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Materials
The Indian government has taken a significant step towards enhancing its electronic component manufacturing sector by approving a ₹23,000 crore scheme aimed at bolstering the nation's electronics supply chain over the next six years. This ambitious initiative is designed to attract substantial investments, create new job opportunities, and further integrate the country's manufacturing capabilities into global value chains.
The electronics manufacturing sector in India has witnessed remarkable growth over the past decade, expanding five-fold to reach ₹10 lakh crore. This growth has created employment opportunities for about 25 lakh people, and exports have surged six-fold to ₹2.5 lakh crore. The government now aims to build on this momentum by focusing on the production of critical electronic components, including passive components, sub-assemblies, and capital goods.
The ₹23,000 crore scheme targets a range of electronic components, including:
This initiative will operate with a tiered incentive structure, offering support based on employment creation, capital expenditure, and turnover. Companies that meet specific employment or investment thresholds will be eligible for these incentives, helping to overcome specific challenges faced by component manufacturers.
Despite its growth, India's electronics sector faces significant challenges, particularly in the production of critical components. The country relies heavily on imports to meet its needs, with electronics imports being one of its largest expenditures after oil. To address this issue, the government aims to increase domestic value addition, targeting sectors where imports currently dominate.
The Electronic Industries Association of India (Elcina) highlights a substantial deficit in the production of non-semiconductor components, which was valued at around USD 13 billion in 2022. This deficit is projected to grow unless significant investments are made in domestic manufacturing. The government's support is crucial in bridging this gap, potentially reducing the deficit by USD 146 billion by 2030.
The approach to enhance domestic electronics manufacturing aligns with global market trends. As companies worldwide adopt a "China Plus One" strategy, seeking alternative manufacturing bases, India positions itself as an attractive destination. The integration into global value chains allows Indian companies to become major suppliers of electronic components, driving both local economic growth and global competitiveness.
This initiative will support various sectors, including:
India's ₹23,000 crore electronics manufacturing plan is a significant step towards building a robust domestic electronics supply chain, aligning with the government's broader vision for economic development and industrial growth. By investing in key components and promoting integrated manufacturing, India aims to not only reduce dependence on imports but also emerge as a pivotal player in the global electronics landscape.
As India continues to grow its electronics sector, this scheme will play a crucial role in fostering innovation, creating new opportunities for domestic businesses, and enhancing the country's position in global electronics production. The integration with global value chains will also accelerate India's transition towards becoming a major electronics manufacturing hub, capable of meeting both domestic and international demand.
The economic impact of this initiative will be multifaceted:
In conclusion, this ambitious scheme embodies India's commitment to advancing its electronics manufacturing capabilities, aligning with broader national goals of economic self-sufficiency and global competitiveness.
