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Home Manufacturing

Manufacturing: $240bn components needed to support $500bn electronics production

Fiinews by Fiinews
June 30, 2024
in Manufacturing
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Report calls on authorities to aggressively pursue FTAs with EU, UK, GCC countries and Africa

The demand for components and sub-assemblies is expected to scale to US$240 billion to support the US$500 billion worth electronics production by 2030 from US$45.5 billion to support US$102 billion worth of electronics production in 2023, according to a report by Confederation of Indian Industry https://www.cii.in/ .

Priority components and sub-assemblies including PCBAs, are projected to grow at a robust CAGR of 30%, reaching US$139 billion by 2030, said the report “Developing India as the Manufacturing Hub for Electronics Components and Sub-Assemblies” https://www.nseindia.com/ .

The Report identifies 5 priority components/sub-assemblies of batteries (lithium-ion), camera modules, mechanicals (enclosures etc.), displays and PCBs which are categorized as high priority for India https://sbi.com.in/ . They cumulatively accounted for 43% of the components demand in 2022 and is expected to grow to US$51.6 billion by 2030. These components have either a nominal production in India or are heavily import dependent said a CII media release on 22 June on the report https://www.bseindia.com/ .

“India can hardly afford to sustain this trend of importing the priority components https://www.jpx.co.jp/english/ . Similarly, PCBA is a high potential category for India since most of the demand is met by imports https://www.ibef.org/ . This segment is expected to grow by 30%, leading to a demand creation of ~US$87.46 billion by 2030,” added the report.

However, manufacturing related cost disabilities vis-à-vis other competing economies like China, Vietnam, Mexico (10-20%), lack of big domestic manufacturing corporations, lack of domestic design ecosystem for Indian companies and lack of raw materials ecosystem add to the challenges that disable the domestic manufacturing of components and sub-assemblies in India https://www.makeinindia.com/home/ .

Some of the key recommendations suggested in the Report are:

• To craft a scheme aimed at providing fiscal support for select components and sub-assemblies in the range of 6-8%. The fiscal support to be extended for a period of 6 to 8 years to ensure adequate time for scaling up and enhancement in value addition http://deutsche-boerse.com .

Additionally, SPECS 2.0 to be introduced with a subsidy support ranging from 25% to 40% to support potential investors across brownfield and greenfield categories. The new policy should adopt a gradient approach with support towards the higher end of subsidy https://www.sgx.com/ .

The import tariffs on priority sub-assemblies and components like camera modules, displays modules, mechanicals, need to be urgently rationalized in line with key competing economies. Majority of tariff lines need to be brought under the level of 5% or lower to ensure that product manufacturers become competitive https://www.londonstockexchange.com/ .

The report calls on authorities to aggressively pursue FTAs with EU, UK, GCC countries and emerging economies in Africa https://fieo.org/ . The creation of export demand for India made products have the twin advantages of increasing export volumes and helping boost domestic manufacturing of components and sub-assemblies https://usimportexports.com/ .

The policy support will help in various economic benefits arising from the development of the components and sub-assemblies’ ecosystem in India. Job creation to the tune of ~2.8 lakhs by 2026, increase in the domestic value addition from the current levels, reduction in import dependency, increase in GDP, all leading to firmly positioning India as a global hub for electronics manufacturing https://www.exportersindia.com/ .

An enabling ecosystem for the components and sub-assemblies will strengthen India’s electronics manufacturing capabilities, enabling it to be self-sufficient and deeply integrated into Global Value Chains https://www.wto.org/ . Fiinews.com

Tags: CII
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Fiinews.com features through news articles on business opportunities in the Indian market for the benefits of foreigners. It is also a platform for international businesses to showcase through elaborate articles on their products & services to the Indian consumers and corporations exploiting industrialisation of the country.

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