DR. NUPUR RAO
India has rapidly emerged as a significant player in the global electronics manufacturing landscape. Driven by government initiatives, policy reforms, and an ever-growing digital market, the electronic hardware manufacturing ecosystem in India has experienced significant advancements over the last decade. With the demand for electronics rising exponentially, the nation is poised to become a global manufacturing hub, aligning its goals with the vision of “Aatmanirbhar Bharat” (Self-Reliant India). This article explores the recent developments, key initiatives, and future potential of India’s electronic hardware manufacturing ecosystem.
At JIMS Kalkaji we teach the PGDM and PGDM IB students Operations Management and Logistics and Supply Chain Management. At JIMS students are made future ready by making the curriculum Industry Integrated.
The Rise of the Indian Electronics Sector
India is one of the largest markets for electronic products, driven by the increasing penetration of smartphones, digital devices, and rapid technological advancements. The electronics sector, however, was historically dependent on imports, primarily from China. Recognizing this dependency as a vulnerability, especially during the COVID-19 pandemic, India has intensified efforts to reduce imports and strengthen domestic manufacturing.
Key factors driving the growth of India’s electronics manufacturing industry include a massive consumer base, rising disposable incomes, and rapid urbanization. The demand spans across various sectors, from smartphones and consumer electronics to high-tech industrial machinery, medical devices, and automotive electronics. The country’s electronics market was valued at around $118 billion in 2021 and is expected to reach nearly $400 billion by 2025, according to industry reports. This anticipated growth offers lucrative opportunities for both domestic and international manufacturers.
Policy Initiatives and Government Support
The Indian government has implemented several policies to establish a robust electronics manufacturing ecosystem. These include:
- Production-Linked Incentive (PLI) Scheme: Launched in 2020, the PLI scheme for electronic manufacturing aims to boost domestic production by offering financial incentives to companies that meet specific production targets. The scheme has successfully attracted global giants such as Apple, Samsung, and Foxconn, as well as domestic players like Lava and Micromax, to expand their production bases in India. An extension of the PLI for electronics, announced in 2023, focuses on further expanding manufacturing capacity and supporting components manufacturing.
- Modified Electronics Manufacturing Clusters (EMC 2.0): To enhance the infrastructure required for electronics manufacturing, the EMC 2.0 scheme provides financial assistance for setting up electronics manufacturing clusters. These clusters help create a conducive environment by offering state-of-the-art facilities, logistics support, and access to raw materials and skilled labor. Major clusters have been set up in Noida, Hyderabad, and Bengaluru, catering to industries from semiconductors to consumer electronics.
- National Policy on Electronics (NPE) 2019: The NPE 2019 policy sets ambitious targets, including achieving a turnover of $400 billion in electronics manufacturing by 2025 and creating 10 million jobs. The policy focuses on promoting exports, ensuring the availability of a skilled workforce, and encouraging innovation.
- Semiconductor Mission: Recognizing the importance of semiconductors in electronic devices, the government launched the India Semiconductor Mission (ISM) to support semiconductor and display manufacturing. This initiative includes financial and policy support to establish chip fabrication plants (fabs) and a semiconductor supply chain, critical to reducing reliance on imports.
Technological Advancements and Emerging Trends
As the Indian electronics manufacturing sector evolves, several technological advancements are shaping its future:
- 5G and IoT: The rollout of 5G networks has created demand for 5G-enabled devices and IoT applications, prompting manufacturers to adopt advanced technologies in production. This trend is expected to drive demand for IoT devices, such as smart meters, wearables, and industrial IoT equipment.
- Automation and Robotics: Automation and robotics are increasingly being deployed in manufacturing facilities to enhance efficiency and reduce human error. Advanced robotics systems and AI-driven automation tools are now part of several production lines, facilitating faster, more precise assembly and quality control.
- Green Manufacturing: As environmental consciousness grows, many manufacturers are adopting eco-friendly practices. Companies are now focusing on sustainable manufacturing by reducing waste, recycling e-waste, and adopting renewable energy sources. This trend aligns with global standards and adds value for export-oriented manufacturing.
- Local Component Manufacturing: To further reduce dependency on imports, India is promoting local production of key components such as Printed Circuit Boards (PCBs), batteries, and displays. The government’s PLI scheme now also incentivizes the production of components, fostering backward integration in the supply chain and ensuring greater self-sufficiency.
Foreign Investment and Strategic Partnerships
India’s electronics sector has become a hotspot for foreign investment due to policy reforms and economic incentives. Major multinational corporations, such as Apple, Samsung, and Dell, have set up or expanded their manufacturing facilities in India. For example, Apple’s iPhone assembly in India, driven by companies like Foxconn, Pegatron, and Wistron, reflects growing foreign interest.
Additionally, strategic partnerships between Indian companies and foreign technology leaders are fostering technology transfer and skill development. These collaborations are crucial for enhancing manufacturing capabilities, particularly in complex areas like semiconductor fabrication, and are helping India strengthen its position in global supply chains.
Challenges and Road Ahead
While India’s electronic hardware manufacturing ecosystem has made considerable strides, it faces challenges that could impact its growth trajectory. Key challenges include:
- Supply Chain Dependencies: Despite efforts to boost local manufacturing, India remains heavily dependent on imports for certain components, especially semiconductors. Supply chain disruptions, as seen during the COVID-19 pandemic, highlight the need for a self-reliant ecosystem.
- Skilled Workforce: The industry requires a highly skilled workforce adept at handling advanced manufacturing technologies. India must focus on training and upskilling to create a workforce capable of supporting high-tech manufacturing.
- Infrastructure and Logistics: While clusters like EMCs are helpful, infrastructure and logistics remain critical challenges, particularly in transportation and electricity. Efficient supply chain management, from raw materials to delivery, is essential for making India a global hub.
- High Initial Investment for Semiconductors: Semiconductor fabrication units require substantial initial investments, advanced technology, and expertise. India’s semiconductor mission is still in its early stages, and establishing a robust semiconductor ecosystem will take years.
The electronic hardware manufacturing ecosystem in India is experiencing a transformative phase. Government policies, coupled with industry collaboration and technological advancements, have laid a strong foundation for sustained growth. India has the potential to become a global manufacturing powerhouse, supported by its vast consumer market, competitive labor costs, and a growing emphasis on innovation.
Looking forward, India’s journey to become self-reliant in electronics manufacturing depends on overcoming key challenges, particularly in supply chain localization and skills development. By fostering partnerships, encouraging innovation, and improving infrastructure, India can attract more global players and realize its vision of becoming a leading electronics manufacturing hub. With a committed focus on this sector, India is not only on the path to self-sufficiency but is also well-positioned to shape the future of electronics manufacturing on a global scale.
