According to a report by Confederation of Indian Industry (CII), the demand for components and sub-assemblies is expected to increase to $ 240 billion to support the $ 500 billion worth electronics production by 2030. Meanwhile the demand stood at $ 45.5 billion to support $ 102 billion worth of electronics production in 2023.
The report highlights that India needs to take critical actions to transform its electronic sector ecosystem from an import dependent assembly led manufacturing to component level value-added manufacturing.
As per the report, the priority components and sub-assemblies including printed circuit board assembly (PCBAs) are projected to grow at a compounded annual growth rate (CAGR) of 30 per cent, reaching $ 139 billion by 2030.
The report stated that the government needs to take key actions including a scheme to provide fiscal support, scheme for promotion of manufacturing of electronic components and semiconductors (SPECS 2.0) to be introduced, import tariffs on components like camera modules to be rationalised, and sign free trade agreements (FTAs) with European and African countries.
The report has identified five priority components/sub-assemblies of batteries (lithium-ion), camera modules, mechanicals, displays, and printed circuit boards (PCBs) which are categorised as high priority for India. They cumulatively accounted for 43 per cent of the components demand in 2022 and are expected to grow to $ 51.6 billion by 2030.
Further, the report highlighted that these components have either nominal production in India or are heavily import-dependent. India can hardly afford to sustain this trend of importing the priority components. Similarly, PCBA is a high potential category for India since most of the demand is met by imports. This segment is expected to grow by 30 per cent, leading to a demand creation of around $ 87.46 billion by 2030.
Furthermore, the report stated that manufacturing-related cost disabilities vis-a-vis other competing economies like China, Vietnam, and Mexico (10-20 per cent), lack of big domestic manufacturing corporations, lack of domestic design ecosystem for Indian companies, and lack of raw materials ecosystem add to the challenges that disable the domestic manufacturing of components and sub-assemblies in India.
Moreover, as per the report, these policy supports will help in various economic benefits arising from the development of the components and sub-assemblies ecosystem in India. Job creation to the tune of approximately 0.28 million by 2026, increase in domestic value addition from the current levels, reduction in import dependency, and increase in gross domestic product (GDP), all leading to firmly positioning India as a global hub for electronics manufacturing.
