Domestic production of electronic goods in India — in terms of value — saw a significant jump in the last six years, with manufacturing of mobile phones and LED products registering maximum growth, official data show. Experts believe the government’s recently introduced production-linked incentive scheme will be a ‘game changer’
The domestic electronics manufacturing sector in India has seen significant growth in the last six years. Production of electronic goods in India increased by 187 percent from Rs 1,90,366 crore in 2014-15 to an estimated Rs 5,46,550 crore in 2019-20, with a compound annual growth rate (CAGR) of about 24 percent, according to the Ministry of Electronics & Information Technology’s annual report 2019-20.
Domestic manufacturing of electronic goods surpassed India’s imports in 2016-17, continuing the trend since then, official data show:
This is an optimistic development for the domestic industry, with India having a huge market for electronic goods and products. The rise in domestic production will also help India reduce import dependency, bringing down the trade deficit and encouraging further adoption of the government’s call for ‘Make In India’ and ‘AatmaNirbhar Bharat’ or self-reliant India.
Mobile phones rule the domestic electronics manufacturing sector
Mobile phone production accounts for 41 percent of the total electronic production (in value) in the country at present, up from its 10 percent share in 2014-15. The mobile phone sector has seen a significant jump over the years, with India now becoming the second-largest mobile handset manufacturing country in the world.
Among the various sub-sectors in the electronics industry, this segment saw the maximum (nearly 12X) growth: from Rs 18,900 crore (6 crore units) in 2014-15 to an estimated Rs 2,25,000 crore (32 core units) in 2019-20.
Another sector that has witnessed similar growth is the light-emitting diode industry, popularly known as the LED products industry. The domestic manufacturing of LED products grew over 7X from Rs 2,172 crore in 2014-15 to an estimated Rs 16,250 crore in 2019-20. Though production in the LED sector is burgeoning, it currently comprises just 3 percent of the total electronics production in the country. The rise in demand for LED products can be attributed to low cost, increased use in residential (including street) lighting and commercial segments, in addition to sectors such as automotive, communications, signalling and entertainment.
The consumer electronics segment — comprising televisions, refrigerators, washing machines, microwave ovens — also reported a 51 percent increase from Rs 55,806 crore in 2014-15 to an estimated Rs 84,000 crore in 2019-20. Domestic production of LCD/LED TVs grew from 0.87 crore units in 2014-15 to 1.20 crore units in 2018-19, with 38 manufacturing units across the country, the ministry’s annual report highlights.
The production of industrial electronic products — consisting of process control equipment, test and measuring equipment, power electronics equipment, automation and analytical instruments — also more than doubled in six years to 2019-20.
“Industrial electronics is an empirical barometer of overall growth in the contribution of the manufacturing sector in the economy,” the annual report states. “The spurt in investments due to the ‘Make in India’ programme is bringing significant interest in engineering, electrical, automotive and electronics segments, which are the driving force behind the growth of (the) industrial electronics sector in the country.”
Strategic electronics production — such as equipment catering to defence, nuclear and aerospace industries — recorded a 109 percent increase from Rs 15,700 crore in 2014-15 to an estimated Rs 32,800 crore in 2019-20. The computer hardware industry, however, reported the least — 20 percent — increase compared to other sectors. Personal computer/ desktop penetration in India is 15 per 1,000 people compared to 784 per 1,000 in the US and 41/1,000 in China, indicating the potential in the India market.
Production-Linked Incentive scheme to be a game changer: experts
To boost the country's manufacturing industry further, on November 11, 2020, the government approved a Production-Linked Incentive (PLI) scheme for 10 key sectors. Electronics/technology products is one of these 10 sectors, with a financial outlay of Rs 5,000 crore over five years. The government had earlier notified PLI for mobile manufacturing and specified electronic components with an outlay of Rs 40,951 crore.
Industry experts have hailed
the government's decision of introducing PLI schemes across key sectors in a move to encourage domestic manufacturing.
“This is a game changer! PLI for strategic sectors approved by (the) government tweeted Manish Sharma, Executive Officer, Panasonic Corp. President & CEO, Panasonic India & South Asia and Chairperson — FICCI Electronics Manufacturing Committee. This will enable competitive domestic production, faster backward integration and scaling up of exports, he said.
Under PLI “we expect a minimum of about Rs 10.5 lakh crore worth of additional incremental production — over and above the last financial year — to happen in the next four-and-a-half financial years,” Ajay Sawhney, Secretary, Ministry of Electronics & Information Technology said in an interview to Rajya Sabha TV on November 11. “Out of this Rs 10.5 lakh crore of additional production, about 6.5 lakh crore worth of production would result in exports,” he added.
The initiative is bringing the “most sophisticated lines of manufacturing, including top-of-the-line handsets, which are the most popular and costliest across the world, and these are starting to get manufactured today in India,” Sawhney said.