Page 28 - CII Artha Magazine 1

Sector in Focus Sector in Focus
B. Deepening the supported CAS (conditional 1. Horizontal expansion of manufacturing footprint. invested in such an assembly. providing higher PLI benefits
Component Value Chain access system) for set top Impact of the Government’s Going Beyond manufactured categories Manufacturing of a However, a similar calculation than the present 5-6 per cent
across the entire boxes. to all electronic sub majority of electronic and for a multi layered PCB for for components, while also
ecosystem Landmark Decision to Develop sectors – consumer, mechanical components, mobile phones reveals an widening the eligibility criteria
Similarly, a global innovation appliances, industrial, piece- parts and their raw investment to turnover ratio so that it is possible to
The domestic electronics challenge for designing of Atmanirbharta, medical, smart energy, materials within India is of 1: 1.5 (at best). Hence, at achieve scale in this sector.
industry is characterised by semiconductors and chip sets Indian automotive, EVs, drones, now considered zero import duty on PCBs, No doubt, several compo-
“essential”. Inadequate
the current schemes are
and robotics. Within these
lack of a component for educational tablets for the groups, demand for several availability of components inadequate and have hence nents have access to capex
ecosystem which leads to its masses could be encouraged. emerging product lines eg. locally results in the not tipped the decision for incentive under the SPECS
dependence on imports. High How India wearables & hearables is following: large scale investments in scheme. This 25 per cent
dependency on imported Besides, the next focus should Semiconductor currently fully dependent (a) severely limits the India yet. along with the 5 per cent PLI
inputs raises cost and impedes be on maximizing domestic trading, and will lead to on imports. innovation potential makes a reasonable case for
competitiveness. A right mix value addition and promoting DESPITE THE manufacturing, ensuring In fact, the 5-6 per cent PLI domestic manufacturing and
of policy realignment coupled Design in India, besides Make and Electronics SECTOR’S higher value addition, and Tariff calibration within (b) renders the industry incentive provided to has resulted in expansion of
with new targets is required. in India. For this, the could Gear POTENTIAL, IT hopefully, leading to design-led the supply chain can uncompetitive due to components, which is a capacities by existing compo-
long lead times &
know-how available with REMAINS MARRED BY manufacturing, not only for ensure a large shift higher logistic costs zero-duty import item, may nent manufacturers. However,
by itself, not trigger new
it has not yet seen a major
towards domestic
The government has, no doubt Government owned R&D HIGH COST OF DOING India, but for the world. manufacturing. domestic manufacturing, influx of new investments in
Hence, it is indeed, a glass half
announced the PLI scheme for laboratories should be made Ecosystem on BUSINESS full. (c) exposes us to risks of especially as components have components. Manufacturers

flight of assembly units
components. However, the 5-6 freely accessible to industry, 2. Scale – Global in case of a major a lower investment to abroad don’t find adequate
per cent incentive on outsourced R&D needs to be up for the The last three years have competitiveness, especially policy change turnover ratio of 1:1 as reason to make the shift as
incremental sales, envisaged incentivized on the lines of hence, not surprising to changed the world in a (near) zero import compared to that of mobiles their components continue to
under the scheme, is not In-house R&D, Technology Defence Sector witness an erosion of irreversibly. For instance, an duty scenario requires (d) makes the industry (1:6). Hence, to reap find markets in India at zero
vulnerable to

