homeeconomy News

Boosted by localisation, Indian electronics mfg sector to touch Rs 7 lakh crore next fiscal

Boosted by localisation, Indian electronics mfg sector to touch Rs 7 lakh crore next fiscal

Boosted by localisation, Indian electronics mfg sector to touch Rs 7 lakh crore next fiscal
Profile image

By PTI Dec 25, 2021 3:19:24 PM IST (Published)

The value-addition from local manufacturing units is expected to go up to 25 percent next year from the current 18 percent. The government is aiming to grow overall electronics production in the country by 30 percent to over Rs 6.9 lakh crore next year.

Buoyed by the government's Rs 2.3 lakh crore policy push for self-reliant India, the domestic electronics manufacturing industry is expected to see 30 percent growth in the next fiscal to be worth nearly Rs 7 lakh crore.

Recommended Articles

View All

While the government continues to make efforts to move up in the global electronics supply chain and is expected to come up with new policies and incentive schemes for wearables and IT hardware, the immediate challenges are those around electronic components, mainly semiconductor chips, and potential threats from the coronavirus pandemic.
"The value-addition from local manufacturing units is expected to go up to 25 percent next year from 18 percent at present. The government is aiming to grow overall electronics production in the country by 30 percent to over Rs 6.9 lakh crore next year," a senior Ministry of Electronics and IT official said.
The ministry has proposed a PLI scheme of about Rs 22,000 crore to promote wearables as well as enhance incentives for IT hardware manufacturers in the next financial year as it aims to increase electronics exports from India by 50 percent.

Also read: 

According to industry body India Cellular and Electronics Association (ICEA), whose members include Apple, Foxconn, Wistron, Lava and Vivo, mobile phone production in the country peaked at Rs 2.2 lakh crore in 2020-21 and is expected to cross Rs 2.75 lakh crore by March 2022. Chinese players like Xiaomi, BBK Electronics group firms Vivo, Oppo, realme and iQOO dominate the smartphone segment with about 70 percent market share.
"Chinese companies are only focusing on catering to the Indian market requirement. Therefore, they have not participated in the PLI scheme. We expect Indian companies to do well and become global champions," the official said.
When asked about the contribution of Indian companies in electronics production, ICEA Chairman Pankaj Mohindroo said the share has come down from 47 percent of volume in 2016 to under 8 percent now. "The government has already introduced a significant measure in PLI wherein the under-$200 (about Rs 15,000) segment is reserved for Indian companies. A slew of other support measures is also being planned and we are sure that not only will Indian companies have a share of the domestic market but they will also emerge as global champions at least in the entry level segment," Mohindroo said.
The electronics manufacturing growth in the country remained almost between Rs 5,33,670 crore in 2020-21 and Rs 5,33,550 crore in 2019-20. "Today we are exporting 50 lakh phones, including smartphones. However, the concern remains that we are not still close to a strong electronics brand emerging out of India which could cater locally as well as become India's face globally," market research firm Techarc founder and chief analyst Faisal Kawoosa said.
The import of electronics in 2020-21 reduced to around Rs 2.85 lakh crore from about Rs 2.9 lakh crore in 2019-20 due to an increase in local manufacturing of consumer electronics items, especially LED television sets and electronic components. However, the import in the IT hardware segment increased to around Rs 79,000 crore in 2020-21 from about Rs 68,400 crore in 2019-20.

MAIT CEO George Paul said that the digital infrastructure supported economic activity across the world during the lockdown which resulted in a boom in demand against a scaling down of worldwide semiconductor capacity.
Paul said that the shortage of semiconductors is because of a combination of the US-China trade war and the outbreak of COVID and the forecast of a possible deceleration of global demand. Infineon Technologies India Managing Director Vinay Shenoy said the demand for semiconductors remains extremely high and is by far outstripping supply. He said that the imbalance between supply and demand will continue for several quarters and will persist into 2022. BenQ India & South Asia managing director Rajeev Singh said that in the short term, the situation is gradually becoming better as trade gateways are getting aligned.
The government has made a third attempt to attract electronics chipmakers in the country with Rs 76,000 crore incentive schemes spread over a period of six years and is confident of attracting 100 companies in the next four years under the package. The government expects two companies manufacturing electronic chips and two companies for manufacturing display units to set up their units in the country within four years with investment in the range of Rs 30,000 crore-Rs 50,000 crore.
"In the context of the prevailing geopolitical situation as well as pandemic pressures on electronics supply chains, there is a greater emphasis on diversification and building regional hubs. In this context, India's initiative to build an end-to-end semiconductor manufacturing value chain in India from fab to box offers an unparalleled opportunity to establish India as a global electronics manufacturing hub," CMR Head of Industry Intelligence group Prabhu Ram said.
According to the electronics industries association Elcina's Secretary General Rajoo Goel, besides shortage of semiconductors, the industry is facing an unprecedented shortage of even multilayer PCBs (motherboards) and copper clad laminates. "There is an equally severe shortage of raw materials such as Ferrite Powder which is impacting a large section of the Indian component sector viz transformers, inductors and coils where we have a significant presence," Goel said. He said that some of Elcina members' companies are seeing over 20 percent increase in the price of electronics components. The mobile phone segment, which is a major consumer of semiconductors and the biggest contributor to 'Make in India' electronics segment, remains optimistic of facing the crisis as most of the players manufacturing their devices in the country are the global majors who procure electronics chips on a regular basis with prior commitments to their vendors.

Mobile phone company realme India CEO Madhav Sheth said that since the onset of this shortage, realme has been looking at and working on collaborations with chipset manufacturers who can provide processors to us without compromising performance. "India is a key market for us, and therefore, we do not want our consumers to witness any shortage of products. We are also in conversations with mainstream chipmakers to keep ahead of the curve with new and powerful 5G chipsets," Sheth said.
Lava International said that the challenge of semiconductors continues but they have made alternate arrangements to ensure continuity of the business but they had to increase the price of their devices due to the rise in the price of components. "We believe that we can navigate through the current chipset shortage scenario by maintaining an optimum balance between demand and supply," HMD Global vice-president for India and MENA region Sanmeet Singh Kochhar said.
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!

Top Budget Opinions

    Most Read

    Market Movers

    View All
    Top GainersTop Losers