New schemes introduced by the government will focus not only on manufacturing of electronics in India, but also positioning the country as an export hub.
The booming demand for electronic goods proves that India’s insatiable desire for electronics is only going to see steeper rise in the coming days. Through this, the government is urgently looking for ways to capture a larger share of the electronics manufacturing value chain.
By framing a National Electronics Policy, the government is prescribing an export-led strategy. At various occasions, the electronics industry dignitaries had been discussing various means and ways on how India can not only manufacture products in high volumes but also manufacture high value products and gradually increase its value addition in the global scenario.
Creating a global value chain
Currently, India has a $112 billion demand of electronics manufacturing. At a recent industry meet, talking about the domestic manufacturing scenario at present, Ajay Prakash Sawhney, secretary, MeitY said that apart from various brands coming to the country to set up manufacturing base, their supply chain partners have also started participating.
Sawhney informed that many multi-national companies are already using their Indian outfits for design and R&D of new products and services, and with electronics manufacturing ecosystem now growing strongly, there is a tremendous opportunity to increase this possibility further. He added that the new schemes introduced by the government will focus not only on manufacturing of electronics in India, but also positioning the country as an export hub.
“It is important for us to not just manufacture, but to be a part of the global ecosystem. It’s important not to just assemble in India but how well we are integrated with the global supply chain and what more can we do to enhance this scenario,” Sawhney said.
Nitin Kunkollenker, president of MAIT believes that there is a need for policy support which will promote the import substitution (India for India) as well as export-orientation (India for the World) to achieve the net zero import.
“Time has come for India to strengthen its export game. Without exports, it is next to impossible to create a strong manufacturing base in India. I do not think India has sufficient domestic demand to get the giants coming to India. If India wants giants to come to the country and expand their business, then India needs to ramp up its export game”, said Kunkollenker.
Harish Krishnan, vice president of MAIT envisages that global companies have now started looking at exports of components from India and hence time has come for the industry to work together and create a win-win situation.
Hurdles to overcome
But how does India turn into a fast-moving player that can generate much larger domestic value-addition and become an exports giant? Electronics manufacturers note that it’s tough to be globally competitive because of inefficiencies of the Indian system that add 10 -12 per cent to manufacturing costs. To overcome logistical issues like poor roads, electronics manufacturers say they will need to be organised in clusters with suppliers nearby. Andhra Pradesh and Karnataka, for instance, are both looking at creating electronics industry clusters. Andhra Pradesh also has set a target of creating 200,000 electronics jobs by next year which it’s widely conceded the State is unlikely to meet.
Vinod Sharma, Managing Director, Deki Electronics, points out that the world market is reckoned to be around $2 trillion. “India is too large a country and too hungry for electronics and the only solution is to create as much value as possible on our own shores”, said Sharma.
Discussing on the possible solutions to bridge the existing gap in India’s electronics export and to boost the local manufacturing ecosystem in order to tap the export potential, Sharma opined that the industry needs simple policies to enhance the ‘Make in India’ initiative in full means. “China has the most robust supply chain ecosystem in the world. Indian companies should declare projects which have local value addition to encourage supply chain vendors and buy domestic products”, said Sharma.
Supporting Sharma on this, Muralikrishnan B. chief operating officer of Xiaomi India stated that there should be availability of skilled labor, plug-and-play manufacturing infrastructure and social infrastructure in far off areas in India where industrialists can come and settle. He further informed that fillip from the Indian government will help industries to work better in these areas. He was optimistic about the progress Indian electronics manufacturing has witnessed so long but at the same time he believes that there is a long way to go.
As a preventive measure to bridge the existing gap Kunkollenker suggested that the government can make the manufacturing sector competitive enough by understanding the existing gaps in terms of infrastructure, logistics, supply chain etc., which until and unless looked upon will not help India’s exports flag off.
Responding to the industry’s call, Sanjay Kumar Rakesh, joint secretary, MeitY said that the government sees the entire electronics industry as a whole and hence policies won’t be tweaked for any particular company. He further informed that the government is working in a fashion where performance is witnessed in every domain of electronics and hence commitment to further flourish in all such sectors remains the prime focus of the government.