NITI Aayog released Report on “Electronics: Powering India’s Participation in Global Value Chains (GVCs)”

Posted 19 Jul 2024

2 min read

Key Findings

Electronics market is estimated at US$ 4.3 trillion globally and US$ 155 billion in India (2022). China is world's largest electronics producer (60% of worldwide production).
India exports approximately US$25 billion annually, representing less than 1% of global share.
India to achieve US$ 500 billion in electronics production by 2030.
Over 75% of electronics exports are part of GVCs. It is not confined to a particular country. E.g. Mobile phone export.

Rising demand in developing countries due to increasing broadband penetration.
Diversifying supply chain beyond China due to excessive concentration risks as observed during Covid-19, ongoing trade tensions between China-USA etc.

Relatively high import tariffs compared to China, Vietnam etc., making products uncompetitive in global markets.
Lack of robust electronics component ecosystem. E.g. Ecosystem of semiconductors, discrete actives, etc. does not exist in India.
High cost of capital (9%- 13%). In contrast, countries like China, Vietnam, and Taiwan enjoy much lower interest rates of 2%-7% due to specific interest subsidies.
Other challenges include inadequate infrastructure facilities (logistics, high cost of land lease etc.), lack of R&D and design ecosystem, shortage of skilled engineers and trained workforce etc.

Fiscal Interventions: Capital expenditure support for high-complexity components; Innovation scheme to promote R&D; Provision for localized regulations (e.g. labor laws) etc.
Non- Fiscal Interventions: Tariffs simplification and rationalization of Taxes; Supporting Industries for skilling and setting up Electronics skills training hubs; Simplify process of Tech Transfer & increased ease of doing business.

Electronics Manufacturing Cluster (EMC) 2.0 scheme, 2020; Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS); Design Linked Incentive Scheme; India Semiconductor Mission etc.