Niti Aayog: India’s Electronics Output Can Reach $500 Billion by FY30

Chennai: India can increase its electronics production five-fold to touch $500 billion by FY30, with $200 -$225 billion worth exports of both finished goods and components by becoming an integral part of the global value chain through focused policy interventions, finds Niti Aayog.

In FY23, electronics production surpassed $101 billion, with a growth rate of 15 per cent. Mobile phone segment saw production growing 19 times and imports reducing from 78 per cent to 4 per cent in the past decade. The geopolitical dynamics with respect to China provide an opportunity to power up the sector with an ambitious long-term strategy, finds Aayog. It can aim at $500 billion production - $350 billion worth finished goods and $150 billion of components by 2030.

However, the electronics sector has a very high participation in the global value chain with 75 per cent exports happening through the chain spread across different economies. India has to increase its share, which is currently at 1 per cent, in the $3 trillion global electronics trade.

Niti Aayog has recommended strategic interventions across multiple domains such as fiscal, financial, trade promotion, technology transfer, regulatory reforms, ease of doing business, hard infrastructure, soft infrastructure, skill development and labour issues.

Fiscal support entails operational expenditure aid to scale up low-complexity or locally produced components like casings and glass, capital expenditure support for high-complexity components such as mechanics, capital goods and special goods as well as hybrid support for highly complex goods.

Fostering the development of product design ecosystems, scaling up industrial infrastructure and creation of large-scale clusters is important. Non-fiscal support involves streamlining processes of technology transfer, skilling initiatives and ease of doing business along with simplification and rationalization of taxes and tariffs. Currently, on average India’s tariff on relevant electronics is around 7.5 per cent against 4 per cent in China, 3.5 per cent in Malaysia and 2.7 per cent in Mexico. India’s tariffs provide a 5-6 per cent cost disadvantage to electronics exports.