NITI Aayog unveiled its latest report titled “Electronics: Powering India’s Participation in Global Value Chains.” The comprehensive analysis focuses on India’s electronics sector, highlighting its potential and the challenges it faces. It outlines specific strategies required for India to become a global manufacturing hub for electronics.
Global Value Chains (GVCs) play a crucial role in modern manufacturing, encompassing international collaboration in design, production, marketing, and distribution. Representing 70% of international trade, GVCs underscore the need for India to enhance its participation, particularly in electronics, semiconductors, automobiles, chemicals, and pharmaceuticals. Notably, electronics exports account for 75% of GVCs.
India’s electronics sector has witnessed rapid growth, reaching USD 155 billion in FY23. Production has nearly doubled from USD 48 billion in FY17 to USD 101 billion in FY23, primarily driven by mobile phones, which now constitute 43% of total electronics production. The country has significantly reduced its dependence on smartphone imports, with 99% now manufactured domestically.
Government initiatives such as Make in India and Digital India, coupled with improved infrastructure and business ease, have spurred domestic manufacturing and attracted foreign investments. Despite these advancements, India’s electronics market remains relatively moderate, constituting only 4% of the global market, focusing mainly on assembly with limited capabilities in design and component manufacturing.
The global electronics market, valued at USD 4.3 trillion, is led by countries like China, Taiwan, the USA, South Korea, Vietnam, and Malaysia. India currently exports around USD 25 billion annually, representing less than 1% of the global share despite a 4% share in global demand. To boost competitiveness, India needs to localize high-tech components, enhance design capabilities through R&D investments, and establish strategic partnerships with global technology leaders.
As of FY23, India’s electronics production stands at USD 101 billion, including USD 86 billion in finished goods and USD 15 billion in components manufacturing. During the same period, exports totaled approximately USD 25 billion, reflecting India’s growing role in the global electronics market. The sector has also contributed to domestic value addition between 15% to 18% and generated around 1.3 million jobs.
Projections suggest that in a Business As Usual (BAU) scenario, India’s electronics manufacturing could escalate to USD 278 billion by FY30. This includes USD 253 billion from finished goods and USD 25 billion from components manufacturing. Employment generation is expected to grow significantly to around 3.4 million, with exports reaching USD 111 billion.
However, to become the third-largest global economy, India requires a more ambitious vision for its technology-driven sectors. With a conducive business environment and robust policy support, including fiscal incentives and non-fiscal interventions, India should aim to achieve USD 500 billion in electronics manufacturing by FY30. This ambitious target includes USD 350 billion from finished goods manufacturing and USD 150 billion from components manufacturing, creating employment for an estimated 5.5 to 6 million people. Electronics exports are expected to reach USD 240 billion, and domestic value addition to exceed 35%.
The strategy emphasizes scaling up production in established segments like mobile phones and expanding into component manufacturing. Additionally, there should be a strong focus on diversifying into emerging areas such as wearables, IoT devices, and automotive electronics. This diversification will capitalize on evolving consumer demands and technological advancements, positioning India as a leader in innovative electronic products on the global stage.
The report recommends strategic interventions across fiscal, financial, regulatory, and infrastructure domains to support this ambitious growth trajectory. These include promoting components and capital goods manufacturing, incentivizing R&D and design, rationalizing tariffs, initiating skilling programs, facilitating technology transfers, and developing infrastructure to foster a robust electronics manufacturing ecosystem in India.
India has the potential to establish itself as a global leader in electronics manufacturing. By seizing emerging opportunities, enhancing value chain integration, and overcoming existing challenges, India can transform its electronics sector into a cornerstone of economic growth and job creation.
