Home News India's demand for electronic components has increased fivefold

India's demand for electronic components has increased fivefold

2024-07-17

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India's demand for electronic components has increased fivefold. Where are the opportunities?


01 Five types of components are of top priority

The Confederation of Indian Industry (CII) has released a report on "Developing India as a Manufacturing Hub for Electronic Components and Sub-Assemblies". The report outlines the key actions required to transform the Indian electronics industry ecosystem from "assembly-led manufacturing with import dependency" to "component-level value-added manufacturing".

India has expressed concern over the continued dependence on imports for key components such as semiconductors, capacitors, lithium-ion batteries and motherboards. CII urged the Indian government to focus on the production of these components and revise the production-linked incentive scheme to provide 35-40% incentives over the next eight years.

According to the CII report, India's domestic demand for electronic components and assemblies is expected to grow fivefold to $240 billion by 2030 to support $500 billion worth of electronics production. The market demand for electronic components and assemblies is $45.5 billion by 2023 to support $102 billion worth of electronics production.


02 Challenges of Electronic Component Manufacturing in India

Key components and sub-assemblies including PCBA are expected to grow at a strong CAGR of 30% to reach $139 billion by 2030.

The Indian electronic components market is expected to grow at a compound annual growth rate (CAGR) of about 10-12% over the next five years. The major growth sectors will be consumer electronics, automotive and industrial automation.


But India still faces some major challenges in electronic component manufacturing:

Supply chain disruptions: 

Global supply chain issues affect the availability of raw materials and components. India currently relies heavily on imported raw materials for electronic components.

Intense competition: 

Domestic companies in India face stiff competition from international companies with more capital and advanced technology.

Technological obsolescence: 

Rapid technological advancements have led to shorter product life cycles.

Higher costs: 

Despite high import duties, importing from China, Vietnam and South Korea is still cheaper than manufacturing components in India.


03 Report recommendations

The report recommends a scheme to provide 6-8% financial support for selected components and sub-assemblies. The financial support will be extended for 6 to 8 years to ensure sufficient time for scale-up and value addition.


In addition, SPECS 2.0 will introduce subsidy support of 25% to 40% to support potential investors in both brownfield and greenfield categories. The new policy should adopt a gradient approach, with the higher the amount of support subsidy, the better.

Import tariffs on key components and parts such as camera modules, display modules, mechanical parts need to be aligned with major competing economies as soon as possible. Most tariff items need to be reduced to below 5% to ensure product manufacturers are competitive.

Free trade agreements with the EU, UK, GCC countries and emerging African economies need to be actively pursued. Creating export demand for Made in India products has the dual advantage of increasing exports and helping to promote domestic manufacturing of components and sub-assemblies.

Policy support will help in various economic benefits arising from the development of the Indian component and sub-assembly ecosystem. Creation of around 280,000 jobs, increase in domestic value addition over current levels, reduction in import dependency and growth in GDP by 2026 will firmly position India as a global electronics manufacturing hub.


An ecosystem conducive to components and sub-assemblies will enhance India's electronics manufacturing capabilities, making it self-sufficient and deeply integrated into the global value chain.



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