Make In India: The Next Opportunity in Electronic Manufacturing

Make In India: The Next Opportunity in Electronic Manufacturing

Make in India campaign has acted as riot in manufacturing industry and this campaign is increasing the opportunities for electronics manufacturing services (EMS) in the country. The Indian electronic market is on significant growth for next few years. According to a study by Indian government, the market for electronic domestic products is expected to grow at a compound annual growth rate of 41 % during 2017-2020 to reach a turnover of US$ 400 billion by 2020. The same study also said that domestic manufacturing of electronic hardware is growing at a Compound Annual Growth Rate of 27 % which may touch US$ 104 billion in 2020.

Analysis says that a spurt in domestic manufacturing of electronic products will power the EMS sector to move forward and in coming five years it will provide huge opportunities for business and jobs in India.

Now, let’s have a look to current stats provided by Indian Government for electronic market which is expected to expand by 2020: 

  • Telecom equipment - US$ 34 bn
  • Laptops, desktops, tablets - US$ 34 bn
  • LED - US$ 35 bn
  • Consumer electronics - US$ 29 bn
  • Set-top boxes - US$ 10 bn
  • Automotive electronics - US$ 10 bn
  • Medical electronics – US$ 8.5 bn (* Source- www.makeinindia.com )

Opportunities in EMS sector    

Due to fast paced technological development ,end users demand are increasing so OEMs focus on new and innovative products .Being consumption driven, the Indian ESM industry is focusing on design lead manufacturing. This will result in EMS sector to grow faster and make ways for new job opportunities and business.   

  • New developments are on its way as India has the third largest pool of scientists and technicians in the world. Strong design and R&D capabilities in auto electronics and EMS industry with skilled manpower is available which will make path for new developments.

  • India provide low cost labour which is attracting global giants to relocate their manufacturing bases from China to India due to mounting labour costs, this would provide a strong bounce to the Indian electronics industry and open doors for new start-ups and jobs . 

  • ‘Make in India’ campaign is making efforts by backing local firms and small manufacturers to increase domestic manufacturing in electronic sector.

  • Government schemes like the National Knowledge Network (NKN), National Optical Fibre Network (NOFN), tablets for the Education sector, a digitisation policy and various other broadband schemes will generate large scope for custom electronics market.

  • Reverse logistic has 60 % scope for business. As in India use & throw is still not accepted in electronic Market. So, services related to repair, reworking and refurbishment work will provide EMS companies additional business from the OEMs and also help in e-waste management.

  • Electronics Manufacturing Clusters is promoted throughout the country to provide world-class infrastructure and facilities.

  • Foreign Direct Investment (FDI) and Foster Business Partnerships reforms are introduced by Indian government to create new possibilities by providing ease of doing Business and improving India's ranking on World’s Bank parameter.

  • To promote electronic manufacturing the central and state government have announced scheme of incentives ,include up to 25% capital subsidy on capital expenditure, giving land at rebated cost, reimbursement of central and state duties, income tax exemptions on setting up in special economic zones, assistance in skill development etc.

FDI in EMS  Sector

Foreign direct investment (FDI) stands for an investment made by an company  in one country in desire of controlling ownership in business in another country. In electronic sector 115.19% FDI inflows has been seen during 2015-16 over 2014-15. Now according to the study the overall development to be seen in electronics market is suspected to grow at a CAGR of 17% during 2014-2020.FDI in electronics in India is making every possible effort to give better result in technological changes and overall development of EMS industry. Lets have some check on stats.

  • Under the automatic route in ESM industry 100% Foreign Direct Investment (FDI) is allowed. Under this route FDI recently invested on Jan 2019 TEGNA Electronics partnershiped Chinese handset maker Oppo , other companies are setting up a Greenfield Electronics Manufacturing Cluster in Uttar Pradesh to manufacture electronics and support accessories.

  • According to FDI policy for defence electronics, up to 100% FDI is allowed, subject to industrial license. Under the Automatic Route, up to 49% FDI is allowed. Above 49% is allowed under the Government Route on a case to case basis.

  • Industrial corridors Pentagon is built by Indian government across the country to provide quality infrastructure and developed land for further manufacturing and township industry.

  • FDI in electronics sector in India has focused on technological changes such as the rollout of 4G/ LTE networks , IoT , etc pilot them to adoption of electronics products.

  • ·FDI has focused on digital banking sector like wallet players ,payment banks ,etc which will raise demand for POS and VSAT-enabled mobile ATMs, which will further give path to EMS .

Future Challenges:

The efforts are been done to make this campaign work with the aim to make India the manufacturing hub for electronic sector. But on this path there are few challenges which are to be faced . These are

· Abortive supply of required electronic components.

· Companies from competing countries like China, Vietnam, Indonesia, etc have access to finance at a much lower cost which make India to be on unfair playing field.

· Greater turnaround time and cost due to Logistics inefficiencies.

· Higher infrastructure Cost.

Appropriate industry initiatives, successful resolution  and government interventions will make EMS sector to move ahead as India has embraced “Make In India “ vision but path has to be followed to make it reality.

Manufacturing with Minimising Ecological impact:

The new policy which is associated with Make in India campaign is ‘Zero defect, zero effect’. According to this policy production mechanisms should flow a procedure in which products have no defects and has zero adverse environmental and ecological effects. This slogan was given by our honourable Prime Minister Narendra Modi . By throwing light on this policy he said “Let’s think about making our product which has 'zero defect ‘and 'zero effect' so that the manufacturing does not have an adverse effect on our environment". According to him high-quality manufacturing standards should be imposed while minimising environmental and ecological impact. This will help in making sustainable development in the country.

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