The Indian government is currently developing policies that support an electronic components manufacturing hub in the country. The intent is to develop a supply chain that encourages electronic exports.
“We are right now moving [forward] with policies for producing sub-assemblies…and component manufacturing in India,” said Ajay Prakash Sawhney, Secretary of the Ministry of Electronics and IT (MeiTY), who recently spoke at a Digital Governance Tech Summit.
Such assemblies include the printed circuit board (PCBs or the motherboard) sector, which is expected to grow substantially in the country. This is good news for the manufacture of mobile phones and other electronic devices. Smartphones are in strong demand and that industry has already been experiencing a resurgence of manufacturing facilities in India.
“From around six crore mobile phones that were being assembled in 2014-15, we finished the last financial year with an assembly of 29 crore mobile phones within the nation,” shared Sawhney. “Our entire consumption for the nation is about 33-34 crore a year.” He added that the government is working to support a local supply chain.
Despite a heavy reliance on imports, India’s domestic electronics division has recently experienced rapid growth. Advances in technology, such as 4G/LTE (long-term evaluation), 5G, and the Internet-of-Things (IoT) have created strong interest and demand for electronic goods in the country. It is predicted that the Consumer Electronics and Appliances business in India will become the fifth-largest in the world by 2025.
In support of ongoing growth and developments, the government is determined to improve India’s “Ease of Doing Business” rankings, which are based on the average of each country’s economy and business scores. For example, programs such as Make in India and Digital India have supported and promoted domestic manufacturing by encouraging local and international companies to invest and establish manufacturing facilities in India.
India also introduced the Phased Manufacturing Programme (PMP), which according to experts, supported the local industry transition from a simple phone-assembly market to one that now manufactures PCBs.
Additionally, the National Policy of Electronics 2019 (NPE 2019) recently replaced the policy book of 2012, setting out several initiatives and measures for the development of the Electronics System Design and Manufacturing (ESDM) sector. It’s expected to establish new regulatory standards and implement much-needed changes for a more conducive business environment. This includes promoting job creation and profession education in the areas of manufacturing to ensure India can properly support the ESDM sector.
The NPE 2019 is expected to encourage inland production and trading in the ESDM value-chain to manage economic advancement and an outcome of USD 400 billion by 2025. The policy is required to generate employment for 10 million by 2025. The administration proposes to improve the domestic mobile production to one billion units by 2025, calculated at USD 190 billion (roughly INR 13,000 billion). NPE also strives to increase exports to 60 percent of the domestic production (around 600 million pieces worth USD 110 billion or INR 7,000 billion) by 2025.
The NPE 2019, policy forecasts that the demand for electronics in India will grow significantly in the next few years. However, to succeed in foreign exchange outflow in the country, owing to the import of microelectronics, it’s essential to promote domestic ESDM manufacturing — and there is strong demand for it.
Here are a few examples of the recent demand of electronics in India.
- The production of LCD/LED TVs, mobile handsets, and LED goods in the nation increased substantially over the last couple of years. In 2014, India had the only a few of mobile-making units. By the end of 2017, the number of units reached 123, with foreign affiliates also entering the market. The demand for information and broadband facilities (including mobile phones) has produced massive growth in this industry, which is expected to continue and increase. The production of mobile telephones for FY 2018 was calculated at USD 20.4 billion (INR 1,320 billion).
- Consumer electronics that include home appliances — such as smart fridges, microwaves, washing machines, air conditioners — was calculated USD 11.3 billion (INR 735.2 billion) in FY 2018. Such demand related to the growing affordability of these devices, including better efficiency and performance.
- The production of industrial electronics such as Supervisory Control, UPS systems, and Programmable Logic Controller (PLC) and Data Acquisition (SCADA), exceeded USD 10.7 billion (INR 690 billion) in 2018. This is because of the rising stake in automotive and engineering electricals with regards to automation and robotics.
- Electronic component configuration (including capacitors, resistors, semiconductors, cathode ray tubes, picture-tubes, and x-ray tubes) provided USD 9 billion (INR 583.5 billion) in 2018 — thanks to the growth in end-user industries such as solar energy, automotive electronics, IT products, electronic tools for healthcare, LED, telecom, and consumer electronics.
- “Strategic” electronics, such as satellite-based communication, research and surveillance systems, under-water electronic operations, sonar, and infra-red ID systems, grew to USD 3.6 billion (INR 235.6 billion) in 2018. Cybersecurity, IT surveillance systems, and digital security systems are the principal drivers in this segment. There was also a government project dedicated to replacing old and obsolete defence hardware in exchange for digital electronics.
India’s goal is to establish a manufacturing hub, with a valued export supply chain, that improves the production of strategic electronics and job creation in the country.
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