Given the ‘unforeseen and unprecedented’ challenges brought by the pandemic, India is likely to achieve electronics production of $300 billion by 2026, lower than the target of $400 billion by 2025 set as per the National Policy on Electronics (NPE) 2019, according to a vision document released by Ministry of Electronics and IT (MeitY) in association with the India Cellular & Electronics Association (ICEA).
However, the reduced target still aims for a 400% increase from the current level, the document noted, adding that electronics manufacturing had grown from $37.1 billion in 2015-16 to $67.3 billion in 2020-21 even as COVID-19- related disruptions impacted the growth trajectory in 2020-21.
“While the policy initiatives of the government have had a positive impact on the manufacturing ecosystem, the disabilities have persisted by and large. There are various challenges being faced by the industry across qualitative (non-tariff, infrastructure related) and quantitative (tariff, free trade agreements etc.) aspects and need to be addressed in toto to ensure that manufacturing in India is resilient, globally competitive and able to undertake operations at massive scale,” according to the document.
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It recommends that for achieving the target of $300 billion in electronics manufacturing by 2025-26, primary focus must be building of scale through incentives and removal of cost disabilities. The documents also called for ‘swift changes’ in respect of existing policies within the next 1,000 days, including stability in import tariffs, decrease in import tariffs for components with no manufacturing base in India, development of skill sets and encouraging major foreign manufacturers to set up components ecosystems in India.
The report pointed out that the demand for electronic products in India may stand at about $180 billion by 2025-26, and if India is able to achieve the manufacturing target of $300 billion for electronics, the domestic market demand may be met in full by such manufacturing. “This necessitates that $120 billion worth of electronic products would be required to be exported to the global market,” it said.
During his address at the release of the document, IT Minister Ashwini Vaishnaw clarified that the Ministry of Telecom will not interfere in matters related to mobile phone manufacturing amid concerns raised by the industry that such a move may lead to heavy regulations.
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On concerns over setting up large footprint factories which can hire 40,000 to a lakh of workers, the Minister said this requires changes in labour regulations and he has discussed the issue with the Labour Minister, who thinks this is a highly doable thing requiring no major change. He further said that industry had pointed out that other countries allow ‘housing on campus’ which India does not, and as per his discussion with the Labour Minister and State government officials, both feel that with a little tweak in the regulations it is possible.
“So, the suggestion here is that we take a particular case and see whether it can be done with State governments tweaking of regulations, or it can be done with Central government’s advisory to the State government and then subsequent tweaking of regulations by the State government,” he said, while requesting industry to come up with one specific location where this could be tested.