India should target $500B in electronics manufacturing, create 6M jobs by 2030: NITI Aayog

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India’s NITI Aayog, the central public policy think tank of the government of India, said that the nation should aim to achieve $500 billion in electronics manufacturing in value terms by 2030. This growth is expected to create employment for as many as 6 million people, significantly boosting job opportunities across the South Asian nation.

The $500 billion target comprises $350 billion from finished goods manufacturing and $150 billion from components manufacturing, NITI Aayog said in a statement. Electronics exports are expected to reach $240 billion, and domestic value addition is expected to increase by more than 35%.

“India’s ambition to become the third-largest global economy necessitates a more ambitious vision for its technology-driven sectors,” NITI Aayog said.

“India possesses immense potential to establish itself as a global leader in electronics manufacturing. By capitalizing on 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,” it added.

Initiatives like Make in India and Digital India, improvement in infrastructure, and ease of doing business, supported by various incentives, have stimulated domestic manufacturing and attracted foreign investments. However, despite these strides, India’s electronics market remains relatively moderate, accounting for only 4% of the global market, which has focused primarily on assembly, with limited capabilities in design and component manufacturing, NITI Aayog pointed out.

The global electronics market, valued at $4.3 trillion, is dominated by countries like China, Taiwan, United States, South Korea, Vietnam, and Malaysia, NITI Aayog said. India currently exports about $25 billion annually, representing less than 1% of the global share despite 4% share in global demand.

“To enhance competitiveness, India needs to localize high-tech components, strengthen design capabilities through R&D investments, and forge strategic partnerships with global technology leaders,” NITI Aayog pointed out.

The strategy also includes scaling up production in established segments, such as mobile phones, and establishing a foothold in component manufacturing. Additionally, India should focus on diversifying into emerging areas such as wearables, Internet of Things (IoT) devices, and automotive electronics. This strategic diversification will capitalize on evolving consumer demands and technological advancements, positioning India as a leader in innovative electronic products on the global stage, NITI Ayog said.

NITI Aayog’s statement comes at a time when the Narendra Modi-led government has been positioning India as an alternative for global tech companies looking to reduce dependence on China for their supply chains, especially the European Union and the U.S., where trade wars with China have increased in recent years.

So far, India has successfully lured suppliers for major U.S. corporations like Apple (NASDAQ: AAPL) and Google (NASDAQ: GOOGL). Google has reportedly asked local suppliers to begin production of its Pixel smartphones in India. At the same time, about 25% of all iPhones is expected to be made in India by 2028 from only 5% to 7% of Apple’s manufacturing in January 2023. Korean electronics major Samsung houses one of its biggest mobile phone factories in India, where it will soon start making laptops.

According to NITI Aayog, as of FY23 the value of India’s electronics production stood at $101 billion, comprising $86 billion in finished goods production and $15 billion in components manufacturing. During the same period, exports totaled $25 billion.

Global value chains

NITI Aayog’s report, “Electronics: Powering India’s Participation in Global Value Chains,” analyzes India’s electronics sector, emphasizing its potential and challenges while outlining specific interventions needed for India to emerge as a global manufacturing hub for electronics.

According to the report, global value chains (GVCs) are critical in modern manufacturing, involving international collaboration across design, production, marketing, and distribution. They represent 70% of international trade, highlighting India’s urgent need to enhance its participation, especially in electronics, semiconductors, automobiles, chemicals, and pharmaceuticals. Electronics, in particular, is pivotal, with 75% of its exports originating from GVCs.

India’s electronics sector has grown rapidly, reaching $155 billion in FY23, according to NITI Aayog. Production doubled to $101 billion in FY23 from $48 billion in FY17, driven primarily by mobile phones, which now constitute 43% of total electronics production. Simultaneously, India has significantly reduced its reliance on smartphone imports, now manufacturing 99% domestically.

Niti Aayog’s 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, tariff rationalization, skilling initiatives, facilitation of technology transfers, and infrastructure development to foster a robust electronics manufacturing ecosystem in India.

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