industries in the world with a size of USD 1.75 Trillion and is expected to reach USD 2.4 trillion by 2020. The demand in the Indian Electronics Market alone is expected to reach USD 400 billion by 2020. With the present growth rate, India can manufacture goods required worth USD 100 billion only. To address the gap of supply & demand, Government of India has set a vision to transform India into a global hub for ESDM sector to cater both domestic and global demand.
Policy support: 100 per cent FDI allowed in the electronics hardware manufacturing sector under the automatic route; Initiatives like Modified Special Incentive Package Scheme (M-SIPS) will provide a capex subsidy of 20 – 25 per cent; As per Make in India Initiative, Electronic Development Fund Policy has been approved to rationalise an inverted duty structure; Focus on local manufacturing and design LED growth of the ESDM sector, the IESA provided a budgetary support of USD110 million through schemes.
Higher Investments: Sector has attracted strong investments in the form of M&As and other FDI inflows; Companies are set to augment investments in production, distribution and R&D in the next few years; Government has received investment proposals for USD17.5 million for which they intend to provide incentives under M-SIPS scheme. Applications received before July, 2020 will be considered.
The Indian electronics sector is split into six product segments
Electronics Manufacturing Industry is one of the largest & fastest growing industries in the world with a size of USD 1.75 Trillion and is expected to reach USD 2.4 trillion by 2020. The demand in the Indian Electronics Market alone is expected to reach USD 400 billion by 2020. With the present growth rate, India can manufacture goods required worth USD 100 billion only. To address the gap of supply & demand, Government of India has set a vision to transform India into a global hub for ESDM sector to cater both domestic and global demand.
Higher Investments: Sector has attracted strong investments in the form of M&As and other FDI inflows; Companies are set to augment investments in production, distribution and R&D in the next few years; Government has received investment proposals for USD17.5 million for which they intend to provide incentives under M-SIPS scheme. Applications received before July, 2020 will be considered.
Policy support: 100 per cent FDI allowed in the electronics hardware manufacturing sector under the automatic route; Initiatives like Modified Special Incentive Package Scheme (M-SIPS) will provide a capex subsidy of 20 – 25 per cent; As per Make in India Initiative, Electronic Development Fund Policy has been approved to rationalise an inverted duty structure; Focus on local manufacturing and design LED growth of the ESDM sector, the IESA provided a budgetary support of USD110 million through schemes.
Consumer electronics have the highest share in production
Policies for promotion of electronics manufacturing have been formulated with a long term vision but their implementation has lacked the same tenacity and a long term sustained approach for promoting high value added manufacturing. A suitable policy must support large investments in manufacturing facilities for raw materials, parts, components and PCBA/EMS for electronics. This is the segment of the ESDM value chain where there is concentration of technology and requires R&D, IP creation and continuous and consistent investments if we want to create a resilient value chain in the country. This is the only way to reduce our dependence on imports and also reduce the insecurity and uncertainty which accompanies it.
Large Foreign or Domestic investments in electronic component manufacturing will happen only if India offers a cost advantage in component manufacturing. It is argued that low value added manufacturing would result in investments in component manufacturing due to demand pull. However, even low value added manufacturing will sustain if duty benefits are allowed to continue over time with increasing value addition under a PMP program.
A strong component manufacturing base in the country is a pre-requisite for a self-reliant ESDM sector in the country. In the recent past, the focus of policy makers is on manufacturing of electronics products irrespective of the degree of value addition. Majority of inputs such as parts, Sub-Parts, Components are allowed for import at zero or minimal duty. This policy has encouraged low value added manufacturing/assembling but simultaneously has stymied the growth of the existing component manufacturing base and FDI in the sector.
Electronics Manufacturing Industry is one of the largest & fastest growing industries in the world with a size of USD 1.75 Trillion and is expected to reach USD 2.4 trillion by 2020. The demand in the Indian Electronics Market alone is expected to reach USD 400 billion by 2020. With the present growth rate, India can manufacture goods required worth USD 100 billion only. To address the gap of supply & demand, Government of India has set a vision to transform India into a global hub for ESDM sector to cater both domestic and global demand.
