- Around 40-50 percent of the bill of materials in mobile phones assembled in the country is imported largely from China.
- With the help of latest technology and with the economies of scale, the Chinese firms have the ability to scale-up India’s domestic supply chain.
The geopolitical scuffles coupled with the pandemic have threatened international financial security. With the escalating tensions in the border, the union government flipped its policy governing Foreign Direct Investment (FDI) in an effort to reduce dependence on Chinese electronics firms. Initially, the policy tweaking did not help in speedy localization because the value addition in mobile products was just 12-20 percent in the first three years of PLI scheme. On the other hand, around 95 percent of laptops were also imported, mostly from China. Questions then surfaced all over the media that whether India will be able to set-up a robust domestic electronics supply chain or not.
The experts feel that boosting domestic electronics companies will take time. With the help of latest technology and with the economies of scale, the Chinese firms have the ability to scale-up India’s domestic supply chain. For instance, around 40-50 percent of the bill of materials in mobile phones assembled in the country is imported largely from China. Analyzing the situation, the Modi government has already begun discussing with stakeholders for an all new PLI scheme targeting electronic components.
Amidst this international global economic threat, the nation's Electronics System Design and Manufacturing (ESDM) ecosystem has turned out to be a strategic and high-growth sector. The mobile phone sector has alone seen a rapid growth in production from 60 million to 310 million units towards the end of 2022. The nation’s competitive remuneration package, proficient workforce, and a favorable geopolitical environment has magnetized manufacturing investments from numerous countries. India now needs to abide by a multi-faceted approach, which include resource security measures, conclusive policy making, IP protection measures, and strategic collaborations.
All these strategic and geographical advantages are helping foriegn electronic firms to choose India as the next manufacturing hub. According to an exclusive report by PWC India, the strategic collaboration between India and other countries can facilitate the relocation of sub-component value chains to India, enabling local firms to develop niche advantages and achieve greater self-reliance in the production of electronics by consolidating value chains and leveraging the four most critical levers of the production system – technology, talent, trunk infrastructure and trade.
During the ongoing session, the speakers also highlighted that in an effort to grow the electronics supply chain sector, India must protect its crucial mineral resources and it needs to completely focus on leveraging ample reserves of some minerals in a way to access the resources the nation lacks. There are certain regions, where India faces immense challenges in having certain minerals, which forces it to depend on other countries. In this regard, India needs to depend on friendly countries with extremely low political risks.
In this regard, let’s find out what the industry experts and the government officials highlighted the key strategies of growing India’s electronics supply chain ecosystem:
Sanjay Agarwal, managing director, Globe Capacitors
India’s electronics industry is growing at a large scale, and we will definitely reach the target of $300 billions of total production by 2026. But in order to meet the same, we have to ensure that the country is equipped with resilient supply chain infrastructure by which we will be able to respond quickly to operational disruptions via flexible contingency planning and infrastructure. Our export ratios are also growing, and more strategies are required to grow it on a large-scale. For instance, mobile phone exports have reached more than Rs 1 Lakh Crore and are expected to cross Rs 1.2 trillion in the coming years. Now, we have to ensure that we have a robust component manufacturing ecosystem in the country and set the target to export them in other countries.
Sasikumar Gendham, managing director, Salcomp
Rome wasn't built in a single day. Keeping that in time, it will also take time for India to top the global value chain. But I am very optimistic that we will top it soon. In an effort to meet the same, India needs to focus strongly on building a robust supply chain ecosystem or else the same dependency situation will continue. Our export and production ratios of various segments of electronics have increased over the years. Semiconductors will take time to lead but recently we had giant announcements in this sector also in a very short span of time. I urge everyone to be optimistic and work closely to build the ecosystem.
Sushi Pal (IAS), joint secretary, MeitY
Our government is now actively involved with all the stakeholders in growing the industry and which is why we are able to successfully deliver the productivity. If you look back at the past couple of years, you will realize how India’s growth in electronics manufacturing has been escalated. There was a time when the industry was neglected, but now the government has kept it on a high priority because it is the future. Without electronics no industry can survive and therefore you can imagine its immense potential in growing the GDP. Supply chain management is the key area where we need to focus now actively, and the government will definitely come out with some new strategy and announcements soon. Apart from this the stakeholders should also concentrate on making India a design powerhouse in electronics manufacturing. We should now design products for ourselves also.
Anurag Dhoot, managing director, Epitome Components
The growth opportunities and employment generation is tremendous in this sector. India would have had the lion’s share in this industry if we would have taken steps twenty years back. But now keeping aside the past, let’s now concentrate on the present and formulate innovative strategies and make new designs for the country. We have a huge talent pool in the country, but we have to ensure there is a huge opportunity in hardware engineering. The PLI scheme, SPECS, EMC all proved to be a game-changer for the industry. Also, now we have to strengthen our supply chain ecosystem and grow the components manufacturing in the country as well.
