The NITI Aayog has outlined a strategy to catapult India’s electronics industry to unprecedented heights, envisioning a five-fold growth from $101 billion in FY23 to a staggering $500 billion by 2030. This ambitious plan hinges on a combination of fiscal and non-fiscal support coupled with a conducive business environment, all aimed at propelling the sector towards a $350 billion finished goods production target and another $150 billion in component manufacturing. The think tank believes that this level of growth could generate an estimated 5.5 to 6 million jobs, significantly boosting job opportunities across the country.
The NITI Aayog’s blueprint projects a surge in electronics exports to reach $240 billion, alongside a substantial increase in domestic value addition to over 35%. To realize this vision, the report advocates for fiscal incentives, including operational expenditure support for scaling up the production of less complex components, capital expenditure support for setting up production units of complex components, and a hybrid approach of both capital and operational expenditure support for highly complex components currently not manufactured in India.
A key bottleneck identified by the think tank is the high import tariffs on electronics components, which can reach up to 20% and are seen as a significant hindrance to India’s ability to scale up electronics exports and compete globally. India’s import tariffs are currently higher than those of China, Malaysia, and Mexico, placing Indian electronics exports at a cost disadvantage, according to NITI Aayog.
S. Krishnan, Secretary of the Ministry of Electronics and Information Technology, acknowledged the recommendations, stating that they will be taken up with other government arms. He emphasized the need to double the value addition in the electronics sector, currently at 18-20%, and highlighted the crucial role of component production in achieving this goal. Krishnan also stressed the importance of boosting domestic production of electronic goods, enabling the availability of quality products for Indian consumers at affordable prices.
The $4.3 trillion global electronics market is currently dominated by China, Taiwan, the US, South Korea, Vietnam, and Malaysia. India’s annual exports stand at $25 billion, accounting for less than 1% of the global share, despite having a 4% share in global demand. NITI Aayog emphasizes the need for India to localize high-tech components, strengthen design capabilities through R&D investments, and forge strategic partnerships with global technology leaders to enhance its competitiveness.
Pankaj Mohindroo, Chairman of the India Cellular & Electronics Association (ICEA), underscores the importance of India integrating into the global value chain to build a large-scale and globally competitive electronics manufacturing industry. He asserts that the true growth potential lies in the global market, with global value chains driving large-scale job creation and fostering technological advancements within the domestic industry.
The NITI Aayog report further recommends fiscal incentives for product designing and for scaling up industrial infrastructure for electronics production.
