UNIT 10 ELECTRONICS COMMODITIES

Structure

10.0 Objectives
10.1 Introduction
10.2 Overview of Trade in Electronics Commodities
10.3 Recent Trends in Exports
10.4 Strengths and Weaknesses
10.5 Exports Promotion Measures
10.6 Future Prospects and Strategic Responses
10.7 Let Us Sum Up
10.8 Terminal Questions
Further Readings

10.0 OBJECTIVES

After reading this unit, you should be in a position to:

 Explain the overview of electronics commodities

 Discuss the significance of electronics goods in Indian Economy
 Describe Trends in Export of Electronic Goods
 Explain various measure taken by the government to support electronics industry
 Discuss the challenges before the electronics sector

10.1 INTRODUCTION

Electronics also known as ‘meta-resource’ represents the fastest growing industry of the
modern era. It is growing by leaps and bound as electronic industry has gained acceptance as
a key player in the economic development as it is backbone of all sectors of the economy.
According to Ministry of Electronics & Information Technology (MEITY) (2021-22), “It is a
catalyst in developing infrastructure, raising productivity, increasing efficiency in delivery of
services, and enabling social transformation”. In this Unit, you will learn the overviews of
electronics commodities, recent trends in exports and strengths and weaknesses. You will be
further familiarised with the export promotion measures and future prospects and strategic
responses.

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10.2 OVERVIEW OF TRADE IN ELECTRONICS COMMODITIES

Electronic industry flourished in the 20th century and is considered as one of the largest
today. A vast range of electronics devices, semiconductors, chips components or electronics
circuits are used in automated or semi-automated factories to make wide variety of products
such as mobile phones, computers, televisions, LEDs etc., which find place in every sphere of
life. To support the electronics industry and create the necessary ecosystem, government of
India introduced various schemes. Schemes such as “the Production Linked Incentive
Scheme (PLI) for Large Scale Electronics Manufacturing, the Scheme for Promotion of
Manufacturing of Electronic Components and Semiconductors (SPECS), the Modified
Electronics Manufacturing Clusters Scheme (EMC 2.0), and the Production Linked Incentive
Scheme (PLI) for IT Hardware” have helped boost production and export of electronics
products in the country.

The increased production resulted in increased exports of electronic items, which almost
doubled during the past decade. The main exports in this segment include mobile phones, IT
hardware (laptops, tablets), consumer electronics (TV and audio), industrial electronics, and
car electronics. The “National Policy on Electronics 2019 (NPE 2019)” aims to position India
as a “global hub for Electronics System Design and Manufacturing (ESDM) by promoting
and enhancing national capabilities for developing core components and fostering an
environment that will allow the sector to compete internationally”.

Electronics and hardware industry has also played an important role in employment
generation. Employment created by all segments of the value chain (Figure 1) in electronics
was about 4.33 million in 2013, which nearly doubled to 8.94 million in 2022 (KPMG, n.d.).

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Figure 1: Electronics Industry Value Chain

Ministry of Commerce and Industry and Ministry of Electronics and Information Technology
among other have taken various steps to promote export competitiveness of Indian industry in
general and electronics industry in particular. Apart from sector specific policies aimed at
growth of electronics industry, the sector has also benefited from general initiatives of export
promotion council of India, Export credit guarantee corporation of India, India Trade
Promotion Organisation etc.

Before we look at the electronics sector, let us understand India’s foreign trade; i.e.; import
and export of various commodities.
Electronics components such as microchips, semiconductors, circuits, transistors are key
ingredients of most of equipment used by modern civilisation. Rising domestic demand and a
growing electronics ecosystem, combined with initiatives such as 'Make in India' and 'Digital
India,' are driving growth in the Indian electronic component market. As a result, the Indian
Electronic Components Market has grown from $11 billion in fiscal year 2009-10 to $20.8
billion in fiscal year 2018-19, representing an annual growth rate of around 7%. Furthermore,
projects such as 'Digital India' and 'Smart Cities' have increased demand for electronics
commodities.