enough to achieve scale in this Acquisition Fund be created manufacturing value add in alternative to the factory of global scale. Make in India geopolitical constraints maximum returns, the import duty.
sector and accordingly would for liberal assistance in filing most sectors. In electronics, the world, China, is being for the world, in several that may be imposed government should consider
cases, could also be
discourage manufacturers patents and a Guarantee Fund World for instance, a sector that was assiduously sought for triggered by aggregation of by the government of
mitigation of geopolitical,
prematurely subject to zero
from indigenizing production. be created to help R&D import duties (ITA -1 since economic and social risks. A local demand, the country housing
Hence, the government should houses to raise working 2005), manufacturing was critical component of Chinese development of these supply chains.
review the scheme by capital. e are at the cusp of a warfare and strategic military electronics and embedded semiconductors, sensors mostly replaced by trading. competitiveness has been the customized products Weaponization of such
expanding the incentive from W massive transformation affairs. India’s ability to software in future intelligent among others is a landmark robust supply chain that has based on indigenous supplies is now a
the present 5-6 per cent and D. Other Suggestions fueled by the rapid advances enhance its military strength weapon platforms would decision that would pave the It is in this context that a 23 been established in almost all designs and manufacturing reality
continue to increase
foundations to a much
widen the eligibility criteria. A in technology and an in such a scenario would significantly. It is very needed indigenous and lectronics manufacturing competitiveness, which accrue per cent CAGR in electronics manufacturing sectors. Any not just for India but for Components are typically
depend upon the country’s
increasingly connected world.
revamped PLI would facilitate Similarly, the government Widespread applications of ability to absorb, develop and pertinent for India to have a integrated electronic design E in India has grown at 23 essentially from higher is laudable. In the least, this destination that aspires to be emerging economies investment, technology and
around the world. An
scale economies from should also look at other emerging New Technologies effectively leverage such National Strategy for and manufacturing ecosystem per cent CAGR over the last effective costs of energy, signals a turning point from seen as an alternative to educational tablet, an skill intensive. This journey
domestic production and also options such as leveraging such as Advanced Robotics & emerging technologies to Electronics and – bedrock of any developed five years. However, despite logistics and finance, have where manufacturing could China has to emulate this integrated set top box, a will hence need more than
take-off. Could this be the
integrated supply chain.
encourage SMEs to strengthen upcoming FTAs (UK & the Automation, Artificial enhance its operational Semiconductors including a economy in the digital and its impressive performance, been well acknowledged. It is inflection point that we have Electronics, even more so. low- cost limited feature the steps already taken to
roadmap to achieve
Industry 4.0 era.
the supply chain and reduce EU) towards enhancing Intelligence, Big Data preparedness. AatmaNirbharta in this I am confident, this will now India has not made its mark also well known that all been waiting for? smart phone, a battery establish assembly in the
our dependence on imports. exports, incentivizing Analytics, Cyber Security, Unarguably, electronics and domain. set-in-motion a longer-term as a globally competitive these disabilities Opportunity through powered modem are country.
semi-conductors is
e-Mobility, IoT, New Materials,
have directly
manufacturing destination so
manufacture of products not Augmented/Virtual Reality, at the core of all In December 2021, the process to transform India far. In fact, despite our impacted Changing geo-political Atmanirbhar initiative examples of such Assembly of mobile phones
C. Encouraging Design-led currently produced in India, Fifth Generation connected announcement of the into an innovation driven four-decade old experience in domestic value trends – capitalise on products. We have a during the last 3 years, and
Manufacturing facilitating EoDB, among Telecommunications network products Government of economy with focus on manufacturing, a reasonable addition within supply chain gaps This is our opportunity. While successful example in the the beginning of large-scale
others. among others are redefining including, India to extend high-end capability, skills and number of large companies the country at we aim at “atmanirbharta” aggregation of LED bulbs exports last year is indeed a
done by EESL, which was
US$10 billion
value-creation. This would
Most of the growth has
For ensuring that the industry the way we do our smart and support to develop also provide a strong impetus engaged in core the sectoral however come from (self-reliance) in electronics, instrumental in laudable achievement. A 20
businesses, lead our lives and
advanced
we will also achieve the scale
remains competitive (by To conclude, a robust policy more importantly the global weapon indigenous to companies including manufacturing, a large SME level. It is, assembly, with low and depth required to “Make establishing a large EMS per cent import duty and a
facilitating domestic IP environment would help the geo-politics. systems. As manufacturing start-ups that are engaged in supply chain and an enviable value addition in in India, for the world”. A capacity for LEDs. This 4-6 per cent PLI on incremen-
creation), even after the PLI & country to realise the huge Furthermore, the confluence technology capability in silicon developing products for labour arbitrage, our products that good start with assembly of capacity now needs local tal sales has triggered
other benefits expire, a push opportunity awaiting India to of high technology with becomes a Core semiconductor fabs, defence applications in manufacturing growth has are not at zero several products has been components. Only then assembly. Mobile phone
stagnated at around 16 per
display fabs,
domains such as Advanced
to R&D is most essential. For emerge as a global hub for military products and their Combat Capability, compound Avionics, Electronic Warfare, cent of GDP at present. import duty. made. We should now aim for will it make for a assembly typically has an
investment: turnover ratio of
this, the government should electronics and meet the applications is believed to set the share and Unmanned Systems, Secure Assembly is achieving three critical sustainable manufacturing 1:6. This means that an
a new paradigm for future
value of
explore innovative solutions targets envisioned in the NPE Communication Devices, The reasons for lower certainly a big objectives: and export story. average 5 per cent PLI (on
for the sector such as a model 2019. Cyber Security among others. manufacturing step up from 3. Most importantly, we need turnover) is a 30 per cent
based on the Government led a deepening of our incentive on the amount
domestic manufacturers Mr. Baba Kalyani, Chairman & MD, Bharat Forge Limited Mr. Vinod Sharma, Chairman, CII National Council on ICTE
and Managing Director, Deki Electronics Ltd
27 ANALYSIS, RESEARCH, THOUGHT LEADERSHIP & ADVOCACY ANALYSIS, RESEARCH, THOUGHT LEADERSHIP & ADVOCACY 28
QUARTERLY JOURNAL OF ECONOMICS
QUARTERLY JOURNAL OF ECONOMICS
DECEMBER 2021 DECEMBER 2021