Industry body CII has demanded that the government provide 6-8% fiscal support for select electronic components and sub-assemblies for a period of eight years to help strengthen the domestic manufacturing sector and curb imports. The Confederation of Indian Industry (CII), in a report, stated that the demand for electronic components and sub-assemblies would grow to $240 billion to support $500 billion of production by 2030 from $45.5 billion to support $102 billion production in 2023. “Priority components and sub-assemblies, includingPCBAs (printed circuit board assembly), are projected to grow at a robust CAGR of 30%, reaching $139 billion by 2030,” according to the report on “developing India as the manufacturing hub for electronics components and sub-assemblies”. The report identifies five components/sub-assemblies of batteries (lithium-ion), camera modules, mechanicals (enclosures etc.), displays and PCBs that are of high priority for India and account for 43% of the components demand in 2022. It is expected to grow to $51.6 billion by 2030. These components have either a nominal production in India or are heavily import dependent, it said. India can hardly afford to sustain this trend of importing priority components. Similarly, PCBA is a high potential category for India since most of the demand is met by imports. This segment is expected to grow by 30%, leading to a demand creation of $ 87.46 billion by 2030. However, manufacturing-related cost disabilities vis-à-vis other competing economies like China, Vietnam and Mexico, 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. Apart from the fiscal support, the report recommends another edition of the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS), 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. It also calls for rationalisation of import tariffs on priority sub-assemblies and components like camera modules, displays modules, mechanicals and majority of tariff lines need to be brought under the level of 5% or lower to ensure that product manufacturers become competitive. It has also backed faster conclusion of Free Trade Agreements with European Union, UK, GCC countries and emerging economies in Africa to create export demand and help boost domestic manufacturing of components and sub-assemblies. 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.