Electronics sector include a wide range of finished and intermediate products finding their
place into each and every sphere of life. A brief description of electronic goods is given in the
following exhibit:

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According to the Ministry of Electronics and Information Technology's vision, India's
electronics industry exports are expected to reach US$ 120 billion by 2026. Cell phones, IT
Appliances like laptops & tablets, general consumer electronics like TV and speakers,
Industrial electronics, Automated Machines, LED lights, Strategic Electronics, PCBA, smart
watche and headphones, and telecom equipment are expected to drive growth in India's
electronics manufacturing and exports.

10.3 RECENT TRENDS IN EXPORTS

Empirical studies show that foreign trade positively affects economic growth and
development by promoting (jiang, 2014). Recognising the significance of foreign trade to
India’s development, Government of India came up with several initiatives, the notable being
EXIM Policies issued from time to time (Singh, 2014). Many of these schemes and initiatives
have been discussed in earlier units of this course. Accordingly top priority to electronics
hardware manufacturing Government notified the “National Policy on Electronics 2019 (NPE
2019) to position India as a global hub for Electronics System Design and Manufacturing

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(ESDM) by encouraging and driving capabilities in the country for developing core
components, including chipsets” (MEITY Annual Report 2020-21).

India’s share in world exports has increased steadily from 0.4 % of the total world exports in
the year 1980 to 1.7% in the year 2018. During the same period value of exports increased
from to USD 8486 million to USD 322492 million. However, India’ share in export of
Telecommunication apparatus and equipment (0.3%) as well as Electrical machinery,
apparatus and appliances (0.5%) remains relatively lower. This shows potential for Indian
exporters to take up the challenge and increase production and exports. Import of electronic
goods accounted for 11.5% to India’s total imports in 2019-20, which increased to 13.8% of
total imports in 2020-21. The Table 1 below gives a bird’s eye view of India’s foreign trade.

Table 1: A snapshot of India’s foreign Trade

Year Exports Imports Trade Trade Export
(USD (USD Balance Balance as % of
Million) Million) (USD as % of Import
Million) Exports
1950-51 1269 1273 -4 0.32% 99.69%
1990-91 18143 24075 -5932 32.70% 75.36%
2000-01 44076 49975 -5899 13.38% 88.20%
2010-11 249816 369769 -119953 48.02% 67.56%
2020-21 291808 394436 -102628 35.17% 73.98%
Source: DGCI&S, Kolkata.

The Table 2 shows some facts about the import and export of electronics goods. A
comparison of the tables 1 and 2 reveals that India’s trade balance in electronics commodities
is much unfavourable than its overall trade balance. On overall basis Indian exports account
for nearly three fourth (3/4) of its imports, however, export of electronics commodities is a
meagre one fifth (1/5) of imports. This shows India’s overdependence on imported
electronics commodities, which is major use of foreign exchange and in some cases also
poses security threats.

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Table 2: Import – Export of Electronics Goods – Some facts
Year Exports (Rs Million) Imports (Rs Million) Exports as % of Imports
2000-01 48,036.30 1,60,284.20 29.97%
2005-06 96,209.20 5,86,258.50 16.41%
2010-11 3,73,781.40 12,10,172.00 30.89%
2015-16 4,43,643.50 28,44,345.80 15.60%
2020-21 8,99,761.50 42,01,139.40 21.42%
2021-22 12,61,088.40 57,28,456.00 22.01%
Source: CMIE Industry Outlook

Electronic industry has witnessed a big boom in the country during past 2 decades post
liberalisation. It has become a catalyst for growth of digital economy and industry 4.0.
The Figure 1 shows how trade in electronics has increased manyfold. It may also be noted
from the Figure 2 that though, the exports have also increased significantly during past 2
decades, it is the import of electronics goods that has skyrocketed during this period.

The following Figure XX shows India’s exports and imports during the year 2021 – 22 for
major categories of electronics goods. As can be noted from the Figure 3, India heavily
depends on imports to meet its demand for electronic components. The gap between imports
and exports is also highest in case of electronics components as imports are nearly nine times
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of exports. As the components affect manufacturing of several other commodities, there is
need to increase production of these components to address the cost, quality and security
issues appropriately.

