Net zero imports: A distant dream?


The Indian electronics industry is hoping that the government’s plan of introducing a new electronics policy will give it a much-needed boost. Will MeitY’s agenda of achieving ‘net zero imports’ in electronics by 2020 bring about clarity or chaos? Industry leaders are keeping their fingers crossed, but also wonder if this ambitious target is achievable by 2020.

By Abid Hasan

The Indian electronics industry is one of the largest in the world and one of the fastest growing. By 2020, the electronics market in India is expected to grow at a CAGR of 41.4 per cent to US$ 400 billion, an ASSOCHAM report stated earlier this year.

More specifically, by 2020, the semiconductor design market in India is expected to increase at a CAGR of 29.4 per cent to US$ 52.58 billion. The Indian electronics manufacturers are bullish about manufacturing in India and leading global players are viewing India as their top market.


In order to strengthen the local manufacturing base, the government is in the process of drafting the new Electronics Policy 2.0. The Ministry of Electronics and Information Technology (MeitY) is in regular touch with all the stakeholders in the industry for their opinions and comments on what this policy should focus on.

In the upcoming policy, the ministry has decided to work towards ‘net zero imports’ in the electronics industry by 2020.

It will be interesting to see such a transformation in a country like India, where currently, electronics imports are far higher than exports.

Vinay Shenoy, MD, Infineon Technologies India, says, “We are just a couple of years away now from the goal set by the government for 2020, and as of now, I can say that India probably cannot afford to rely wholly on electronics imports due to economic, societal and technology security reasons. Transforming into a predominantly local manufacturing and technology innovation hub requires deep rooted interventions, which will take some more time. Having said that, even if a strong positive trend towards net zero imports is achieved by 2020, the National Policy on Electronics would have achieved its mission.”

In order to build India into a US$ 1 trillion digital economy, in June this year, Ravi Shankar Prasad, minister for electronics and IT (as well as justice and law) mentioned that the government will shortly come out with a new electronics policy to boost electronics manufacturing.

Rupesh Kumar, CEO of EVI Technologies, is hopeful about this new policy and believes that net zero imports will create more jobs. He says, “If you take out the discrete components, around 80 per cent of the components are imported into India. Our country should start manufacturing these locally.”

He feels that an increase in PCB manufacturing in India will create massive job opportunities, and lead to the creation of many SMEs in this sector as well as a new market with higher demand.

Kumar points out that it seems difficult to achieve this goal within just three years, but if the execution is perfect then it can create opportunities which can be leveraged by Indian industry players.

The long road ahead

The government had first unveiled the National Policy on Electronics in 2012, which included schemes such as MSIPS, electronics clusters, the electronics development fund, etc. The new electronics policy will also help in realising the Modi government’s goal of ‘net zero imports’ in electronics by 2020.

Spreadtrum’s country head, Neeraj Sharma, bats for this policy and believes this is the appropriate way to go forward. “I think it has been happening a lot in the mobile industry. A lot of assemblies and SMTs have entered India. Once the ecosystem and supply chain flourish, it is possible to achieve net zero imports. We still have a couple of more years and it can be done,” says Sharma.

Talking specifically about mobile phone manufacturing, he points out that the supply chain, assemblies and SMTs are already here and next year, camera modules will also be made in India. “We have done most of the manufacturing in India and the remaining will be done very soon. However, chips cannot be manufactured here because there are no foundries; that will take more time but very soon we will see some design happening in India,” he adds.

The government is bullish about achieving its goal of net zero imports by 2020, which is a good thing, but being realistic is equally important. Many industry leaders feel it’s a good move but believe that, in reality, it may be a bit difficult to achieve such a target in three years.

Imports > Exports

According to Vinod Sharma, managing director of Deki Electronics, in order to balance exports and imports for a US$ 400 billion industry, India needs to have US$ 200 billion worth of exports to offset an equal value of imports.

Sharma says, “The target of net zero imports has been the PM’s vision since the start. The current exports amount to US$ 6 billion and this figure has been stagnant for over four years. Hence, a $200 billion export target obviously will need a dramatic paradigm shift in our policy.”

He adds that achieving this target is difficult but not impossible. Countries like Vietnam have increased their electronics exports from US$ 20 billion to US$ 70 billion in four years, but in order to get close to that, India needs to think differently.

The chairman of IESA, Ashwini Aggarwal, is also positive about the policy. He feels that the country is witnessing growth in domestic manufacturing for the electronics industry; so it is inevitable that imports will first stagnate and then reduce.

“We are at an exciting stage where we see the first mega projects get into commercial production, with others in the pipeline – and there’s been a visible impact in select sectors, where imported content has dropped,” Aggarwal reports.

He concludes by saying, “As a nation, the time has come to look at focused indigenisation initiatives to reduce our net imports, and IESA absolutely supports the vision of ‘net zero imports by 2020’. A lot will depend on the government’s enablement policies, and IESA will work with the government to make it happen.”

The fact remains that India has a lot of work to do in order to get to zero electronics imports by 2020. More than the policy, it’s proper and prompt execution that will give the much-needed boost to local manufacturing.

The ASSOCHAM report mentioned earlier also highlighted that by 2020, Indian electronics sector imports will go up to US$ 300 billion. In order to evaluate whether India’s dream of net zero imports is possible within the next three years, let’s look at export and import trends over the past few years. India’s total electronics hardware production in 2014-15 was US$ 32.46 billion. At that time, this represented a share of about 1.5 per cent of the world’s electronics hardware production. The domestic consumption of electronics hardware in 2014-15 was US$ 63.6 billion, of which 58 per cent was met by imports.

The following year, MeitY’s annual report (2015-16) revealed that electronics imports in 2015-16 (April-December) grew by 11.5 per cent compared to 12.1 per cent during the corresponding period of the previous year. Telecom instrument imports, which grew at 13.4 per cent, compared to 30.6 per cent in 2014-15, continued to be the largest item in the basket of electronics imports. Import of electronic components grew dramatically compared to the negative growth rate experienced in 2014-15 (April-December). On the other hand, consumer electronics imports declined by 2.6 per cent during April-December of 2015-16.

In the same year (2015-16), MeitY’s report revealed that exports continued to decline by 9.8 per cent, continuing the declining trend witnessed in the previous year. Growth in computer hardware exports, however, turned positive compared to the negative rate experienced in 2014-15 (April-December). On the other hand, export of electronic components dropped sharply, while telecom instruments exports which were declining during 2014-15, continued to do so during the period April-December of 2015-16.

With the new electronics manufacturing policy, MeitY plans to focus on the competitiveness of the local electronics manufacturing industry, R&D, startups and the promotion of research in emerging technologies. The ministry is working hard to finalise the policy by March 2018. However, if we look at the story the figures for the past few years tell, the new policy will need to include some pretty drastic initiatives that reverse current foreign trade trends—giving a boost to falling exports and reducing imports quickly. Otherwise, net zero imports by 2020 may remain a dream.



  1. The article is informative but requests you to shed some lights on the export potential for electrical products and the top countries likely to import Indian electrical products.


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