Page 31 - CII Artha Magazine 1

the sector has gone up from Rs.
B. Deepening the supported CAS (conditional
Component Value Chain access system) for set top
across the entire boxes.
ecosystem
Similarly, a global innovation
The domestic electronics challenge for designing of
industry is characterised by
lack of a component for educational tablets for the
ecosystem which leads to its
dependence on imports. High
dependency on imported Besides, the next focus should
inputs raises cost and impedes
competitiveness. A right mix
of policy realignment coupled
with new targets is required.
know-how available with past. There were a large
number of SMEs in
The government has, no doubt
announced the PLI scheme for
components. However, the 5-6
per cent incentive on outsourced R&D needs to be
incremental sales, envisaged
unicorn boom. The
under the scheme, is not In-house R&D, Technology
enough to achieve scale in this
example, we have VLSI design
sector and accordingly would
the pricing offered by China.
Manufacturing Clusters (EMC
discourage manufacturers patents and a Guarantee Fund
from indigenizing production.
Hence, the government should
review the scheme by capital. digital shop of the world,
thanks to its software
electronics manufacturing) by
expanding the incentive from
the present 5-6 per cent and
(CSCs) in villages is helping in
widen the eligibility criteria. A
be available in India, though
government push, we are still
revamped PLI would facilitate
scale economies from should also look at other
domestic production and also
encourage SMEs to strengthen
services sourcing business in
providing an enabling
the supply chain and reduce
our dependence on imports. exports, incentivizing
manufacture of products not
and discovery, like EVs and
country. And when we define
C. Encouraging Design-led currently produced in India,
Manufacturing facilitating EoDB, among
others. Google first launched its
For ensuring that the industry
Pay in India—before taking it
remains competitive (by To conclude, a robust policy
facilitating domestic IP environment would help the
that can be used for skilling
creation), even after the PLI &
it is Apple or Samsung, or
other benefits expire, a push
to R&D is most essential. For
this, the government should
explore innovative solutions
for the sector such as a model
based on the Government led
domestic manufacturers
31 ANALYSIS, RESEARCH, THOUGHT LEADERSHIP & ADVOCACY
QUARTERLY JOURNAL OF ECONOMICS
DECEMBER 2021
semiconductors and chip sets
masses could be encouraged.
be on maximizing domestic
value addition and promoting
Design in India, besides Make
in India. For this, the learn from mistakes of the
Government owned R&D electronics before the
laboratories should be made
freely accessible to industry,
pandemic, India generated
incentivized on the lines of
unprecedented performance
Acquisition Fund be created
here. We are trying to push
for liberal assistance in filing
talent for new tech and an
be created to help R&D entrepreneurial mindset.
houses to raise working India’s contribution as the
engineering talent, is well
D. Other Suggestions known. We have been the
import bill is second only to
leading IT sourcing opportune moment when
Similarly, the government destination across the world,
accounting for 55 per cent
options such as leveraging market share of the
upcoming FTAs (UK & the US$200-250 billion global
EU) towards enhancing 2019-20.
in India
billion) in 2020-21 (a slight
Global captive centres in India
are transforming into test
beds for global innovations.
devices, wireless ear buds,
payment product—Google neckbands, speakers, pocket
to the world. Global MNCs
such as Oppo, OnePlus,
country to realise the huge
opportunity awaiting India to
emerge as a global hub for
electronics and meet the Agrawal, CEO of Twitter, now
targets envisioned in the NPE
2019. components from those
countries.
INDIA NEEDS TO
GET INTO
SEMI-CONDUCTOR
MANUFACTURING
TO OVERCOME IT
SHORTAGE
trends, seizing the
opportunity of Designing in
India and Making in India, and journey in the semiconductor
sector is more likely to start
with assembly, testing,
marking, and packaging
Information Technology (ATMP) and specialty fabs.
n the middle of the global origin tech captains steering
global tech companies. National Policy on Electronics
considerable interest with its So, we have the ability, and
government policies too are Incentive (PLI) Scheme for
has been a showcase of sorts moving us towards the electronics sector, the
companies. We have become
for its appetite for adventure, atmanirbharta (self-reliance).
