Introduction
The electronics manufacturing industry is one of the fastest-growing industries
in the world. India, which is now rapidly promoting and developing its
electronics manufacturing cluster, currently holds a 3% share of global
electronics production.
In recent times, India's various industry electronic associations and the government have worked hard to improve the business ecosystem, as a supportive ecosystem and large capital investments are required for a proper and efficient electronics manufacturing industry.
Need for Domestic Manufacturing
The government has been pushing for the domestic manufacturing of electronics,
electronic components, and semiconductors for several reaons including:
·
National Security: Most of the electronics, chips, and components used in Indian
communication systems are imported from other countries. Backdoors could be
programmed in these chips and components during production, compromising our
networks, cyber-security, and jeopardising our national security and
sovereignty.
·
n Import Dependency: It is predicted that electronics will eventually displace crude
oil as India's most important import commodity, reducing domestic assembly
units to nothing more than packaging units.
·
Chip Shortage: The
Covid-19 pandemic and subsequent global lockdowns forced the closure of crucial
semiconductor chip-making facilities in Japan, South Korea, China, and the US.
This presents an opportunity for India to fill up these production gaps by
setting up its own manufacturing facilities.
Historical Progress of Electronics Manufacturing in
India
Electronics Industry: In the 1960s, an electronic
committee was set up under the leadership of Dr. Homi Bhabha. For both strategic
and economic reasons, the committee's report emphasised the importance of
electronics and the necessity for a robust domestic electronics component
ecosystem. This idea was carried forward when the government set up the
Department of Electronics (DoE) in 1970.
Like in other industries, duties were kept high to
discourage imports of electronics components. However, the government realised
that domestic electronics production could not keep up with the demand.
Subsequently, throughout the 1980s, successive policies cut import taxes on
electronic components and finished goods.
The uncertain policy climate did not deter Indian
firms from entering the electronics market. In fact, HCL and Wipro, two of
India's most well-known IT services companies, began as electronic calculator
and computer manufacturers, respectively. Companies like these tried hard to
push against all odds and helped the Indian electronics industry get to the
level it is at today. Currently, electronic goods production in India has more
than doubled from US$ 30 billion in 2014-15 to US$ 75 billion in 2019-20.
Semiconductor Industry: Microprocessors and other
semiconductors were seen by the Indian government as the possible foundation
for a new revolution as the pace of global technological innovation accelerated
in the 1970s and 1980s. They concluded that for India to progress, it needed
its own domestic manufacturing facilities.
For this purpose, in 1984, the Indian government
founded SCL, a 100% state-owned company. The purpose of SCL was to design and
manufacture cutting-edge circuits and electronics. A sum of US$ 40-70 million
was invested in this project, and the facility was located in Mohali, Punjab.
When it was founded in 1984, SCL obtained a
5-micron process technology from American Microsystems Inc. Shortly thereafter,
SCL acquired process technology from two other companies as part of a deal to
manufacture electronics components for them. SCL also performed third-party
assembly duties for electronics brands. In the late 1980s, the company quickly
went from a 5-micron process to a 0.8-micron process.
Since then, the PLI scheme announced in December
2021 has been the first significant positive move by the government in the
semiconductor space. This scheme is the government's attempt to give a fresh
start to India's semiconductor manufacturing and fabrication vision.
Government Initiatives
The government has taken multiple initiatives and implemented policies that
promote the domestic manufacturing of electronics and semiconductors in India.
·
In
December 2021, the Ministry of Electronics and Information Technology (MeitY)
approved a comprehensive PLI scheme for the development of semiconductors and
display manufacturing ecosystems. Incentives worth Rs. 76,000 crore (US$ 9.81
billion) were announced, which will be distributed over the next six years.
·
In
December 2021, MeitY proposed the launch of a PLI scheme worth Rs. 22,000 crore
(US$ 2.94 billion) for the development of wearable technology and IT hardware.
This scheme aims to boost exports by up to 50%.
·
Scheme
for Promotion of Manufacturing of Electronic Components and Semiconductors
(SPECS):
o This scheme was introduced on
April 1, 2020.
o It involves provision of
financial incentive of 25% on capital expenditure for the identified list of
electronic goods, including electronic components, semiconductor/ display
fabrication units, ATMP units, and specialized sub-assemblies.
o It applies to new unit
investments and capacity expansion, modernisation, and diversification of
existing units.
·
National
Policy on Electronics 2019 (NPE 2019):
o Implementing initiatives in the
country for developing core electronic components, including chipsets.
o Promotion of industry-led R&D
and innovation in all sub-sectors of electronics, including grass-roots
innovation and early-stage startups in emerging technology areas like 5G,
Internet of Things (IoT)/sensors, artificial intelligence (AI), machine
learning, virtual reality (VR), drones, robotics, additive manufacturing,
nano-based devices, etc.
o Initiatives for significantly
enhancing availability of skilled manpower, including re-skilling of employees.
o The policy’s aim was to achieve a
turnover of US$ 400 billion by 2025.
Road Ahead
India's global electronics manufacturing market size share has increased from
1.3% in 2012 to 3.6% in 2019. Rising domestic demand and a burgeoning
electronics ecosystem are driving growth. With the upcoming implementation of
5G technology, this demand is just going to increase further. 5G modems, 5G
routers, MIMO antennas, 5G New Radio (5GNR), C-RAN units, etc. will all require
manufacturing soon, which presents a huge opportunity for Indian manufacturers
to capitalise on.
ISMC, a joint venture between Abu Dhabi-based Next
Orbit Ventures and Israel's Tower Semiconductor, has already announced signing
an MoU with the Karnataka government to set up a semiconductor chip
manufacturing plant in the state. To ensure the smooth progression of projects
like these, the India Semiconductor Mission (ISM) has been set up. This will
act as the nodal agency for the efficient and smooth implementation of the PLI
semiconductor schemes. With deeper integration into India's value chain, the
semiconductor and display ecosystem will have a positive multiplier effect
across different sectors of the economy.
These schemes to promote electronics manufacturing, combined with the Prime Minister's call for an 'Atmanirbhar Bharat,' have rejuvenated India’s aspirations of having its local thriving electronics industry, which will allow the country to be truly self-sufficient.
Courtesy :- IBEF Indian Brand Promotion Foundation
Comments
Post a Comment