By Ramya Chatterjee
The electronics manufacturing industry in India is ripe for transformation and is on the verge of a significant shift. With ambitious goals, including achieving 25% of GDP through manufacturing services by 2025 and $1 trillion in exports by 2030, the upcoming Union Budget for the fiscal year 2025 could prove to be a major catalyst for the sector's development. Currently, the sector employs 25 million people and contributes 3% to the GDP, yet it is at a crucial point where strategic interventions could unlock its vast potential.
Building on the Success of PLI Schemes
A key driver of India’s economic expansion has been the Production-Linked Incentive (PLI) schemes created by the government. These incentives have already yielded impressive results in mobile phone manufacturing, with exports reaching $11.2 billion and Foreign Direct Investment (FDI) reaching $165.1 billion in electronics alone. India is poised to capitalise on these gains, and Budget 2025 should strengthen existing PLI schemes not only in mobile phone manufacturing but also across consumer electronics, semiconductors, and electric vehicle components sectors. These areas, with immense growth potential, are likely to receive additional incentives in Budget 2025. Expanding the Public Lending Infrastructure framework could attract further investments in high-value manufacturing, moving India closer to becoming a global electronic powerhouse.
Adopting Industry 4.0
The shift of India’s manufacturing sector to modern industrial practices, known as Industry 4.0, is crucial for its further development. The global trends of automation tools, artificial intelligence (AI), and data analytics must be embraced to maximise competitive advantages. The application of these new technologies promises better efficiencies, reduced operational expenditures, and improved product competitiveness in the global market.
Budget 2025 could play a pivotal role in ensuring conducive conditions for this technological revolution by providing fiscal incentives to small and medium-sized enterprises (SMEs) to adopt advanced technologies. Public-private partnerships could also be vital for the effective dissemination of these technologies, enabling Indian manufacturers to implement modern innovations for smart manufacturing.
Enhancing Domestic Supply Chains
The COVID-19 pandemic underscored the critical importance of building resilient and self-sufficient supply chains, a lesson India must take to heart as it seeks to expand its share of the global electronics market. To reduce reliance on imports, particularly from countries like China, India must prioritise strengthening domestic infrastructure, fostering local production of key components and raw materials, and introducing policies that incentivise domestic manufacturing. Renewed emphasis on research and development, particularly in areas such as semiconductor fabrication, will be vital in mitigating vulnerabilities and securing supply chains. Furthermore, India should actively encourage foreign companies to establish manufacturing facilities for critical components, ensuring the nation not only reduces its dependence on external sources but also becomes a sustainable and competitive hub in the global electronics ecosystem. Strategic partnerships with international players and investments in cutting-edge technologies will further bolster India’s position in the evolving electronics production landscape.
Upskilling for the Future
As India’s electronics manufacturing sector flourishes, the need for a skilled labour force becomes increasingly pressing. While millions are employed in this sector, many workers lack the technical expertise required for advanced production processes and emerging technologies. India should invest in workforce skill development to prepare workers for Industry 4.0 roles, such as robotics, AI, and automation training, which could be addressed within this Budget proposal.
Collaborations with educational institutions to develop electronics manufacturing curricula could become a priority to ensure that the workforce is prepared for the future. Encouraging private sector participation in upskilling initiatives would further enhance productivity and support industry expansion.
Boosting Export Competitiveness
India’s ability to reach its $1 trillion export target by 2030 depends heavily on the competitiveness of its electronics sector. To enhance this competitiveness, the Budget could focus on improving the ease of doing business for electronics manufacturers. Streamlining processes, reducing taxes, and improving logistics should be focal areas of attention.
Fiscal incentives like tax breaks or subsidies could also stimulate India’s electronics export sector. Investment in infrastructure, particularly ports and airports, would reduce logistics costs, while strengthening trade agreements with key markets like the US, Europe, and Asia would open new avenues for Indian electronics producers.
A Turning Point for the Electronics Sector
With sufficient government support, this sector’s growth targets could not only be met but exceeded, contributing significantly to fulfilling India’s economic ambitions. To realise its true potential, India must align itself with global trends, adopt advanced technologies, and invest in workforce development.
Conclusion
India’s electronics manufacturing industry has immense potential for growth, and its next big push could come from strategic investments in technology, infrastructure, and skill development. By fostering innovation, enhancing the ease of doing business, and increasing government support through initiatives like the Production-Linked Incentive (PLI) scheme, India can attract global manufacturers and become a hub for electronics production. Additionally, tapping into the growing demand for consumer electronics, renewable energy systems, and mobile devices will further strengthen the sector. Collaboration between the government, industry players, and academia will be crucial in driving this transformation and positioning India as a global leader in electronics manufacturing.
(Ramya Chatterjee, Chief of Solitaire Brand Business, CEO & Director of Prointek Global Innovations.)
Views are personal and do not represent the stand of this publication.
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