Source: CMIE Industry Outlook

Check Your Progress A

1. What are the subsectors of electronic industry?
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2. Write five leading electronic goods exported from India.
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3. Write five leading electronic goods imported to India.
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STRENGTHS AND WEAKNESSES
Before we delve deep into the strategic positioning of Indian electronics sector and its
strengths and weaknesses, it is imperative to understand the changing pattern of India’s
electronics imports and exports. To understand the trade dynamics, it is also imperative to
understand who are the trade partners of India for electronics goods. The following Table 3
shows countries that do most of electronics business with India. As can be noted from the
following table, India depends heavily on its arch rival China for its need for electronics
goods. Apart from economic it also has social, cultural and security imperatives, making it an
urgent case for appropriate intervention to produce local and reduce dependence on imports.
So far as export of electronics goods is concerned, our biggest trade partner is USA (17.98%)
followed by UAE (14.63%). The Indian exports of electronics goods are more dispersed
compared to its skewed imports (46% coming from one source).

Table 3: Import & Export of Electronics Goods at a Glance (2021 – 22)

Import into India Export from India
Country INR Million % Country INR Million %
World 57,28,456.00 100.00% World 12,61,088.40 100%
China 26,41,203.10 46.11% USA 2,26,774.70 17.98%
Hong Kong 7,77,892.10 13.58% UAE 1,84,465.90 14.63%
Singapore 4,12,853.20 7.21% China 71,656.90 5.68%
Vietnam 2,45,750.60 4.29% Netherlands 62,899.20 4.99%
USA 2,36,543.20 4.13% UK 60,686.60 4.81%
South Korea 2,24,468.40 3.92% Germany 59,972.00 4.76%
Taiwan (Taipei) 1,63,806.60 2.86% France 44,070.30 3.49%
Germany 1,62,455.40 2.84% Russia 36,891.70 2.93%
Malaysia 1,19,053.80 2.08% Japan 36,208.30 2.87%
Japan 1,13,595.30 1.98% Singapore 32,567.70 2.58%
Others 6,30,834.30 11.01% Others 4,44,895.10 35.28%

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It can also be noted from the above table that any geo political conflict with China may
disrupt the logistics and value chain in Indian electronics sector due to its large dependence
on China for electronics inputs.

Strengths and Opportunities

Despite the challenges and competition posed by foreign firms the Indian electronics sector
has made some god progress during past few years. The following strengths and opportunities
indicate that the Indian electronics sector has good future prospects:
• New manufacturing facilities Setup and supported by government initiatives
• Growing electronic market in the country and elsewhere
• Significant local demand as an enabler to growth of Electronics industry
• Export potential to unexplored markets such as Africa and Latin America
• Rising manufacturing costs in China and disruptions caused by covid-19
• Growing collaboration with foreign companies as a result of improved business
climate in the country
• Depreciation of the Rupee resulting in higher revenues for exporters

Weaknesses

Apart from the high dependence on imports, domestic electronics industry has been
plagued by several drawbacks hindering its growth. The KPMG report on Human
Resource and Skills Requirement in the Electronics and the IT Hardware Sector,
highlights that “several subsectors in the electronics industry have virtually no
manufacturing facilities in the country. Poor infrastructure, a long-drawn-out
approval process and an inverted duty structure act as impediments for domestic
manufacturing facilities”. Majority of startups fail due to variety of reasons such as
“lack of right funding”, inability to understand the market dynamics and user
perceptions, lack of product innovation etc. (StartupIndia, 2018).
Some of the challenges and weaknesses confronting Indian electronics industry are given
below:
High Tax Rates
Schemes such as “Remission of Duties and Taxes on Export Products (RoDTEP)” and
Production Linked Incentive (PLI) scheme allows refund of duties and taxes and incentives

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respectively. However, the high rates of indirect tax (GST), levied on electronics goods make
them less competitive with products being imported. High rates of GST also make Indian
electronics products less competitive in foreign markets. The following Table 4 shows
indirect tax rates (GST) applicable to some categories of electronic items.

