India’s Electronic Manufacturing Set to Reach USD 500 Billion by 2030: CII Report

India’s electronic manufacturing industry is on a significant growth trajectory and is expected to reach USD 500 billion by 2030, as per a report by the Confederation of Indian Industry (CII). This remarkable expansion is driven by rising domestic demand, favorable government policies, and rapid technological advancements.

India needs to take critical actions to transform its electronic sector ecosystem from an ‘import dependent assembly led manufacturing’ to ‘component level value-added manufacturing’, highlights a report by Confederation of Indian Industry.

As per the Report, in 2023, the demand for components and sub-assemblies stood at USD 45.5 billion to support USD 102 billion worth of electronics production. This demand is expected to scale to USD 240 billion to support the USD 500 billion worth electronics production by 2030.

The priority components and sub-assemblies including PCBAs (Printed Circuit Board Assembly), are projected to grow at a robust CAGR (Compounded Annual Growth Rate) of 30 per cent, reaching USD 139 billion by 2030.

The report also recommended the government to take key actions including a scheme to provide fiscal support, SPECS 2.0 (Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors) to be introduced, import tariffs on components like camera modules to be rationalized, and sign FTAs with European and African countries.

The Report identifies 5 priority components/sub-assemblies of batteries (lithium-ion), camera modules, mechanicals, displays, and PCBs (Printed Circuit Board) which are categorized as high priority for India. They cumulatively accounted for 43 per cent of the components demand in 2022 and are expected to grow to USD 51.6 billion by 2030.

These components have either nominal production in India or are heavily import-dependent. India can hardly afford to sustain this trend of importing the priority components. Similarly, PCBA is a high potential category for India since most of the demand is met by imports. This segment is expected to grow by 30 per cent, leading to a demand creation of around USD 87.46 billion by 2030.

However, manufacturing-related cost disabilities vis-a-vis other competing economies like China, Vietnam, and Mexico (10-20 per cent), lack of big domestic manufacturing corporations, lack of domestic design ecosystem for Indian companies, and lack of raw materials ecosystem add to the challenges that disable the domestic manufacturing of components and sub-assemblies in India.

According to the report, these policy supports will help in various economic benefits arising from the development of the components and sub-assemblies ecosystem in India. Job creation to the tune of approx. 2.8 lakhs by 2026, increase in domestic value addition from the current levels, reduction in import dependency, and increase in GDP, all leading to firmly positioning India as a global hub for electronics manufacturing.

Key Growth Drivers: India’s Electronic Manufacturing sector

• Rising Domestic Demand: The increasing consumption of electronic products within India is a primary factor fueling the growth.
• Government Support: Various initiatives and policies introduced by the Indian government are providing a conducive environment for the sector’s development.
• Technological Advancements: Innovations in technology are enhancing production efficiency and product quality, contributing to the industry’s growth.

Strategic Recommendations

The report emphasizes several strategies to sustain and accelerate this growth:

• Enhancing the Supply Chain: Strengthening the supply chain is crucial for meeting the increasing demand and ensuring smooth operations.
• Boosting Research and Development: Investing in R&D is essential for fostering innovation and staying competitive in the global market.
• Promoting Innovation: Encouraging innovation at all levels will help in developing new products and improving existing ones.

Economic Impact

The expansion of the electronic manufacturing sector is expected to have a significant positive impact on India’s economy. It is projected to:

• Create Jobs: The growth of this sector will generate numerous employment opportunities across various skill levels.
• Increase Exports: Boosting the production capacity and quality of electronic products will enhance India’s export potential, contributing to the country’s overall economic growth.

Conclusion

With the right strategies and continued support, India’s electronic manufacturing industry is well-positioned to achieve the USD 500 billion mark by 2030, making a substantial contribution to the nation’s economy and global standing in the electronics market.