In the financial year 2023-24, India imported electronic components worth over $12 billion from China and $6 billion from Hong Kong. Together, these imports constitute more than half of India’s total electronic component imports, highlighting a continued heavy reliance on Chinese supplies despite India's efforts to enhance domestic manufacturing.
India-China Trade Status: The trade relationship between India and China is significant, with China being a major supplier of electronic components. Despite efforts to diversify supply sources, China remains a dominant player.
Top Products Imported and Exported by India:
India’s major imports include crude oil, gold, petroleum products, and coal,
while top exports encompass petroleum products, gems and jewelery, pharmaceuticals, machinery, and textiles.
Dominance of Chinese Imports: Over the past five years, imports of electronic components from China and Hong Kong have greatly surpassed those from other key hubs such as South Korea, Japan, Taiwan, and ASEAN countries combined.
Significance in Imports:
In 2023-24, electronic components imports reached $34.4 billion, making them the fifth largest import commodity for India, following crude oil, gold, petroleum products, and coal. These components are essential for assembling a range of electronics, including smartphones and televisions, within India.
Strategic Adjustments:
India is exploring opportunities to allow more Chinese companies to establish operations in the country through joint ventures with domestic firms.
The Economic Survey 2023-24 suggests balancing reduced import reliance with continued investment from China.
Significance of Electronic Manufacturing in India’s Economic Growth
Economic Contribution: The electronics sector is a significant contributor to India's GDP. It drives industrial growth, creates employment opportunities, and fosters technological innovation.
Trade Balance: Reducing dependence on imports by boosting domestic production can improve the trade balance, as electronics are a major import item for India.
Technological Advancement: Growth in electronics manufacturing can help India advance in technology and innovation, potentially positioning it as a global tech hub.
Employment Generation: The sector creates a wide range of jobs, from assembly line workers to engineers and research and development professionals.
Government Measures to Boost Domestic Manufacturing
Production-Linked Incentive (PLI) Scheme: The Indian government has introduced the PLI scheme to incentivize domestic manufacturing of electronics. It offers financial incentives based on incremental sales of products manufactured in India.
National Policy on Electronics (NPE): The NPE aims to promote the growth of the electronics sector by providing a comprehensive policy framework, supporting research and development, and encouraging investment.
Make in India Initiative: This initiative focuses on encouraging companies to manufacture in India, providing a more conducive environment for industrial growth.
Infrastructure Development: The government is investing in electronics manufacturing clusters and parks to create dedicated zones with necessary infrastructure.
Skill Development: Various programs are in place to enhance the skills of the workforce to meet the needs of the electronics industry.
Challenges in Reducing Reliance on Chinese Imports
Cost Competitiveness: Indian manufacturers often face higher production costs compared to their Chinese counterparts, making it challenging to compete on price.
Supply Chain Dependencies: Many electronic components are still sourced from China due to well-established supply chains and the scale of Chinese production.
Technology Gap: Indian companies may lag in technology and innovation compared to their Chinese competitors, impacting their ability to produce high-quality components.
Investment and Infrastructure: Adequate investment in infrastructure and technology is needed to boost domestic production, which requires time and resources.
Regulatory and Bureaucratic Hurdles: Complex regulatory processes and bureaucratic inefficiencies can deter investment and slow down manufacturing activities.
Steps to Boost Domestic Production of Electronic Components
Enhancing R&D Investment: Increased investment in research and development can drive innovation and help in developing cutting-edge technologies.
Building a Robust Supply Chain: Developing a comprehensive supply chain network for raw materials and components within India can reduce dependency on imports.
Encouraging Foreign Direct Investment (FDI): Attracting FDI in the electronics sector can bring in capital, technology, and best practices.
Strengthening Infrastructure: Developing better manufacturing infrastructure, including electronics manufacturing clusters, can help streamline production processes.
Facilitating Skill Development: Investing in education and training programs tailored to the electronics sector can help address skill shortages.
Promoting Public-Private Partnerships: Collaborations between government and industry can lead to more effective policy implementation and resource utilization.
Streamlining Regulations: Simplifying regulatory processes can make it easier for domestic and international companies to set up and operate manufacturing units in India.
By addressing these challenges and implementing strategic measures, India can enhance its electronic manufacturing sector, reduce reliance on imports, and contribute significantly to its economic growth.
