Can India Lure Big Electronics Manufacturers to india?

In this age, taking a 360-degree view of the room, everyone would notice that we are surrounded by electronic items. They have become an essential part of our daily life and are going to have an even greater impact going forward. But there is one problem - most of it is manufactured in China and now India wants a piece of the pie, and a big one.

Currently, the domestic production of electronics is a $70bn industry and growing at 25% CAGR over the last 4 years. And the growth potential is much higher than that. So India wants to become a global hub in Electronic Systems Design and Manufacturing (ESDM).

For such an ambitious project, the government has announced incentive schemes worth Rs.50,000 Cr. There are 3 schemes made available to the industry players - Production Linked Incentive (PLI),  Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) and Modified Electronics Manufacturing Clusters Scheme (EMC 2.0). Out of this, PLI is the biggest scheme with an outlay of Rs.41000 Cr.

PLI scheme is essential for boosting Mobile phone and semiconductor production in the country. It would give a 4-6% incentive on incremental sales of these goods to the manufacturers for a period of 5 years. Companies would have to invest a certain minimum amount to avail of the benefits. For domestic companies that threshold is lower compared to the foreign players. The other 2 schemes are made available to incentivize manufacturers forming the supply chain in the industry and to ensure proper infrastructure is created for all parties concerned.

While the smaller schemes did not attract a lot of interest, PLI has got the attention of the biggest players in the industry. 22 companies applied for the PLI scheme including foreign giants like Samsung and Apple contract manufacturers - Foxconn, Pegatron, and Wistron. Many domestic players like Dixon Tech, Micromax, and Lava among others also expressed their interest.

Union minister Ravi Shankar Prasad has stated that this initiative would help India produce Rs.11.5 lac Cr. worth of electronics over the next 5 years, Rs.7 lac Cr of which would be exported. It would also create 3 lac additional jobs and 9 lac indirect jobs in the country.

Key takeaway:

The government has shown a strong intent of making "Make in India" successful by targeting the electronics industry. It is a very lucrative industry and has a long runway. PLI along with boosting infrastructure has got the attention of the biggest players at a time when they are thinking of reducing their reliance on China. Proper implementation of this would help replicate similar success in other industries as well

PLI in electronics is a move by the government at an opportune time. No Chinese companies participated in the initiative but China must surely be sweating over it as it may prove to be a threat to their hegemony.

Its time to kick China in their butt and make sure that you get involved in boycott Chinese goods call as each one of us can contribute to the Indian economy by going local.