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Demand for Electronic Components Expected to Reach $240 Billion to Support Electronics Production Worth $500 Billion by 2030: CII The Confederation of Indian Industry (CII) has published a comprehensive report projecting a five fold increase in the demand for electronic components and sub-assemblies in India by 2030.

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According to a recent report titled 'Developing India as the Manufacturing Hub for Electronics Components and Sub-Assemblies' by the Confederation of Indian Industry (CII), the demand for electronic components and sub-assemblies in India in 2023 stood at $45.5 billion, supporting electronics production worth $102 billion. This demand is expected to surge to $240 billion by 2030, backing electronics production worth $500 billion. Notably, priority components, including printed circuit board assembly (PCBA)s, are set to grow at a robust compound annual growth rate (CAGR) of 30 per cent, reaching $139 billion by 2030.

The report underscores the need for India to transition from its current state of 'import-dependent assembly-led manufacturing' to 'component-level value-added manufacturing.' To achieve this, CII has identified five priority components and sub-assemblies: batteries (lithium-ion), camera modules, mechanicals (enclosures, etc.), displays, and PCBs. These components, which accounted for 43 per cent of the demand in 2022, are projected to grow to $51.6 billion by 2030. Presently, the production of these components in India is minimal, resulting in heavy reliance on imports. This import dependence is deemed unsustainable, prompting the need for domestic production capabilities. The report also highlights the potential for PCBAs, with demand expected to grow by 30 per cent, reaching $87.46 billion by 2030.

However, the report also outlines several challenges that hinder domestic manufacturing. Firstly, manufacturing-related costs in India are 10-20 per cent higher compared to China, Vietnam, and Mexico. Additionally, there is a lack of large domestic manufacturing corporations, a robust domestic design ecosystem, and an underdeveloped raw materials ecosystem. These factors collectively pose barriers to the growth of domestic manufacturing of components and sub-assemblies in India.

To address these challenges, CII has made several key recommendations. One of the primary suggestions is to introduce a scheme providing 6-8 per cent fiscal support for select components and sub-assemblies, extended over a period of 6-8 years to ensure adequate scaling up and value addition. Additionally, the report recommends implementing SPECS 2.0 with subsidy support ranging from 25 per cent to 40 per cent for both brownfield and greenfield investments. This policy should adopt a gradient approach, offering higher subsidies for more significant investments. Furthermore, it is crucial to rationalise import tariffs on priority sub-assemblies and components like camera modules, display modules, and mechanicals. Aligning these tariffs with key competing economies and reducing most tariff lines to 5 per cent or lower will enhance the competitiveness of Indian manufacturers. Lastly, the report emphasises the need to aggressively pursue free trade agreements (FTAs) with the EU, UK, GCC countries, and emerging African economies. Creating export demand for India-made products will not only boost domestic manufacturing but also increase export volumes.

The report highlights the various economic benefits that will arise from developing the components and sub-assemblies ecosystem in India. These include job creation, with an estimated 2,80,000 new jobs by 2026, an increase in domestic value addition, reduced import dependency, and overall GDP growth. By implementing these recommendations, India can firmly position itself as a global hub for electronics manufacturing, transforming its electronics sector and significantly boosting its economy.

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