Since electronics is a meta
resource for all verticals, the
government’s aim to hit to promote indigenous
US$250 billion (domestic manufacturing. being trained in all these
semi-conductor shortage.
2025-26 (from about US$70 When we start designing in
billion in 2021) comes at an It’s also a fact that despite our
invest in design in India.
huge talent advantage and depth, more components will
there is fresh zeal to get out
of the Covid storm. manufacturing through design
and domestic value addition. passives etc are already
The government is keen on When we talk of new and
semiconductors.
environment, with the Make emerging technologies, we
talk of a new era in mobility, be defining the components
needed to proceed.
program, communications, connectivity which would be used in the
drones, space tech, backhaul
in telecom, interesting will create a market for our
future semiconductor plants. to design products that are
repairable locally. What has so
serious cyber-attacks of
projectors, digital and far happened is that a lot of
immersive tech, metaverse manufacturing has come from
Mondelez, Intel etc have and education, and so on.
semi-conductors, we need to
opened new R&D centres in Chinese companies, they are
India in recent years. Parag So, the US$250 billion aim
must embrace these South Korea or the US, and
joins the growing list of Indian new mega therefore they buy
act fast to develop Indigenous
IMPORTS Samsung are manufactured electronics products.
here. For now, the country’s
Expert Speak
Dr Krishnamurthy
Subramanian
Chief Economic Advisor,
Ministry of Finance,
Government of India
Agreement (ITA) of WTO We should stick to the large
came into effect resulting in
(2019), Production Linked the closure of many SMEs.
With zero duty kicking in,
many local brands got killed,
growth. The government
SPECS Scheme, Electronics
2.0) Scheme, and several So, a lot of work needs to be
other interventions designed done to bring SMEs back
onto the mainstage. tool design. So people are
scale which will make and Micromax, to come back,
areas. AR/VR across four lakh production economically
India, we will see more of
labour reforms, power sector
education as well. Recently,
lagging on the depth of some may still be imported.
Some components like centre in Chennai, in IIT
Madras, and the company is
available for use. When we
start making in India, we will India. (US$54.4 billion) in 2019-20,
We need to think locally. and Rs 3,99,374 crore (US$54
Designing for India means
the components we need, we that we need to look at
Indian conditions. So, we need
In the past, Indian design did
not work because of the central to the new economies
sheer pricing pressure from
Chinese products. Even the
global companies. So, whether From the point of view of
VALUE ADDED think locally. India may have to
all designing in China or MANUFACTURING KEY
TO CUTTING DOWN edge chips from companies
INDIA’S ELECTRONIC such as Intel, TSMC, and
Dr Rakesh Mohan
Member (Part-Time) Economic Advisory
Council to the Prime Minister of India and
President & Distinguished Fellow,
Centre for Social and Economic Progress
There is a need for a third-generation reforms aimed at leapfrogging its growth trajectory
to the next level of around 8-9 per cent which would ensure a doubling of per capita
income in coming decades. There is also a need for a regulatory standards-setting authority
which is technologically competent to deliver on the third-generation reforms.
There is an impelling need to
volumes and produce improve the competitiveness of
something that is very huge.
We are skilling rapidly to There is no longer any need
achieve self-reliance. For
as they couldn't compete with courses, courses for SMT
(surface mount technology)
manufacturing, courses for
PLI has helped to get the
hand in the present
because they are also getting
common services centres viable. Our electronics goods
the country’s oil import bill.
Foxconn set up an R&D
Invest India data figures,
import of electronics was reigning mega technologies AI
planning to design products in recorded at Rs 3,85,081 crore
compute-intensive, and
massive amounts of data are
decrease in US$ terms albeit Specialised chips can do that
an increase in Rupee terms). more efficiently, especially in
areas like face and voice such as backdoor spyware
conclusion that the
structure and funding,
recognition--and all that is sitting inside electronic
hardware. These can result in
we build now. enormous implications, which
impacts our government
offices, banks, our defence
set-ups, power and space.
wait a while before bleeding Hardware leaks can be more
dangerous than software. We
need to fortify ourselves and
the manufacturing sector
distribution of Chinese And today, the shortage is in
to just assemble products phones is done by Chinese
into a higher gear with a sort of a colony of the
manufacturing, getting into a Chinese in that matter. Now
deeper level of manufacturing. the opportunity has come for
a lot of companies, like Lava Geo-politics may have had a
competitiveness and has Immediate Past President-Designate,
Trump banned the export of likewise taken remedial
CII and Chairman &
PLI benefits. But they must
semiconductor manufacturing. reforms, MSME policy etc
According to the Meity and We need to get extensively
into making chips. The semiconductor chip decision.
