In a major move to strengthen the electronics manufacturing sector, India is set to introduce a US$ 5 billion incentive scheme worth approximately Rs. 42,245 crore. This initiative is aimed at encouraging local firms to manufacture critical electronics components such as printed circuit boards (PCBs) for devices like smartphones and laptops. The scheme, spearheaded by the Ministry of Electronics and Information Technology, is expected to reduce India’s dependence on imports, particularly from China and Hong Kong, and help build a more robust and self-sufficient domestic supply chain.

India’s Growing Electronics Production

India’s electronics production has seen remarkable growth, reaching US$ 115 billion (Rs. 9,71,635 crore) in FY24, more than doubling from six years ago. This surge in production has been largely driven by global manufacturers like Apple and Samsung, who have been ramping up their operations in India. However, despite this impressive growth, the industry still heavily relies on imported components, particularly from China and Hong Kong, which together account for over half of India’s electronics imports, totaling US$ 89.8 billion (Rs. 7,58,720 crore) in FY23, according to the Global Trade Research Initiative (GTRI).

The Incentive Scheme and its Goals

The upcoming incentive scheme will focus on stimulating the domestic manufacturing of key components, including printed circuit boards (PCBs), which are vital for the assembly of electronic devices. By bolstering the local production of these components, India aims to create a more resilient and self-reliant electronics ecosystem, reducing the dependence on imports, especially from China.

The programme, which is currently awaiting approval from the Ministry of Finance, is expected to be officially launched within the next two to three months. The goal is to foster a more comprehensive and deeper local supply chain, ultimately contributing to India’s electronics manufacturing value addition. This initiative aligns with the government’s broader vision of establishing India as a global hub for electronics manufacturing while gradually reducing its reliance on foreign suppliers.

Target for FY30: Scaling Production to US$ 500 Billion

India’s government, through Niti Aayog, has set an ambitious target for the country’s electronics industry. By FY30, India aims to scale its electronics production to US$ 500 billion (Rs. 42,24,500 crore), with US$ 150 billion (Rs. 12,67,350 crore) of that figure dedicated to component manufacturing. This goal is part of a larger strategy to position India as a leader in global electronics production, creating not only economic growth but also numerous job opportunities in the sector.

The upcoming incentive programme plays a crucial role in this strategy, helping to meet the component manufacturing target and reduce India’s import dependency. By investing in local manufacturing capabilities, India hopes to improve its balance of trade and create a more sustainable ecosystem for electronics production that can serve both domestic demand and global markets.

Future Implications for the Electronics Industry

The launch of this incentive scheme marks a significant step in India’s ambition to become a dominant player in the global electronics manufacturing landscape. As local firms begin to manufacture more components, the country will also likely see increased foreign investment and greater participation from global companies looking to expand their supply chains in India. This shift towards local component manufacturing is not only critical for strengthening India’s domestic market but also for the broader Make in India initiative, which seeks to make India a manufacturing powerhouse.

India’s strategy to foster a thriving electronics sector by reducing its reliance on imports and ramping up domestic production of critical components is a forward-thinking move that aligns well with global trends towards manufacturing diversification and self-reliance. As more companies invest in India's electronics manufacturing capabilities, the country’s role in the global electronics supply chain will continue to grow, enhancing its competitive edge in the sector.

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