India Should Target $500 Billion In Electronics Manufacturing By 2030, Says NITI Aayog

In a report on Thursday, NITI Aayog stated that India should set a target of achieving $500 billion in electronics manufacturing by 2030. This target includes $350 billion from finished goods manufacturing and $150 billion from component manufacturing.

Currently, as of the financial year ended 2023, India's electronics production totals $101 billion, comprising $86 billion from finished goods and $15 billion from components.

The report titled 'Electronics: Powering India's Participation in Global Value Chains', also forecasts that India's electronics exports could reach $240 billion, with domestic value addition expected to surpass 35%.

"India's ambition to become the third-largest global economy necessitates a more ambitious vision for its technology-driven sectors."

"With a conducive business environment and robust policy support, including fiscal incentives and non-fiscal interventions, India should aim to achieve $500 billion in electronics manufacturing by value terms by FY30," the report said.

In a business-as-usual scenario, the report noted that the projections indicate India’s electronics manufacturing could escalate to $278 billion by FY30. This includes $253 billion from finished goods and $25 billion from component manufacturing. Employment generation is expected to grow substantially to around 3.4 million, with exports reaching $111 billion.

The report recommends strategic interventions across fiscal, financial, regulatory, and infrastructure domains to support this growth trajectory.

According to the report, these include promoting components and capital goods manufacturing, incentivizing R&D and design, tariff rationalisation, skilling initiatives, facilitation of technology transfers, and infrastructure development to foster a robust electronics manufacturing ecosystem in India.

India’s electronics sector has experienced rapid growth, reaching $155 billion in FY23. Production nearly doubled from $48 billion in the financial year 2017 to $101 billion in FY23, driven primarily by mobile phones, which now constitute 43% of total electronics production.

India has significantly reduced its reliance on smartphone imports, now manufacturing 99% domestically, the report said.

The report emphasised scaling up production in established segments such as mobile phones and establishing footholds in component manufacturing.

Additionally, it said there should be a strong focus on diversifying into emerging areas such as wearables, IoT devices, and automotive electronics.

"This strategic diversification will capitalise on evolving consumer demands and technological advancements, positioning India as a leader in innovative electronic products on the global stage," it said.

As per the report, the global electronics market, valued at $4.3 trillion, is dominated by countries like China, Taiwan, the US, South Korea, Vietnam and Malaysia.

India currently exports approximately $25 billion annually, representing less than 1 percent of the global share despite a 4% share of global demand.

To enhance competitiveness, India needs to localise high-tech components, strengthen design capabilities through R&D investments, and forge strategic partnerships with global technology leaders, the report noted.

Presently, India’s electronics manufacturing primarily involves the final assembly of electronic goods. While brands and design firms have started increasingly outsourcing assembly, testing, and packaging tasks to Electronic Manufacturing Services companies in India, the ecosystem for design and component manufacturing is at a nascent stage.

Releasing the report, NITI Aayog CEO BVR Subrahmanyam said India has been a part of the global value chain.

"Currently, India is a very, very minor player as far as electronics manufacturing is concerned," he said, adding that certain types of components are just not made in India.

(With input from PTI)