The domestic electronics manufacturing industry is predicted to rise 30% in the next fiscal year, reaching approximately Rs 7 lakh crore, thanks to the government’s Rs 2.3 lakh crore policy push for self-reliance.
While the government continue to work to drive up the global electronics supply chain and is expected to introduce fresh policies and incentive schemes for wearables and IT hardware, the immediate challenges are those related to electronic components, particularly electronic chips, and potential threats from the coronavirus pandemic.
“Value addition from local manufacturing units is predicted to increase to 25% next year, up from 18% currently. According to a top Ministry of Electronics and IT (Meity) official, the government aims to increase overall electronics manufacturing in the country by 30% to over Rs 6.9 lakh crore next year.
In order to expand electronics exports from India by 50%, the Meity has suggested a PLI scheme worth Rs 22,000 crore to promote wearables and improve incentives for IT hardware makers in the coming fiscal year.
Mobile phone production in the country peaked at Rs 2.2 lakh crore in 2020-21, according to industry association ICEA, whose members include Apple, Foxconn, Wistron, Lava, and Vivo, and is likely to reach Rs 2.75 lakh crore by March 2022.
With almost 70% market share, Chinese players such as Xiaomi, BBK Electronics group firms Vivo, Oppo, Realme, and Iqoo dominate the smartphone industry. “Chinese enterprises are solely focused on meeting the needs of the Indian market.” As a result, they have not taken part in the PLI initiative. “We expect Indian enterprises to succeed and become global champions,” stated a Meity executive.
When asked about Indian companies’ contribution to electronics manufacture, India Cellular and Electronics Association Chairman Pankaj Mohindroo claimed the percentage has dropped from 47% in 2016 to under 8% presently.
“The government has already taken a huge step in PLI by reserving a chunk of USD 200 (about Rs 15,000) for Indian firms. A plethora of other support measures are also in the works, and we are confident that Indian enterprises will not only capture a share of the domestic market, but will also emerge as global champions, at least in the entry-level area,” Mohindroo added.
In 2020-21, the country’s electronics manufacturing output grew by roughly Rs 5,33,670 crore, compared to Rs 5,33,550 crore in 2019-20. “Right now, we’re exporting 50 lakh phones, including smartphones,” says the company. However, market research firm Techarc Founder and Chief Analyst Faisal Kawoosa expressed concern that “we are still not near to a major electronics brand emerging out of India that could cater locally as well as become India’s face globally.”
Due to a rise in local manufacturing of consumer electronics items, mainly LED television sets and electrical components, electronics imports in 2020-21 decreased to roughly Rs 2.85 lakh crore from around Rs 2.9 lakh crore in 2019-20.
However, from roughly Rs 68,400 crore in 2019-20, IT gear imports jumped to around Rs 79,000 crore in 2020-21.
During the lockdown, the digital infrastructure maintained global economic activity, resulting in a surge in demand despite a reduction in global semiconductor capacity, according to MAIT CEO George Paul.
The shortage of semiconductors, according to Paul, is due to a combination of the US-China trade war, the outbreak of COVID, and the expectation of a likely worldwide demand slowdown. The demand for semiconductors is exceptionally high, according to Infineon Technologies India Managing Director Vinay Shenoy, and supply is clearly outstripping demand.
According to him, the supply-demand imbalance will endure for several quarters, possibly into 2022.
Rajeev Singh, managing director of BenQ India & South Asia, stated that the situation is improving in the short term as trade gateways align.
With Rs 76,000 crore in incentive schemes stretched over six years, the government has undertaken a third attempt to recruit electronics chip makers to the nation, and is certain that the package will attract 100 companies in the next four years.
Within four years, the government expects two businesses that make electronic chips and two companies that make display units to set up shop in the country, with investments ranging from Rs 30,000 crore to Rs 50,000 crore. “There is a greater emphasis on diversification and developing regional hubs in the context of the current geopolitical scenario as well as pandemic constraints on electronics supply chains.” “In this environment, India’s aim to construct an end-to-end semiconductor manufacturing value chain in India, from fab to box, presents a unique chance to establish India as a worldwide electronics manufacturing hub,” said Prabhu Ram, CMR’s Head of Industry Intelligence Group.
Apart from semiconductors, the electronics sector is experiencing an unprecedented shortage of multilayer PCBs (motherboards) and copper clad laminates, according to Elcina Secretary General Rajoo Goel.
“An equally acute shortage of raw materials such as Ferrite Powder is affecting a big segment of the Indian component business, including transformers, inductors, and coils, where we have a significant presence,” Goel explained.
He claims that the price of electronics components has increased by more than 20% for some Elcina members’ businesses. The mobile phone segment, which is a major consumer of semiconductors and the largest contributor to the ‘Make in India’ electronics sector, is optimistic about overcoming the crisis because most of the players manufacturing their devices in the country are global majors who procure electronics chips on a regular basis with pre-arranged contracts with their vendors.
Realme India CEO Madhav Sheth said that since the start of the scarcity, the business has been looking for and working on collaborations with chipset makers who can deliver CPUs without sacrificing performance.
“India is a critical market for us, and we don’t want our customers to face any product shortages.” “We’re also talking to mainstream chipmakers about staying ahead of the curve with new and powerful 5G chipsets,” Sheth added.
Lava International stated that the semiconductor challenge persists, but that they have made alternative arrangements to ensure the business’s continuity. However, due to the rise in component prices, they had to raise the price of their devices.
“We believe that by keeping an optimum balance between demand and supply, we can navigate through the current chipset shortage issue,” Sanmeet Singh Kochhar, vice president of HMD Global for India and the Middle East and North Africa, stated.
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