The Union Ministry of Electronics and Technology is examining the possibility of having a new programme to ensure that more and more of the electronic components can be made in India, and through an appropriate PLI like scheme.
“That is currently in the works, and something on which the ministry is working on. The Union Minister is keen on pushing this, and where we expect there would be substantial growth,” said S Krishnan, Secretary, Ministry of Electronics and Information Technology. This will greatly assist the non-semiconductor electronics part sector. This is clearly an area where states like Tamil Nadu should be interested because its the kind of advanced manufacturing that states like Tamil Nadu need to push, he added.
While delivering his keynote address on Electronics: Rapidly re-shaping the future at the TN Global Investors Meet 2024, Krishnan said, the component ecosystem is a space where advanced manufacturing can really take place in a significant measure. That’s where states like Tamil Nadu can significantly contribute. “This is an area in which Tamil Nadu will focus on just as we will focus at the Government of India level,” he said.
The PLI scheme has been successful in electronics, especially in the mobile phones the country managed to achieve. The PLI scheme is successful because it offers a kind of subsidy where the capital investment may be small but the turnover which is achieved is really large. This means the contrary is also true. If the incentive seizes or if you have not achieved sufficient scale and competitiveness by the time the incentive stops, you are at the risk of reversal, he said.
Vital for India
For a country like India, it is vital to go to the next stage how to make it competitive for more components to come into the country. This would be the next stage of what the Centre would be wanting to do with this industry. How do we bring more of the component ecosystem in to India? It is happening already. For instance, camera module and battery modules being produced here. This needs to be accelerated. We need to ensure that those industries are encouraged so that with the components, we are in a position to make sure that in the electronics space, domestic value addition goes up significantly, he said.
In the bill of materials in any of the electronics items, the components are in two parts - semiconductor and other kinds of assemblies and subassemblies in a phone or an electronic item. You have to look at both of them. The semiconductor sector is absolutely vital and strategic in a number of ways. We learnt during the Covid pandemic as to why it is vital with each of those chips that need a resilient supply chain that the world realised.
The Centre’s Semiconductor Mission is probably one of the most ambitious and generous packages that has ever been offered as part of the industrial policy. IThe Tamil Nadu’s semiconductor policy released by a 50 per cent top up on that. This basically means 75 per cent of the entire investment that the government is subsiding, and on a pari passu basis. This is something which I don’t think has been done historically in any other industry. This is a huge incentive structure to which the industry really needs to respond.
In the value addition, there is a substantial portion that is on the non-semiconductor electronics part, and this again where traditionally India had strengths and some of those strengths over the years we became uncompetitive post ITA1 and that is an area where we need to regain the competitive strengths; upgrade technologies and come in a big way.
A learning from the automobile sector was that the strength in components led to overall manufacturing competitiveness of the State. If you do not have strengths in components and component manufacturing, you are not likely to do very well and unlikely to be very competitive in terms of overall electronics manufacturing.
“We need to have high ambitions in this sector starting with ESDM, moving on to semiconductor, component manufacturing, design and having patents,” he said. What other countries 30-40 years to do, we would do it in 5-10. If the mobile industry is anything to go by, we have demonstrated to do it in 5-10 years. With the same level of ambition and planning, there is no reason why it should be possible to do the rest of the story in the coming decade,” he said.