Building on the initial successes India achieved in electronics manufacturing, there is an ambitious plan to increase local value addition from the current 18-20 per cent to 38-40 per cent in the future. The Centre is working on identifying the top five electronic components for which incentives could be offered to attract investments and build a strong electronic component manufacturing base in the country, said S Krishnan, Secretary of the Ministry of Electronics and Information Technology (MeitY).

“There will be a large components promotion scheme by the Centre in order to bring in electronics component manufacturing. The objective is to identify five top items including PCBs (printed circuit boards) and encourage much more of such manufacturing in the country. It is important from a resilient and continued competitiveness perspective to get it done,” he said, while delivering the 10th G Ramachandran Endowment Lecture, organised by the Madras School of Economics and South India Chamber of Commerce and Industry.

For this electronics components manufacturing promotion, incentives could be provided or we can learn from other countries including Europe as not all barriers have to be physical. Krishnan highlighted India’s success in attracting assembly and packaging units for mobile phones, achieving an 18-20 per cent value addition. He suggested doubling this to 38-40 per cent to improve resilience. While China achieves 40-45 per cent value addition by sourcing inputs globally, Krishnan emphasized that India should focus on areas where it can make a difference rather than trying to cover the entire value chain.

Private sector involvement

To participate in global value chains, India needs to build capacity and foster industrial champions. Krishnan noted the importance of private sector involvement, highlighting the efforts of major Indian groups like the Tatas and Murugappa Group in exploring electronics and semiconductors. “Many such groups need to get into such electronics manufacturing in the days to come,” he added.

Inclusive growth

Earlier, discussing the impact of the digital economy and the outlook, he said the share of the digital economy in the overall economy, is likely to be significantly larger, but more importantly, it is likely to contribute to the growth of the other elements of the economy as well. Also, the digital economy carries the potential to deliver inclusive growth and will allow for a range of participants to come in, he stated.

The size of the digital economy increased from ₹13.6 lakh crore in FY20 to ₹18.2 lakh crore in FY22. Employment in this sector has increased from 4.9 million to 5.1 million during this period. India’s digital economy is expected to grow from 8 to 20 per cent of the overall economy, touching $1 trillion when the country reaches $5 trillion, according to initial estimates of a study being done by the MeitY.