In the age of rapid technological innovation, India’s electronics manufacturing industry has obtained the status of one of the fastest-growing industries in the world. India currently holds a 3.3% share of all global electronics production and is looking forward to strengthening its electronics manufacturing ecosystem. However, the country still outsources a huge portion of its electronics components from China. As a result, the Government of India is now working hard hand-in-hand with various industry associations & MSME’s to improve the ecosystem in the nation.
MSMEs contribute almost 29% of the country’s GDP, around 45% of manufacturing production, and about 48% of the country’s total exports.. With this significant contribution, it isn’t an exaggeration to call them the ‘backbone of the country.
MSMEs currently employ over 9 crore people, as per the national sample survey (2022) and India’s overall exports (Merchandise and Services combined) in April-November2022* are estimated to be USD 499.67 Billion
Ease of doing business for MSMEs: The Udyam Registration portal’s data disclosed by the MSME Ministry over two years after the launch of the portal showed 8.81 crore people employed by 1.19 crore MSMEs registered on the portal. Out of the total employment, 2.05 crore were women, the latest data published on the portal at the time of publishing this report showed.
The history of India’s electronics industry dates back to the 1960s when an electronic committee was set up under the leadership of Dr. Homi Bhabha. This committee reported the importance of the electronics industry and the necessity for a robust domestic electronics component ecosystem. There were many reasons behind this – some were strategic, and some were for the economic growth of the country. As a result, duties were kept high to discourage imports of electronic components from outside India.
However, the government realised soon that domestic electronics production was not enough to keep up with the ever-increasing demand. The result was successive policies that cut import taxes on electronic components and finished goods. Despite the policy changes, Indian companies such as HCL and Wipro began their journey in the electronics industry. Today, electronic goods production in India has more than doubled from US$ 30 billion in 2014-15 to US$ 75 billion in 2019-20.
Currently, the Government of India is backing the domestic manufacturing of electronics, electronic components, and semiconductors for several reasons. Those reasons include the question of national security, excessive import dependency, and the chip shortage. Imported electronics and components could come with the risk of compromising our cyber security and national security. At the same time, the Covid19 pandemic has presented a unique opportunity before India to fill up the production shortage by opening up new domestic manufacturing units.
In this scenario, the government has taken multiple initiatives to promote domestic manufacturing of electronics and components. The National Policy on Electronics 2019 (NPE 2019) seeks to assist India in becoming a global hub for Electronics System Design and Manufacturing (ESDM) by promoting and enhancing national capabilities for developing core components. The government also aims to foster an environment that will allow the sector to compete internationally.
The Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) of 2020 envisions helping to overcome the challenges for domestic manufacturing of electronic components and semiconductors to strengthen the electronics manufacturing ecosystem in the country. Moreover, a comprehensive PLI scheme for the growth of the semiconductor and display manufacturing ecosystems was approved by the Ministry of Electronics and Information Technology (MeitY) in December 2021. It also announced financial incentives worth Rs 76,000 crore (US$ 9.81 billion), which will be distributed over the next six years.
In a country of 1.4 billion people, the domestic demand for electronics products is on a constant rise. As India is fast-forwarding its 5G implementation plan, this demand will only increase in the coming years. So, this presents an excellent opportunity before Indian manufacturers to capitalise on and help India rejuvenate its aspiration to become Atmanirbhar.
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