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