How to boost electronics manufacturing to $500 bn by 2030? NITI Aayog has a blueprint

Government think tank NITI Aayog, in its latest report on India's electronics industry, has said India should aim to achieve $500 billion in electronics manufacturing by value terms by FY30. This target comprises $350 billion from finished goods manufacturing and $150 billion from components manufacturing.

“Such growth is projected to create employment for an estimated 5.5 million to 6 million people, significantly boosting job opportunities across the country. Electronics exports are expected to reach USD 240 billion and domestic value addition to increase to more than 35%,” says Niti Aayog, in its report titled “Electronics: Powering India’s Participation in Global Value Chains”.

In a business-as-usual (BAU) scenario, projections indicate India’s electronics manufacturing could escalate to $278 billion by FY30, with $253 billion worth of finished goods and $25 billion worth of components manufacturing. Employment generation is expected to grow to around 3.4 million, with exports reaching $111 billion.

The report underscores the need for an ambitious vision. “India's ambition to become the third-largest global economy necessitates a more ambitious vision for its technology-driven sectors.” The 69-page report also emphasises scaling up production in established segments such as mobile phones and component manufacturing, with strong focus on diversifying into emerging areas such as wearables, IoT devices, and automotive electronics. “This will capitalise on evolving consumer demands and technological advancements, positioning India as a leader in innovative electronic products on the global stage.”

India’s electronics sector has experienced rapid growth, reaching $155 billion in FY23. Production doubled from $48 billion in FY17 to $101 billion in FY23, driven by mobile phones, which constitute 43% of total electronics production. “India has significantly reduced its reliance on smartphone imports, manufacturing 99% domestically.”

Initiatives like “Make in India” and “Digital India” improved infrastructure and ease of doing business, says the report. Supported by incentives, these initiatives have “stimulated” domestic manufacturing and attracted foreign investments, it adds.

However, there’s still a lot of catching up to do. “India’s electronics market remains relatively moderate, accounting for only 4% of the global market, which has so far focussed primarily on assembly, with limited capabilities in design and component manufacturing,” the report adds.

The global electronics market, valued at $4.3 trillion, is dominated by countries like China, Taiwan, USA, South Korea, Vietnam and Malaysia. India currently exports around $25 billion annually, representing less than 1% of the global share despite a 4% share in global demand. “India needs to localise high-tech components to enhance competitiveness, strengthen design capabilities through R&D investments, and forge strategic partnerships with global technology leaders,” the report adds.

The current value of India’s electronics production stands impressively at $101 billion as of FY23. This comprises $86 billion in finished goods production and $15 billion in components manufacturing. During the same period, exports totalled $25 billion, reflecting India's increasing role in the global electronics market. As regards domestic value addition, the sector has also contributed ranging between 15% to 18% and has generated approximately 1.3 million jobs.