India Sets Ambitious $500 Billion Electronics Manufacturing Goal by 2030

India should target USD 500 billion in electronics manufacturing by 2030, according to a NITI Aayog report released on Thursday. This growth could generate employment for around 6 million people. The report, titled "Electronics: Powering India's Participation in Global Value Chains," outlines an ambitious goal of USD 350 billion from finished goods and USD 150 billion from components manufacturing.

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Current Production and Future Goals

As of FY23, India's electronics production stands at USD 101 billion, with USD 86 billion from finished goods and USD 15 billion from components. The report projects that India's electronics exports could reach USD 240 billion, with domestic value addition increasing to over 35 per cent. To become the third-largest global economy, India needs a more ambitious vision for its technology-driven sectors.

The report highlights that with a conducive business environment and robust policy support, including fiscal incentives and non-fiscal interventions, India should aim for USD 500 billion in electronics manufacturing by FY30. In a business-as-usual scenario, projections indicate that India's electronics manufacturing could rise to USD 278 billion by FY30. This includes USD 253 billion from finished goods and USD 25 billion from components, with employment generation expected to grow to around 3.4 million and exports reaching USD 111 billion.

Strategic Interventions

To support this growth trajectory, the report recommends strategic interventions across fiscal, financial, regulatory, and infrastructure domains. These include promoting components and capital goods manufacturing, incentivising R&D and design, tariff rationalisation, skilling initiatives, facilitating technology transfers, and infrastructure development to foster a robust electronics manufacturing ecosystem in India.

India's electronics sector has seen rapid growth, reaching USD 155 billion in FY23. Production nearly doubled from USD 48 billion in FY17 to USD 101 billion in FY23, driven mainly by mobile phones, which now constitute 43 per cent of total electronics production. The country has significantly reduced its reliance on smartphone imports, now manufacturing 99 per cent domestically.

Diversification and Emerging Areas

The report emphasises scaling up production in established segments such as mobile phones while establishing a foothold in component manufacturing. Additionally, it suggests focusing on diversifying into emerging areas like wearables, IoT devices, and automotive electronics. This strategic diversification will capitalise on evolving consumer demands and technological advancements, positioning India as a leader in innovative electronic products globally.

The global electronics market is valued at USD 4.3 trillion and is dominated by countries like China, Taiwan, the US, South Korea, Vietnam, and Malaysia. India currently exports approximately USD 25 billion annually, representing less than 1 per cent of the global share despite having a 4 per cent share in global demand.

Enhancing Competitiveness

To enhance competitiveness, India needs to localise high-tech components, strengthen design capabilities through R&D investments, and forge strategic partnerships with global technology leaders. Presently, India's electronics manufacturing primarily involves the final assembly of electronic goods. While brands and design firms increasingly outsource assembly, testing, and packaging tasks to Electronic Manufacturing Services (EMS) companies in India, the ecosystem for design and component manufacturing is still developing.

Releasing the report, NITI Aayog CEO BVR Subrahmanyam said India has been part of the global value chain but remains a minor player in electronics manufacturing. "Certain types of components are just not made in India," he noted.

India's ambition to become a major player in the global electronics market requires significant efforts across various domains. By focusing on strategic interventions and diversifying into emerging areas, India can position itself as a leader in innovative electronic products on the global stage.