Indian Manufacturing Needs To Grow Beyond Assembly

Context: Indian electronics manufacturing sector issues need to be addressed to enable India to emerge as a major centre of electronics.

Electronic manufacturing in India: Got a boost from Make in India initiative, especially in mobile phones, with our share of the global market now at 3.6%.

• By 2025, India is expected to produce 600 million mobile handsets and have an export business worth $110 billion.

Need of electronics manufacturing

• Electronics is a vital component of not just mobile phones but all white goods, cars and other durables, and artificial intelligence.
• From a cybersecurity point of view, too, it is important to have components increasingly indigenised.
• Huge domestic market:
  • India has the world’s second-largest mobile phone market.
  • India also has the world’s third-largest automobile market (all new cars come with display screens that are integrated with information systems).
  • Work- and study-from-home routines ushered in by the pandemic that has boosted the market for laptops.

Challenges in electronics manufacturing:

• Structural issues: According to MeitY, electronic hardware and component manufacturing in India faces immense challenges on account of numerous local hurdles, including
  • Inadequate infrastructure.
  • The high cost of finance and logistics.
  • Inverted custom duties.
• Incomplete indigenisation: Even if India has the capability to manufacture printed circuit boards, other critical components like diodes, chips and transistors are not made in the country.
• Shifting demands: While India is a major manufacturer of cathode, the demand is shifting towards components such as integrated circuits and diodes, optical discs, magnets and radio frequency tuners.

Way forward

• Diversify strategies for indigenisation of electronics manufacturing: Acquiring technologies through joint ventures and encouraging domestic manufacturing as well as supply chains.
  • Enter new areas: Like components for 5G telecom, analogue or discrete components, silicon carbide and LEDs.
• Handholding support for small enterprises: Required in ways that would enable them to get picked preferentially by Indian manufacturers for their procurement chains.
  • This will enhance quality, deliver better technologies, and encourage local manufacturers to expand their manufacturing capabilities.
• Pushing PLI:
  • It should incentivise value-addition as part of its indigenisation thrust in electronics.
  • Emphasis also needs to be placed on research.