The next wars are going to to build scale. asked what is the new
and ML are be fought with
it as a world that is never manufacturing, are
Moreover, design and normal, next normal, and
manufacture in India helps to new normal. Choose any
ward off threat from sources
we can come to the program, with a chains and enhance its
global footprint.
world normal itself does is required to prepare
not fit in. for future pandemics.
ANALYSIS, RESEARCH, THOUGHT LEADERSHIP & ADVOCACY 32
QUARTERLY JOURNAL OF ECONOMICS
DECEMBER 2021
also evident from the annual
depends enti
1,90,366 crore (US$27.20
import bill which has
for its semi
escalated from Rs. 2,29,615
Already, ele
billion) in 2014-15 to about Rs.
5,33,550 crore (US$76.0
the second h
crore 2014-15 to Rs. 3,85,081
crore in 2019-20 marking a
bill and sem
billion) in 2019-20, exhibiting an
account for
impressive CAGR of 23 per
CAGR of 10.89 per cent.
portion.
cent.
What is notable is that India has
There is nee
emerged as a leading
production o
sectors such
manufacturer of mobile phones
in recent years. In FY20, mobile
semiconducto
phone manufacturing
country. As
development
accounted for 41 per cent of
industries e
total production of the sector,
investments
In view of its pivotal role in
followed by industrial
significant
realising the US$5 trillion
electronics (18 per cent),
support, bot
economy dream in near
consumer electronics (16 per
account for
future, the government has
cent), electronic components
(15 per cent), strategic
identified electronics
the total pr
electronics (6 per cent) and
manufacture as a thrust
non-monetary
growth of the sector. Some
again a logical step to augment
Components and
computer hardware (4 per
sector in policy formulation
semiconducto
the electronics manufacturing
of the challenges include
Semiconductors (SPECS) and
cent).
to boost electronics
infrastructu
capabilities in the country
infrastructure deficiency
Modified Electronics
manufacturing in India, reduce
land and pre
Manufacturing Clusters
while the Modified Electronics
such as shortage of
import dependence and
Similarly, major strides have
access); as
Manufacturing Clusters
high-quality power, deficien-
Scheme (EMC 2.0). A fourth
been made towards
increase exports.
in countries
cies in transportation/logis-
Scheme (EMC 2.0) is specially
scheme, namely the
increasing exports of
leaders like
tailored to provide the
Production Linked Incentive
tics, high cost of finance,
electronics items. As per
Korea, Israe
The National Policy on
inadequacy of domestic
requisite infrastructure to
Scheme (PLI) for IT Hardware
DGCI&S data, India’s exports
Electronics (NPE) 2019 seeks
supply chain, complex
was notified in March 2021.
promote the establishment of
computer hardware and
In this cont
have grown from Rs. 38,263
to change the electronics
greenfield and brownfield
regulatory system, limited
strategic electronics
crore in 2014-15 to Rs.
landscape of the country by
incentive pa
R&D, among others. In
electronic manufacturing units
The production linked
(aerospace and defence). Of
he electronics industry,
82,929 crore in 2019-20,
positioning India as a global
Rs.76,000 cr
addition, the absence of an
within the cluster to promote
incentive (PLI) scheme for
these, three segments namely
considered to be the
notching an impressive CAGR
hub for domestic
by the gover
innovation and steer growth in
large scale electronics
adequate manufacturing base
communication and broadcast
bedrock of every other
development
of 16.73 per cent. Indian
manufacturing and export in
manufacturing, mobile phone
the sector.
for different components viz,
equipment, industrial
manufacturing activity in the
semiconducto
exporters are also gradually
the entire value-chain of
manufacturing and specified
semiconductors, passive and
electronics and consumer
country, has the potential to
getting integrated in the
Electronics System Design
manufacturin
electronic components as well
The wide array of calibrated
electromechanical compo-
electronics comprise around
hasten our quest of emerging
global value chain.
