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India’s Road to Becoming the World’s Electronics Manufacturing Hub

The electronics industry is one of the most important entities in the growth of the economy in India. Today, you will feel surprised if someone you know says he/she doesn’t own a mobile phone. It would have been the case ten years back, but today, people living in even the remotest of areas have mobile phones. In fact, India has the second-largest mobile user base in the world. With electronic manufacturing in India, smartphones have become quite affordable. The Indian electronics industry started seeing growth in the early years of the 21st-century, and it hasn’t looked back since then.

It got encouragement from the government policies and incentives and by international investments. Today, there is no international electronic brand that doesn’t have a manufacturing facility in India. Even Apple set up its manufacturing plant in the country in 2017. And the tech giant is planning to shift the majority of its iPhone production from China to India.

With the massive need for products produced by electronic companies, electronic manufacturing in India is experiencing an economic boost. There is a significant growth in the research and development departments looking to produce innovative and better performing electronic items.

This post discusses in detail the dynamics of electronic manufacturing in India, the scope of growth, leading electronics manufacturers, and a lot more.

So, keep on reading.

India to be the Next Big Electronics Manufacturing Hub of the World

electronics manufacturing companies in india

India is making it easier to do business. The government has taken concrete measures to ensure that investors get a suitable business climate. The country is aiming to go from a $2.8 trillion economy to a $5 trillion economy. Nevertheless, it may be delayed as the country is in the midst of the second wave of Covid-19. But, the key points to note here is that:

  • India has all the resources it requires to become the global electronics manufacturing hub and a competent partner to the world economy.
  • Last year, the government introduced a $6.6 billion incentive scheme for local and international companies to ramp up their electronic manufacturing in India.
  • The production and assembly of smartphones, in particular, is the cornerstone of the government’s “Make in India” campaign.
  • Most importantly, the Indian electronics industry expects to see a growth in the export of electronic items by 40-50% annually over the next five years.

What does the Current Scenario say?

India currently holds a 3% market share of global electronics production. While it is in its first lap of the marathon, the country is slowly gaining pace. India has the third-largest pool of technicians and scientists in the world. So, experts predict that the Indian electronics industry will reach an estimated $400 billion by the end of 2025.

Nevertheless, given the current situation, the road ahead is full of challenges. India’s manufacturing sector is recovering from the massive downtick of 40% due to the Covid crisis. As a result, it is expected that electronic manufacturing in India is going through the same fate.

Most importantly, the country’s economic policy is under distress due to international and geostrategic affairs, particularly with China. China is India’s biggest competitor, and we have always relied on our neighbor for imports. China enjoys over 28% of global manufacturing output. For example, the value of components sourced from China for televisions and smartphones is as high as 75%.

But there is a change of dynamics. Many major economies are abandoning China and looking for a more reliable partner who can look after their manufacturing needs. And guess what? India is available. The country has shown some promising prospects in terms of resources, manpower, skills, and availability of space.

The massive push from the Indian government has set the stage for electronics manufacturers to produce products with ‘Made in India’ tags. If things go as planned, the government is predicting that electronic manufacturing in India will grow at a rate of 30% for the next five years. This means that it will bring in approximately INR 11.5 lakh crores worth of production during this five-year phase.

Smartphone Manufacturing

India is one of the leading smartphone markets in the world, and the Indian government is offering incentives to smartphone manufacturers, encouraging them to set up manufacturing plants in the country. Top smartphone manufacturers like Apple, Xiaomi, Lenovo, and Samsung, among others, have already set up production centers and assembly lines in the country for some of their handsets.

As of 2014, India had only two mobile phone factories. Today, it is the second-largest mobile phone manufacturer in the world. You can imagine the rate at which things have taken place in electronic manufacturing in India.

What’s making popular smartphone brands invest and set up factories in India is its gamut of IT power. India has one of the largest pools of engineers and scientists. So, it has all the human resources, startup power, and software power available in abundance. All this, coupled with the relative ease of doing business in India, has made it possible for the electronics industry to gain momentum.

Last year, there was an announcement that the government would give production-linked cash incentives to smartphone manufacturers, worth 4-6% of incremental sales over the period of five years. This incentive is for electronics manufactured locally. Five international smartphone manufacturers will be selected for this incentive scheme.

Other portions of the scheme are dedicated to ramping up the electronic components manufacturing in India and improving the resources and infrastructure available to the manufacturers.

The majority of global smartphone manufacturers have already set foot in India. But, time will tell how fast things turn out for the electronics manufacturers, considering there is a sudden change in dynamics due to the second wave of Covid-19. There is also a claim that there will be a third wave. So, we have to wait and see.

Why does India need to Push Boundaries in Electronics Manufacturing?

Despite bright predictions, India’s ESDM (Electronic System Design and Manufacturing) sector is still at the growth stage and has not fully developed. In short, it cannot meet the demand of consumers as of now. This is the reason why the majority of our electronic products are imported from China.

ESDM has not got the desired attention, either from the government or the investors. ESDM is a vast sector that incorporates hardware components relating to a plethora of electronic sectors, such as medical electronics, information technology, and consumer electronics, among others. It also consists of critical industrial domains like design-related activities that range from very large scale integration (VLSI), chip designing, and product designing.

Why ESDM?

ESDM is still small and cannot meet the demand of Indian consumers. To fill this gap, India imports electronics worth $300 billion. While the Indian government is trying to encourage the growth of its domestic industry, it is still early to say when and how it will shape. But the Electronic System Design and Manufacturing sector will play an important role in meeting the demands of both consumers and manufacturers. With the inclusion of foreign manufacturers in the Indian electronics industry, it is expected that the ESDM sector will flourish to newer heights. The goal is to manufacture products and components locally. Local production will give a certain boost to the overall economy.

Cashing on the Anti-China Sentiment

Since the pandemic started, anti-China sentiments have grown stronger across the globe. The buzzword is that US and European buyers have already set the ‘anything-but-China’ policy. They are looking for alternatives, and India ticks all the boxes. It is helping electronic manufacturing in India to show its full potential. Indian electronics finished goods companies and component makers have the opportunity to find new buyers. However, more needs to be done by the local electronics manufacturers in India to capitalize on this sentiment.

Top Electronics Companies in India

Manufacturing is a global supply chain. However, every sub-sector, irrespective of the country, has dependencies on China. This is true for primary components like transformers, capacitors, and resistors. With the right policy and schemes, India can take on testing and design manufacturing. While the industry is trying to set up the right ecosystem of electronics manufacturing, there are several top-rated companies establishing their presence in the country and globally.

These electronics companies meet the manufacturing needs of the buyers and consumers. Also, they are involved with the design, manufacturing, and distribution in the world of electronics. They include:

  1. Havells India Ltd
  2. Aar em Electronics
  3. Bajaj Electronics
  4. Jabil Circuits
  5. The Kirloskar Electric Company Limited
  6. Midas Communication Technologies
  7. Honeywell Automation India Limited
  8. Bharat Electronics Limited
  9. Philips Electronics India
  10. Bosch India
  11. Exide Batteries Limited
  12. Compton Greaves

These are some of the most prominent names holding together the face of electronic manufacturing in India. Their growth and development should give encouragement and motivation to foreign manufacturers to set up factories in India.

Conclusion

It is still a long run before we can reach the finish line. Electronic manufacturing in India is slowly picking up the pace. We can expect to see a massive boost in this sector in the coming years, which will pave the way for new job opportunities, technological advancements, and the overall growth of the nation.