India’s ambition to build a $500 billion electronics industry by 2030 presents a major opportunity for MSMEs, driven by rising domestic demand and exports. While India still trails China in the manufacturing scale, industry stakeholders felt the focus should be on leveraging strengths in building skills, innovation, design, IP creation and problem-solving, rather than attempting to replicate China’s model.
Participating in a panel discussion on ESDM – From Vendors to Value Creators at conclave, experts pointed out that India’s electronics ecosystem is still heavily dependent on imported components.
While assembly operations have expanded significantly, much of the value creation remains outside the country. In sectors such as smartphones, India may manufacture products for global brands, but the value-addition often remains limited because a large share of components continues to come from overseas, particularly China.
“Our journey as a country is very much on track in terms of electronics manufacturing” said Ashok Chandak, President, IESA (India Electronics and Semiconductor Association). The target to build a $500 billion electronics manufacturing industry includes $400 billion in finished products and $100 billion in components that will fit into it.
rising exports
While exports from India are growing, the domestic consumption is also growing very fast, said Chandak. Beyond handsets and mobile phones, there is a huge demand emerging in industrial products, telecom, appliances, automotive electronics, defence and so on, said Chandak, exhorting the MSMEs to look beyond ‘Make in India’.
“Make in India is already done. Got to go beyond, that is, design in India, build in India, secure in India and get trusted world wide,” said Chandak. While stating that opportunities are abundant and unfolding, Chandak said about 75 new projects have been approved under the Electronic Component Manufacturing Scheme, of which close to a third are from South India. About 11 projects have been approved in Karnataka and 13 in Tamil Nadu.
While huge opportunity exists in electronic manufacturing, several challenges, such as shortage of skilled talent and lack of robust domestic component system, exist.
“We are in a situation where we make iPhone for the world and earn 5 per cent value of the phone,” said BS Srinivasan, Managing Partner, Viprof Electronics.
“The labour productivity is one-third in India, one-fifth of China. Unless and until we get our labours to upskill, we won’t get to close to China,” said Srinivasan, adding that “in the Age of AI, industry 5.0, we need to skill 100 million people in the next 5-10 years”.
Srinivasan further stressed that there’s a need to target 10,000 MSMEs and take them from “technology readiness level 3 to technology readiness level 6”. “By 2030, if we all work very hard, I think we can all have 1,500 technologies that we import made in India,” he added.
“We are quite far away from becoming another China in terms of electronics manufacturing,” said Sonam Motwani, Founder and CEO, Kharkhana.io, adding that there are few areas where we have the ability to excel and build a strength for ourselves and build our own IP.
Sachin Dhruva Naik said in terms of component ecosystem, China is a decade ahead. We should find an insight and scale rather than trying to copy China. “If anyone of us thinking that we can compete with China by the volume of being cheaper, I personally feel it is just not the game,” he said.