Table 4: GST Rates applicable to ESDM sector and its components

S. N. Category of Electronics Products 2017 2022
GST % GST %
1 Semi-conductors 18 18
2 Display Devices 18 18
3 Electronic components 18 18
4 Other electronic equipment 18 18
Computers and other information
5 terminals* 18 18
6 Communication equipment 18 18
7 AV equipment* 18 18
*28% for display size above 20 inch

As can be noted from the above table, rates of GST on various electronic goods have been
18% since GST was launched, through rates on many other products were reduced. Given the
economic, strategic and security significance, there is need to re look in to these rates and
reduce them to make Indian electronics products more competitive both domestically and
globally.

Electronics import substitution from India draws criticism from around the world

To promote domestic manufacture, India increased customs taxes on a range of electronics

products, including LED bulbs, TV sets, digital cameras, microwave ovens, and mobile
phones. India's decision to increase import taxes on televisions, projectors, and mobile
phones has drawn criticism from the EU, Japan, and the US. In order to comply with the
Information Technology Agreement (ITA), signatories cannot levy import charges on various
IT items, including mobile phones, thus they have asked India for an explanation at the
World Trade Organization (WTO).

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A number of nations previously criticised China and India in the WTO for failing to carry out
their obligations under the ITA. To encourage domestic manufacture, the government placed
the first customs duty on mobile phones on July 1.

India has around 9300 tech-start-ups and continues to be the world’s third-largest tech start-
up ecosystem. Technology Startups, like most businesses, have been adversely impacted by
COVID-19 and its associated mitigative measures. Many tech start-ups in India have reported
a decline in revenue, some suspended operations and faced non response from VCs due to
market uncertainty and Start-ups not achieving the milestones

Some of the challenges and weaknesses still confronting Electronics sector are given below:

• Skill shortage across the ESDM value chain

• Rapidly changing technology requires continuous re skilling of the workforce.
• Increasing imbalance in import and exports of electronics items.
• Zero import duty regime required by WTO has resulted in cheap imports from China
and other countries; causing harm to domestic industry.
• Capital intensive nature of Electronics industry requires huge upfront investment,
thereby discouraging new entrants in the market.
• Unfavourable tax structure makes Indian Products less competitive compared to those
coming from China and Taiwan
• Emergence of other low-cost competitors such as Vietnam
• inadequate infrastructure,
• Existence of hurdles in supply chain and logistics,
• Less availability of reliable and quality power at competitive rates,

10.5 EXPORT PROMOTION MEASURES

India incorporation is moving fast on the path of development propelled by the digital
technology and industry 4.0 revolution. Post pandemic Indian economy has scored quick
rebound and witnessed highest economic growth across the globe as a result of good
governance and the infrastructural developments brought in by various initiatives of the
government, especially “Make in India, Make for India and Make for the World”. Industry
4.0 led development is heavily dependent on digitisation of the processes which in turn

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depends on availability of electronics and information technology hardware. Ministry of
Electronics and Information Technology Government of India estimates that domestic
electronics manufacturing could generate economic value of about $400 billion in 2025
(MEIT, 2021) MEIT’s vision document “India’s Trillion-Dollar Digital Opportunity”
envisages achieving this target by “building vibrant electronic device manufacturing
ecosystems encompassing assembly, components, and design for smart phones, LED and
LCD televisions and set-top boxes, LED lights, sensors, medical electronic devices, among
other goods”.

Recognising the contribution of electronics goods to the economic growth especially “make
in India and Digital India” plans, the National Policy on Electronics 2019 sets an ambitious
target of a turnover of USD 400 billion (approximately INR 26,00,000 crore) by 2025 in
domestic manufacturing and export in the entire value-chain of Electronics System Design
and Manufacturing (ESDM) industry. According to MEIT “This includes targeted production
of 1.0 billion (100 crore) mobile handsets by 2025, valued at USD 190 billion (approximately
INR 13,00,000 crore), including 600 million (60 crore) mobile handsets valued at USD 110
billion (approximately INR 7,00,000 crore) for export”.

To promote production of white goods in huge quantities to meet both the domestic demand
and also to facilitate exports, the Government of India selected 42 companies under the
production linked incentive (PLI) scheme of the Department for Promotion of Industry and
Internal Trade (DPIIT) for promotion of manufacturing and trade of white goods.

