India is the next destination for global investments in electronics manufacturing

India’s production of electronics escalated from Rs 1,903 billion in FY15 to an estimated Rs 5,465 billion during FY20, at a CAGR of about 23%

India is likely to appear as the next destination for planned investments in the electronics sector soon, stated by Ministry of Electronics & IT (MeitY). During the ongoing pandemic, many countries now planning to remove their manufacturing and other units from China and looking to set up in India and Vietnam. The massive anti-China sentiments triggered more investments by global electronics firms in Indian soil.

A latest report by Dun & Bradstreet mentioned that the proactive decision taken by the state governments to reform the labour laws, low wage skilled workers and India’s strong position in software development can help India to become a hub for electronic components, mobile manufacturing and Internet of Things (IoT).

The report also highlighted that Indonesia, Malaysia, Vietnam, and China are suitable for manufacturing at a lower cost and manufacturers in these regions have an edge over Indian companies.

“For domestic players to dominate the market, there is a need to create a strong electronics component hub. The government has taken cognizance of the opportunity that can be leveraged and has initiated a series of policy initiatives to strengthen the supply chain and the entire eco-system of the sector,” said the report.

As of now, in India a huge gap exists between the expected or speculated growth in demand and the current domestic production capability in the electronics segment in India. The government is working constantly in its effort to unleash new policies, ease taxation, and custom duties to enhance productivity in the country.

Highlighting the Electronics and Computer Software Export Promotion Council estimates, the report said India might miss the electronics and software exports forecast of $155 billion for 2020-21.

For computers and hardware, the biggest market for exports are the US (31%), Singapore (12%) and UAE (7%), while France, Germany and Netherland constitute another 9% of export demand.

MeitY at its official twitter account stated that India’s production of electronics escalated from Rs 1,903 billion in FY15 to an estimated Rs 5,465 billion during FY20, at a compound annual growth rate of about 23%. It grew by around 20% in FY20. As per Government estimates, demand for electronics hardware is expected to increase to $ 400 billion by 2025, whereas in FY20 production stood at $ 77 billion. Currently, the domestic production meets close to 60% of the domestic consumption demand.

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