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India’s Electronics Manufacturing Poised to Hit USD 500 Billion by 2030, Says CII Report

Transforming India's Electronics Manufacturing Ecosystem

Editor Ritam English by Editor Ritam English
Jun 24, 2024, 09:00 am IST
India's Electronics Manufacturing Poised to Hit USD 500 Billion by 2030, Says CII Report

India's Electronics Manufacturing Poised to Hit USD 500 Billion by 2030, Says CII Report

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India’s electronic sector is poised for a significant transformation, the Confederation of Indian Industry (CII) recently released a report highlighting the need for the country to shift from its current state of ‘import-dependent assembly-led manufacturing’ to ‘component-level value-added manufacturing’. This transformation is critical to reducing import dependency and boosting local production capabilities.

In 2023, the demand for components and sub-assemblies in India was valued at USD 45.5 billion. This supported electronics production worth USD 102 billion. By 2030, this demand is projected to skyrocket to USD 240 billion, which will be necessary to support electronics production worth USD 500 billion.

Among the priority components, Printed Circuit Board Assemblies (PCBAs) are expected to experience a robust Compound Annual Growth Rate (CAGR) of 30%, reaching USD 139 billion by 2030.

To achieve this ambitious growth, the CII report recommends several critical actions for the Indian government. These include introducing a fiscal support scheme and launching SPECS 2.0 (Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors). Additionally, the report suggests rationalizing import tariffs on components like camera modules and signing Free Trade Agreements (FTAs) with European and African countries.

The report identifies five high-priority components/sub-assemblies that are crucial for India’s electronic manufacturing sector. These include lithium-ion batteries, camera modules, mechanicals, displays, and Printed Circuit Boards (PCBs).

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In 2022, these components accounted for 43% of the total components demand and are expected to grow to USD 51.6 billion by 2030. Presently, these components are either produced minimally within the country or are heavily import-dependent, which poses a significant challenge for India.

PCBAs represent a high potential category for India, as the majority of the current demand is met through imports. This segment is expected to grow by 30%, leading to a demand creation of around USD 87.46 billion by 2030. Developing this sector domestically could significantly reduce import dependency and strengthen India’s manufacturing capabilities.

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Despite the promising potential, India faces several challenges in developing its domestic manufacturing of components and sub-assemblies. These include higher manufacturing-related costs compared to other economies like China, Vietnam, and Mexico (10-20% more), the absence of large domestic manufacturing corporations, a lack of a domestic design ecosystem, and insufficient raw materials availability.

The report emphasizes that with appropriate policy support, the development of the components and sub-assemblies ecosystem in India could yield numerous economic benefits. These include creating approximately 280,000 jobs by 2026, increasing domestic value addition, reducing import dependency, and boosting the GDP. All these factors would help position India as a global hub for electronics manufacturing.

By implementing the recommended policies and overcoming the existing challenges, India has the potential to transform its electronics manufacturing sector. This shift will not only reduce import dependency but also foster economic growth, job creation, and increased global competitiveness in the electronics industry.

Tags: India's Electronic sectorCIIConfederation of Indian Industry
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