and Manufacturing (ESDM).
laudable. Th
and well-crafted measures
nents etc is a deterrent to
as the PLI for IT hardware,
75 per cent of the overall
as a hub of global
would cover
The aim is to achieve a
medical devices including
introduced by the government
investors as it increases the
share of the market for
manufacturing, technology
turnover of US$300 billion by
Besides, the sector is showing
engaged in s
dependence on imports.
electronics has been described
together with growing
electronics industry.
and innovation. A flourishing
remarkable growth in
2025-26. It estimates that
semiconducto
demand, rising disposable
as a game changing initiative
electronics industry, through
about 10 million jobs will be
fabs, compou
demand. In fact, demand for
for promoting local
Some of the constraints and
incomes, the digital India vision,
its ability to create value and
created from the
electronics hardware in India
semiconducto
the remedial measures to
among others would
electronics manufacturing in
jobs, can also contribute
is anticipated to perk up from
implementation of NPE.
photonics, s
encourage domestic players to
help the industry are
the country. The scheme is
significantly to bringing
semiconducto
US$127 billion in 2019 to
make forays into the sector.
also expected to attract global
elucidated below.
dynamism to our
reach US$300 billion by
Similarly, in consonance with
and semicond
investments, facilitate
development journey. What is
the credo of Make in India,
would not on
2025-26. This surge in demand
A. Encouraging High Value,
investments in innovation,
Despite the above, the
also significant is that its
is huge which brings a big
Digital India and Atmanirbhar
address the
electronics industry is beset
technological upgradation and
High volume
applications are being
Bharat Abhiyan, and to realise
opportunity for the industry.
of semicondu
with numerous disabilities
Manufacturing such as
research and make India an
increasingly utilized by almost
would also g
the vision of the National
However, unless there is a
integral part of the global
Semiconductors
Responding to the impetus
all segments of the economy.
huge ramp up in domestic
toward makin
Policy on Electronics 2019,
supply chain.
provided by the government’s
electronics
the government launched
capacity, it is likely that the
The country does not have
‘Make in India’, Atmanirbhar
The electronics industry is
three major incentive
incremental demand would be
enough presence in the
The Scheme for Promotion of
Bharat, Digital India and Smart
classified into six broad
Further, Mei
met through a rise in imports.
schemes in 2020 to support
indigenous manufacturing of
Manufacturing of Electronics
City initiatives, the electronics
segments viz. communication
local manufacturing. These
It also needs to be noted that
for inviting
Components and
high value components such
industry has made noteworthy
and broadcast equipment
include the Production Linked
the country specializes in low
up semicondu
as semiconductors which are
Semiconductors (SPECS),
progress in terms of production
(including mobile phones),
fabs is a we
Incentive Scheme (PLI),
tech content and most
extensively used by the
which targets the
and growth in the last five years.
consumer electronics,
should be pu
Scheme for Promotion of
high-tech components are
electronics industry. For
development of the
This is borne out from the fact
industrial electronics,
Introduction electronic components, that the value of production in presently imported. This is Manufacturing of Electronic components’ ecosystem, is which restrict the potential examp
which in turn would help in job
the in the lower end, the creation and promote inclusive
higher end like 7 nm process recognizes that the high cost of
is difficult and extremely doing business – such as
expensive to put up too. logistics, power, credit, etc - has
impacted manufacturing Mr Uday Kotak Mr Sanjiv Bajaj Mr Ajay S Shriram
President, CII and CII and Chairman & Past President,
hardware and software for measures, by undertaking Managing Director & Managing Director, Senior Managing
CEO Kotak Mahindra Bajaj Finserv Limited Director,
Europe has taken a which would reduce operating Bank Limited DCM Shriram Limited
costs and encourage industry Very often I have been Capabilities and access India has a unique
to finance, research & opportunity to
world gonna be? I define development and position itself in the
overarching dynamics
spread across the of the world and
globe. Therefore, a become one of the key
of these Ns and maybe globally coordinated nodes of global value