Electronics industry to discuss '$500 billion by 2030' goal with PMO, FM; flag issues facing Chinese firms

In FY24, India's electronics production was at $115 billion.

The smartphone and electronics manufacturing industry plans to discuss tariff rationalisation, ease of doing business and reforms in meetings with the Prime Minister's Office (PMO) and the finance ministry later this month.

The discussions are part of the broader strategy to achieve the $500-billion electronics production by 2030, a target recently set by Prime Minister Narendra Modi.

“We are keen to have a presentation with the finance minister and PMO on the elements that are essential for the industry to achieve the outlined vision of USD 500 billion by 2030," Indian Cellular and Electronics Association (ICEA) chairman Pankaj Mohindroo told Moneycontrol on September 17.

ICEA, which represents companies such as Apple, Foxconn, Tata Electronics, Dixon, Xiaomi, Oppo and Vivo, wants to discuss in details with various government departments the approach to enhancing India's manufacturing capabilities and improving the country’s participation in global value chains.

Mohindroo said a complete plan needs to be in place to achieve the $500-billion target.

The China question

The manufacturers will also take up tax and legal challenges faced by Chinese smartphone companies, sources said. Chinese firms are seen as critical for boosting smartphone exports and developing a strong electronics components ecosystem.

Chinese players such as Xiaomi, Oppo and Vivo in India face litigation for customs duty, income tax evasion and even money laundering.

Chinese companies are crucial for enhancing smartphone exports but they haven’t “significantly expanded” their operations due to these challenges, experts said.

These companies have now begun entering into partnerships with local electronics contract manufacturers such as Dixon Technologies and Bhagwati Product Limited to take advantage of the production-linked incentive (PLI) scheme.

The Ministry of Electronics and Information Technology (MeitY) plans to roll out an incentive scheme for electronics components by October at an expected outlay of Rs 30,000-Rs 40,0000 crore.

Getting Chinese companies to set up operations in India through local partnerships should be the top priority to build a robust ecosystem, experts said.

After due diligence, the government is expected to give swift approvals to Chinese companies looking to enter the country through Indian partners to set up component facilities under the scheme, sources said.

“There will be government-wide cooperation on this,” a government source told Moneycontrol on condition of anonymity.

It’s a T20 ahead

In FY24, the electronics production was at $115 billion. To reach $500 billion by FY30, the industry will need to grow at a 20 percent compound annual growth rate (CAGR).

Electronics production nearly doubled from $48 billion in FY17 to $101 billion in FY23, driven by mobile phones, which accounted for 43 percent of the total production.

In FY23, India’s electronics sector recorded a significant value of exports, contributing 5.32 percent to total merchandise exports.

ICEA expects the mobile phone ecosystem to grow to $180 billion in production value by the end of the decade.

“We will discuss a strategy to enhance India's electronics manufacturing capabilities and boost New Delhi's participation in global value chains (GVCs),” Mohindroo said. “The success of the GVC model is critical.”

GVCs drive large-scale job creation and build technology capabilities. They also bring in large-scale manufacturing, drive the scale of production, reduce costs and enhance competitiveness, Mohindroo said.

Addressing the inaugural session of the Semicon India 2024 in the previous week, Modi called on the industry to grow the country's electronics sector to $500 billion and create six million jobs by the end of the decade.