Rajesh Jha, Vice-President, Manufacturing, VVDN Technologies

Rajesh Jha, Vice-President, Manufacturing, VVDN Technologies

India has emerged as a preferred destination for electronics manufacturing in recent years. The country has a large and expanding consumer market, a strong IT industry, a skilled labour force, and government policies and initiatives that support the growth of the electronics manufacturing sector.

Potential of electronics manufacturing in India

  • Growth prospects: According to the India Brand Equity Foundation, the electronics manufacturing industry in India was valued at $75 billion in 2019-20 and is expected to reach $400 billion by 2025.
  • Make in India: The government’s Ma­ke in India initiative has attracted significant foreign direct investment in the el­e­ctronics manufacturing industry, reaching $3.6 billion in 2022.
  • IT industry: India also has a large and an ever-growing pool of skilled labour, in­cluding engineers and technicians, which is essential for electronics manufacturing.
  • Industrial parks and special economic zones (SEZs): The government has been investing in infrastructure development, including the development of in­dustrial parks and SEZs for electronics manufacturing. This has provided companies with access to the necessary infrastructure and facilities for setting up, running and expanding manufacturing operations in India.

Government initiatives

The government has implemented several policies and initiatives to support electronics manufacturing. Some of these are:

  • Make in India: The Make in India initiative, launched in 2014, offers fi­nan­cial incentives and tax breaks to co­m­pa­nies that set up manufacturing op­era­tions in India.
  • Production-linked incentive (PLI) scheme: The PLI scheme has co­m­mi­t­ted to providing incentives worth Rs 409.51 billion ($5.5 billion) to large-scale electronics manufacturers over the next five years.
  • Electronics manufacturing clusters (EMCs): The government has also es­tablished EMCs across the country, offering infrastructure and facilities for electronics manufacturing.
  • National Policy on Electronics (NPE): The policy has set a target of creating a $400 billion electronics ma­nu­facturing industry by 2025, with a fo­cus on increasing domestic value addition and creating employment opportunities.

Global trends and scenarios

There are several global trends and develo­p­ments that support the potential for electronics manufacturing in India.

  • Geopolitical stability: The geopolitical situation post 2020 has led to a shift in global supply chains, with India emerging as one of the preferred destinations for el­ectronics manufacturing.
  • Strategic location: India’s location provides easy access to major markets in Asia, Europe and Africa via air and sea links, making it an ideal location for manufacturers looking to serve global markets.
  • Favourable business environment: The government has implemented initiatives to promote ease of doing business in the country, including measures to simplify regulations, reduce bu­reaucratic red tape and attract foreign investment.
  • Lower labour costs: India has a large pool of skilled labour that is available at a lower cost, making it an attractive destination for manufacturing operations.
  • Strong domestic demand: The demand for electronics products is growing rapidly in India due to the adoption of digital technologies, increasing urbanisation and rising incomes.
  • Technological advancements: India has a strong IT industry and a growing pool of skilled labour, making it well positi­o­n­ed to capitalise on emerging technologies such as the internet of things, artificial intelligence and 5G.

Covid-19 disruption

The disruptions caused by the pandemic have led ma­ny companies to seek alternative manufacturing destinations, and India has emerged as an attractive destination for electronics ma­nufacturing.

  • Supply chain disruptions: The pande­m­­ic has disrupted global supply chains, le­­­ading to many companies exploring al­t­ernative manufacturing destinations. Th­is has led to an increase in the number of companies setting up operations in India.
  • Shift towards remote work and digital technologies: The pandemic has led to a shift towards remote work and digital te­chnologies, driving the demand for electronics products such as laptops, smartphones and other devices. India has a large and growing IT industry, making it well positioned to develop and manufacture these products.

Towards a promising future

India has a bright future in electronics manufacturing, with a growing domestic market, government support and a skilled lab­o­ur force. The country’s policies and in­iti­a­ti­ves aim to create a favourable business environment for electronics manufacturing, with financial incentives, streamlined regulations and infrastructure support. With the ongoing shift in global supply chains, India is well positioned to be­come a manufacturing hub for electronic products.