DBT Bureau
Bengaluru, 15 January 2025
Rubix Data Sciences, a technology and analytics-based B2B risk management and monitoring platform provider, has come up with a report titled ‘Rubix Industry Insight—Electronics Manufacturing”, giving an in-depth view of threats and opportunities on the path of India’s $500 billion electronics production target.
Key Highlights:
- Vying for a spot in the Global Value Chain
India is aiming to achieve an electronics production target of USD 500 billion by FY2030. To facilitate this, Government initiatives like the Production Linked Incentive (PLI) scheme have attracted investments of over USD 17 billion, driving growth across key sectors including mobile phones, semiconductors, and consumer electronics. - Semiconductors: Powering the Future
India’s semiconductor market is projected to reach USD 109 billion by 2030, spurred by projects like Tata Electronics’ fabrication plants and Micron Technology’s USD 2.75 billion ATMP facility. These initiatives aim to localise production and reduce the reliance on imports. - Growth in the Manufacturing of Smartphones
India’s mobile phone exports grew by over 40% in FY2024 to USD 15.6 billion. Domestic value addition in mobile manufacturing increased from 6% in 2017 to 16% in 2023, with aspirations to reach 50% by 2030. - Shifting Supply Chains: The “China Plus One” Advantage
Global players such as Apple and Samsung are capitalising on India’s growing manufacturing ecosystem. Tamil Nadu alone has seen electronics exports grow exponentially, from USD 1.66 billion in FY2021 to USD 9.56 billion in FY2024. - Import Dependency
Despite growth in local manufacturing, India continues to rely on imports for high-value components like semiconductors, Printed Circuit Board Assemblies (PCBAs), and chipsets, contributing to a significant trade imbalance. Electronics imports from China alone exceeded USD 12 billion in FY2024.
- High Tariffs and Cost Competitiveness
India’s average electronics tariff rate of 7.5% places the country at a 5% to 6% cost disadvantage in assembly and a 4% to 5% disadvantage in component manufacturing compared to competitors like Vietnam and Malaysia. This contributes to a 10% to 14% cost disability in assembly and 14% to 18% in component manufacturing. - Limited R&D Investment
India’s investment in Research & Development (R&D) remains at just 0.64% of India’s GDP, compared to 2.41% in China and 5.71% in Israel. This limits innovation in critical sectors such as semiconductors and Internet of Things (IoT) devices. - Underdeveloped Component Ecosystem
While India has seen success in assembly operations, component manufacturing remains nascent. High-complexity components like silicon chips are still largely imported, accounting for 64% of the demand in the automotive electronics sector alone.
What Does This Mean for Businesses?
The current state of India’s manufacturing sector is a dual narrative of opportunity and challenge. From mobile devices to semiconductor manufacturing, businesses have tremendous opportunities to grow. However, addressing structural issues such as tariff complexity, R&D gaps, and infrastructure development is crucial to unlocking the sector’s full potential.
“The electronics industry in India represents a unique blend of opportunities and challenges. Companies that act swiftly to invest in innovation and value addition will be at the forefront of this transformation,” said Mohan Ramaswamy, Co-founder & CEO of Rubix Data Sciences.
