India’s New Electronics Policy: Driving Value Addition and Creating Global Brands

India’s electronics sector is poised for a significant transformation with the upcoming revised National Policy on Electronics (NPE) 2019, set to meet the growing demand for electronic products and elevate India’s position in the global electronics market. The revised policy, currently under consultation, seeks to meet the projected $500 billion domestic electronics market by 2030.

With a focus on value addition, promoting domestic brands, and fostering component manufacturing, the new policy aims to make India a major hub for electronics manufacturing and export.

Key Focus Areas of the New Electronics Policy

The revised NPE 2019 prioritizes the following key areas:

1. Creating Indian Global Brands: One of the core objectives of the new policy is to create Indian global electronics brands. The policy envisions nurturing domestic companies that can compete internationally by producing high-quality, innovative products across various categories such as smartphones, home appliances, consumer electronics, and wearables.
2. Value Addition: The policy targets increasing domestic value addition in electronics manufacturing to 34-40%by encouraging local production of components and semiconductors. By attracting global value chains to India, the policy aims to position the country as a key player in electronics exports.
3. Component Manufacturing and Semiconductors: To reduce dependence on imports, the policy emphasizes building capabilities in electronic components and semiconductor manufacturing. The semiconductor industry, in particular, is critical for developing a self-sufficient electronics ecosystem. This includes the production of strategic products like smart meters and optical converters, which will support India’s infrastructure modernization.

Supporting Initiatives: Fund of Funds and Intellectual Property Rights Pool

To realize the vision of creating Indian brands and adding value to local manufacturing, the government is considering establishing a fund of funds and an Intellectual Property Rights (IPR) pool. The fund of funds will be designed to support innovation, design, and manufacturing of high-value products, while the IPR pool will ensure the protection and commercialization of indigenous technologies, encouraging local companies to invest in cutting-edge research and development.

Production Linked Incentive (PLI) Scheme

The Production Linked Incentive (PLI) scheme for electronic components will play a pivotal role in supporting domestic manufacturing. Replacing the earlier Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS), which expired in March 2023, the PLI scheme provides incentives ranging from 3-6% on incremental sales of locally produced goods over five years. The scheme aims to attract more investments into the electronics sector and facilitate the establishment of production facilities for components and semiconductors.

Under the previous SPECS program, the government attracted an additional INR 8,803 crore in investment to boost semiconductor and electronics component production. The new PLI scheme builds on this momentum, with INR 8,390 crore already invested in large-scale electronics manufacturing.

Budget 2024-25: Boosting the Electronics Industry

In her recent budget speech, Finance Minister Nirmala Sitharaman announced several initiatives aimed at propelling the domestic electronics sector. These include additional financial incentives, tax reforms, and infrastructural support aimed at reducing the cost of production and improving the ease of doing business for electronics manufacturers.

Meeting the $500 Billion Electronics Market by 2030

A NITI Aayog report highlights that India’s electronics market, while growing, still accounts for only 4% of the global market. To enhance its share, the report outlines a strategic roadmap to achieve $500 billion in electronics manufacturing by FY 2029-30. This includes both domestic and export markets, with the potential to create 5.5 to 6 million direct jobs by the end of the fiscal year.

The electronics sector’s current growth trajectory, supported by strong government policies like the PLI scheme and initiatives under the revised NPE 2019, indicates that India is well-positioned to become a global electronics powerhouse.

Challenges and Opportunities

While the revised policy presents substantial opportunities, there are also challenges that need to be addressed, including developing a robust supply chain, ensuring skilled labor availability, and overcoming logistical and infrastructural constraints. The government’s commitment to easing business operations, improving infrastructure, and fostering innovation will be key to overcoming these hurdles.

India’s New Electronics Policy signals a bold vision for the country to emerge as a leading player in the global electronics industry. By focusing on value addition, promoting domestic brands, and enhancing component manufacturing, the revised NPE 2019 is set to transform India into a key global hub for electronics manufacturing and exports. With a target of achieving $500 billion in electronics manufacturing by 2030, the policy has the potential to not only meet the domestic demand but also create millions of jobs and boost the country’s export capabilities. As India positions itself to capitalize on these opportunities, the new policy is a significant step towards realizing its ambitions of becoming a global leader in electronics.