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Electronics Goods Production Increases in India

India spends maximum foreign currency on import of crude oil and gas. Second on the list are electronics goods. India is heavily dependent on imports for crude oil. Petroleum crude accounts for about 34 percent of the total inward shipments. We also import gold and silver (12 percent of the total imports), machinery (10 percent), electronic goods (7 percent) and pearls, precious and semi-precious stones (5 percent). These are key areas responsible for foreign currency spends. It is encouraging to observe that total value of electronics goods production in India has increased significantly. This trend in electronics good production is being led by increased manufacturing of mobile sets and LCD & LED TVs.

Make in India Policy for Electronic Goods

Under “Make in India” policy the Modi Government focussed on manufacturing of electronics goods within the country. In the year 2016-2017 India spend $ 43 billion on import of electronic goods. But for the first time the domestic electronics goods production was of higher value at $ 49.5 billion. How did it happen? The government has initiated a number of steps to boost manufacturing of goods like televisions, smart phones, appliances like microwave ovens, set top boxes, LED lamps etc. Most of these items were being imported from China. But through fiscal incentives and policy changes government is trying to reverse this trend. Some of the steps are given below:-

  • Custom duty on import of certain items was increased.
  • Electronic Manufacturing Cluster (EMC) was initiated.
  • Special Incentive Package Scheme (M-SIPS) was modified and launched

In the year 2015-2016 the local production of electronics goods was around 37 billion whereas import was of around $ 41 billion. The mobile handsets and LCD & LED TV powered the digital initiative. The government has ambitious plans to increase this turnover to $ 1 trillion by the year 2022. As per IT Minister Sri Ravi Shankar Prasad the policies of Modi Government have accelerated local manufacturing so far as electronic goods are concerned.  The ambitious plan is to make in India not only for domestic market but for world markets as well.

Local Manufacturing Capability of Mobile and TV

During the year 2016-2017, total demand o electronics goods has been to the tune of $ 86 billion, up from $ 60 billion in the year 2014-2015. It is likely to go beyond $ 170 billion by the year 2020 and a stupendous $ 400 billion by the year 2024. So to prevent drain on foreign exchange we have to develop our local manufacturing capabilities. The government is working precisely in that direction.

For example in the year 2014-15, 6 crore mobile handsets were manufactured in India. This capability has grown three old in just two years. In the year 2016-17 the country produced 17.5 crore mobile handsets. The total value is Rs 90,000 crore in the year 2016-2017. Same encouraging storey is with LCD and LED TVs. It grew from 90 Lakhs unit in 2014-2015 to 1.5 crore units in 2016-2017.

How has these been achieved? One of the reasons is duty incentives given or local manufacturing. Due to this incentive many companies have started manufacturing in India. Some other companies have started sourcing from contract suppliers in India and abroad and then assembling in India. This policy has also created around one lakh direct jobs and two lakhs indirect jobs. Let us hope that the government replicates this in other manufacturing areas also.

Article by Col P Chandra (Retd)

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