The total committed investment of Rs 4614 crore includes and investment of Rs 3,898 crore
by 26 companies for air conditioner manufacturing while the proposed investment of Rs 716
crore by 16 companies is for LED light manufacturing.
The proposed investment is envisaged to generate net incremental production of around Rs
81,254 crores and direct employment of more than 40000 people (ET, 2021). The PLI
scheme for white goods shall have significant impact on production of:
a) Air conditioning equipment including compressors, copper tubing and aluminium
foils.
b) Components such as control assemblies both for indoor and outdoor units (ODU), AC
display units, ivalves etc.

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 c) LED Lighting, display units and components such as metal-clad PCBs and wire-
wound inductors etc.

National Policy on Electronics 2012

Despite the growing economic and strategic status of Electronics sector, India heavily
depended on imports to fulfil its need for electronic goods and components. This required a
road map for the advancement of electronics sector in the country. A holistic, investor-
friendly and market-driven National Policy on Electronics, 2012 (NPE 2012) was enacted by
Ministry of Electronics and Information Technology to fill this gap. This strategic move
focused on building much needed capacity in the electronics sector by making provision for
better infrastructure, incentivising industry to provide level playing field and give it a
competitive advantage, promoting innovation and facilitate human resource development to
alleviate skills shortage.

Electronic commodities sector scored impressive growth in India during past few years and
has the potential to contribute significantly to the fast economic growth and development of
the country. This fast growth has been facilitated by schemes such as: “Modified Special
Incentive Package Scheme (M-SIPS)”; “Electronics Manufacturing Clusters (EMC)” for
providing world-class infrastructure and logistics; specifying and implementing standards for
safety; and streamlining tariff structure to incentivise domestically manufactured electronic
products in Government procurement under the aegis of the “Public Procurement Order 2017
(PPO2017)”.

The Modified Special Incentive Package scheme (M-SIPS), “provides financial incentives
across the ESDM value chain. Launched in 2012, M – SIPS provides capital subsidy of 25%
for electronics industry located in non-SEZ areas and 20% for those in SEZ areas. Under M-
SIPS, 419 investment proposals involving investment of INR 1,13,089 crore have been
received till 31.12.2018. Out of these 197 applications with proposed investment of
approximately INR 41,791 crore have been approved” (SOURCE).

The Electronics Manufacturing Clusters (EMC) Scheme, also launched in 2012, “encouraged
entities, including State Government entities, to provide good quality infrastructure within a
cluster. Under the scheme, 50% of the project cost for Greenfield EMC and 75% for
Brownfield EMC is given as grant. So far, 20 Greenfield EMCs and 3 Brownfield EMC

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projects have been sanctioned with the project outlay of INR 3,898 crore, including INR
1,577 crore from the Government of India as Grant-in-aid. Under this scheme, 3,565 acres of
land is being developed in Electronics Manufacturing Clusters with likely investment of
about INR 54,836 crore by the manufacturers” (SOURCE).

Electronics Development Fund (EDF) scheme was launched to promote startups and
innovation. “EDF is a Fund of Funds which invests in Venture Funds, which in tum invests in
ventures/ Startups in the area of Electronics, Nano-electronics and IT”. At least 50% of the
corpus has to be invested in Ventures working in ESDM sector.

National Policy on Electronics 2019 (NPE 2019)

National Policy on Electronics 2019 (NPE 2019) envisions “to position India as a global hub
for Electronics System Design and Manufacturing (ESDM) by encouraging and driving
capabilities in the country for developing core components, including chipsets, and creating
an enabling environment for the industry to compete globally”. Its mission includes:

• Encourage production of electronic goods and facilitate establishment of “global

bases for manufacturing of components and sub­ assemblies” in India in all sub-
sectors of electronics.
• Reduce dependence on import of electronic goods and protect domestic industry from
dumping by countries such as China, US and others.
• Strengthen India's linkages with global trade to boost Indian ESDM exports.
• Build a risk-management eco-system to promote and create a framework for a
comprehensive start­ up eco-system in the upcoming areas of electronics and
technology
• Promote ease of manufacturing
• Introduce fiscal incentives and provide finances at competitive rates
• Promote R&D to develop electronic products and encourage and incentivize Transfer
of Technology (ToT) for core technologies.

