NITI Aayog will release a report on July 18 that will lay down the roadmap for India to become a global hub in electronics manufacturing, underscoring the crucial role in job creation.
Based on extensive analysis of the scope of India’s electronics sector and challenges ahead, NITI Aayog's comprehensive report is titled 'Electronics: Powering India’s Participation in Global Value Chains'.
Global Value Chains (GVCs)
It is the fragmentation of production across the world, which can lead to more jobs getting created and step up on growth. A finished product today often is an end-product of manufacturing and assembly in multiple countries, with each step adding value. Through GVCs, manufacturers can integrate the know-how of the stages of production from multiple offshore locations. This international integration of the know-how is the key feature of GVCs.
Why are GVCs Important?
A smart phone that gets assembled in one country might contain design elements from the US, silicon chips from Taiwan or South Korea, and rare earth metals from Africa. The final assembly ensures all countries involved in the process get to retain some value from the export of the finishes good. The World Bank regards GVCs as a powerful driver of productivity, job creation, and better living standards.
The right steps can help India maximize its participation in GVCs, hence the NITI Aayog note assumes significance and will act as an indicator for the companies involved in the business.
At present, India’s electronics manufacturing revolves around final assembly of electronic goods, with a very nascent ecosystem for design and component manufacturing. Brands and design companies have, however, started to outsource assembly, testing, and packaging jobs to Electronic Manufacturing Services (EMS) companies in India.
Some of the major listed electronics manufacturers in India include Bajaj Electricals, Bharat Electronics Limited (BEL), TVS Electronics and Havells India.
As per an OECD report from 2022, about 70 percent of the international trade involves global value chains (GVCs) with raw materials, parts and components crossing borders a number of times.
A 2023 WTO report on GVCs noted an increase in GVC-related trade in 2021 and 2022 along with considerable growth in exports. It also noted a shortening of GVCs during periods of trade tensions between China and USA, and because of the COVID-19 pandemic.
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