“India’s Rs 25,000 Crore Push to Transform the Electronics Components Industry”

• Chinmay
• January 6, 2025
• India, News
• Camera Modules, Component Manufacturing, Electronics Components Incentive, Electronics Manufacturing, India electronics industry, Lithium-ion Cells, Local Value Addition, PCBs, PLI Scheme, self-reliance
• 0 Comments

India Gears Up for a Major Boost in Electronics Manufacturing

The Indian government is set to launch an ambitious incentive scheme worth ₹25,000 crore (nearly $3 billion) to bolster the domestic manufacturing of electronics components. Approved by the finance ministry, this scheme aims to reduce India’s reliance on imports, enhance local production capabilities, and achieve a local value addition of 35-40% during its tenure.

The proposal is expected to receive cabinet approval later this month, with a rollout planned from April. Government officials estimate the scheme could drive the production of $50-60 billion worth of electronic components and subassemblies over the next five to six years.

Key Features of the Incentive Scheme: 

1. Tailored Incentive Structure: Unlike the production-linked incentive (PLI) schemes for smartphones, this initiative will offer variable incentives depending on the manufacturing challenges and extent of localization for specific components. Products with higher manufacturing constraints compared to global hubs like China and Vietnam will receive greater incentives.
2. Capital-Intensive Focus: Recognizing that component manufacturing is more capital-intensive than smartphone assembly, the scheme will prioritize investments in infrastructure for producing critical components like PCBs, camera modules, lithium-ion cells, and displays.
3. Dynamic Fund Allocation: While ₹25,000 crore has been allocated initially, officials have hinted at the possibility of upward revisions if the fund pool is fully utilized, ensuring optimal support for the industry.
4. Local Value Addition Goals: The initiative aims to boost local value addition from the current 15-18% to 35-40% during the scheme’s tenure and ultimately achieve 50% coverage of non-semiconductor components in electronics manufacturing.

Rising Demand for Components

India’s demand for electronics components is projected to surge from $45.5 billion in 2023 to $240 billion by 2030, driven by increasing local production of mobile phones and other electronics. According to the Confederation of Indian Industry (CII), high-priority components like batteries, camera modules, mechanicals, and PCBs accounted for 43% of component demand in 2022, a figure expected to reach $51.6 billion by 2030.

Challenges and Industry Response

The domestic electronics industry has called for:

1. Customs Duty Reductions: Industry leaders argue that high duties on smartphone parts nullify incentives and impede the growth of local manufacturing.
2. Ecosystem Development: To sustain growth, the scheme must foster a robust ecosystem for capital-intensive component manufacturing.

A Path to Self-Reliance in Electronics

By targeting high-priority components and building a comprehensive ecosystem, the scheme strives to reduce dependency on imports, particularly from China and Vietnam. It focuses on producing components that form nearly 50% of the bill-of-materials in mobile phones and laptops, positioning India as a global manufacturing hub.

Driving India’s Electronics Vision

As part of its broader strategy, the government seeks to elevate the local production of critical components such as:

• Printed Circuit Boards (PCBs).
• Lithium-ion cells.
• Camera modules.
• Display subassemblies.
• Vibrator motors, speakers, and mechanics.

Looking Ahead

With the electronics industry poised for exponential growth, this ₹25,000 crore incentive scheme is a pivotal step toward self-reliance. By nurturing a thriving ecosystem of component manufacturing, India is set to not only meet its rising domestic demand but also emerge as a competitive player in the global electronics market.