CII report projects growth in worth of India's electronics production from $102 billion in 2023 to $500 billion by 2030

A report on “Developing India as the Manufacturing Hub for Electronics Components and Sub-Assemblies” by the Confederation of Indian Industry (CII) has projected an increase in demand for electronic components and sub-assemblies in India by 2030. As per the report, the demand for components and sub-assemblies in 2023 stood at $45.5 billion to support electronics production worth $102 billion, which is expected to scale up to $240 billion by 2030 to support electronics production worth $500 billion. Priority components and sub-assemblies, including PCBAs, are projected to grow at a robust CAGR of 30%, reaching $139 billion by 2030.

The report encapsulates critical actions required to transition India’s Electronics sector ecosystem from an ‘import dependent assembly led manufacturing’ to ‘component level value-added manufacturing’. It has identified 5 priority components/sub-assemblies of batteries (lithium-ion), camera modules, mechanicals (enclosures etc.), displays and PCBs, which are categorised as high priority for India. They cumulatively accounted for 43% of the components' demand in 2022 and are expected to grow to $51.6 billion by 2030. Currently, these components either have a nominal production in India or are heavily import-dependent, which the CII termed as unsustainable in view of the continuing import of priority components. Similarly, the report pointed to PCBA as a high potential category for India as most of the demand is currently met via imports. It expects the segment to grow by 30%, leading to a demand creation of nearly $87.46 billion by 2030.

The report lists manufacturing-related cost disabilities vis-à-vis other competing economies like China, Vietnam, and Mexico (10-20%), lack of big domestic manufacturing corporations, lack of domestic design ecosystem for Indian companies and lack of raw materials ecosystem as challenges which disable the domestic manufacturing of components and sub-assemblies in India.

Some of the key recommendations suggested in CII's report are:

• Need to craft a scheme aimed at providing fiscal support for select components and sub-assemblies in the range of 6-8%. The fiscal support should be extended for a period of 6 to 8 years to ensure adequate time for scaling up and enhancement in value addition

• SPECS 2.0 should be introduced with subsidy support ranging from 25% to 40% to support potential investors across brownfield and greenfield categories. The new policy should adopt a gradient approach with support towards the higher end of the subsidy

• The import tariffs on priority sub-assemblies and components like camera modules, display modules, and mechanicals, need to be urgently rationalised in line with key competing economies. Majority of tariff lines need to be brought under the level of 5% or lower to ensure that product manufacturers become competitive

• India needs to aggressively pursue FTAs with EU, UK, GCC countries and emerging economies in Africa. The creation of export demand for India-made products has the twin advantages of increasing export volumes and helping boost domestic manufacturing of components and sub-assemblies

The report says that policy support 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 2.8 lakhs by 2026, increase in the domestic value addition from the current levels, reduction in import dependency, increase in GDP, all leading to firmly positioning India as a global hub for electronics manufacturing.