The NPE 2019 proposes following strategic action plan (Table 5) to achieve its vision and
mission.

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 Table 5: Strategic Actions Planned Under NPE 2019

Strategy Actions
Creating eco-system for Appropriate incentive mechanisms and fiscal interventions to
globally competitive boost manufacturing of electronic products and components.
ESDM sector Provide tax rebates or exemption to reduce capital
expenditure.
Facilitate establishment of new units and expansion of existing
manufacturing units
Promote Electronics Manufacturing Clusters (EMC) scheme to
ease supply chain issues
Provide support for Micro, Small and Medium Enterprises
(MSME) to setup electronic manufacturing units.
Promote domestic industry to cater to National Critical
Infrastructure.
Developing and Set up standards based on global benchmarks to boost quality
Mandating Standards to of Indian electronic products
ensure quality of output Promote participation various stakeholders in standard setting.
Ensure compliance to standards for electronics products.
Create and upgrade lab for testing of electronic goods
Ease-of-doing-Business Strengthen and leverage “Invest India” for facilitation of
for faster growth of investment and support till the units become functional.
ESDM sector

Industry-led R&D and Promote path-breaking research and grass root level
Innovation for improved innovations in emerging technology areas
quality and faster growth Establish chairs for focused research in the emerging
of the sector technology areas and thrust areas of electronics.
Promote Institutes in small cities to conduct relevant research.

Incubation Centres/ Centres of Excellence (CoE) should be

established to support growth of electronics.
Support development and acquisition of IPs and patents in

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 ESDM sector.
Facilitate interaction between academia and industry to foster,
creativity innovation to create and share IPs/ prototypes
Incorporate sustainability aspects throughout the life cycle of
electronic goods
Human Resource Work with various stakeholders to ensure availability of
Development adequately skilled manpower to the ESDM industry.
Provide support for skill development
Generate research base at Post Graduate/ Ph.D. level to to
facilitate path breaking research in emerging technology areas
Support Indian scholars for carrying out their research abroad
in collaboration with centres of excellence.
Formulate schemes for job creation and bridging the skill gap.
Export Promotion Incentivise export of electronics goods and thereby empower
the exporters
Trusted Electronics Value “Promote trusted electronics value chain initiatives to improve
Chain national cyber security profile and control its supply chain
across national defence (military, intelligence, space) and
critical national infrastructure (energy grids, communication
networks, digital economy, etc.)”.
Cyber Security Enhance understanding of cyber security issues
Develop adequate capacities for testing and identifying cyber
security risks.
Reduce cyber security risks by using better security chips
Promote other development of photonics, nano-based devices
and cyber security products.
Manufacturing “Provide incentives and support for manufacturing of core
Ecosystem for ESDM electronic components (both active and passive, including bare
Components PCBs, PCB laminates, chip components, connectors, wound
components, switches, relays, ferrites, etc.), lithium-ion cells
(and such other cells that may be commercialized in future
with advancement of technology) for electronics/ EV
applications, fuel cells, preform of silica, optical fibre, solar

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 cells, raw materials for electronic components, etc., and
ATMP of semiconductors”.
Preferential Market Implement the Public Procurement (Preference to Make in
Access promoted locally India) Order 2017 to boost demand of locally produced
produced electronic electronic goods.
goods by Create and expand the market for through Government e-
Market Place (GeM) facility.
Developing core Promotion of Fabless Chip Design Industry
competencies in the sub- (Electronic Design Automation (EDA), Emulation/ rapid
sectors of Electronics prototyping infrastructure, Provide support under the PPO
2017, Provide support through Venture Capital (VC) funding,
Set up Incubation Centres/ Centres of Excellence (CoEs),
Broaden the VLSI Design base)
Promotion of Medical Electronic Devices Industry
(Promote R&D through PPP model, Commercialize
technologies available with academic/ R&D institutions,
Common testing facilities, common manufacturing facilities,
open labs, etc. Provide skilled manpower and implement a
Phased Manufacturing Programme (PMP) for medical
electronic devices.)
Promotion of Automotive Electronics Industry and Power
Electronics for Mobility: “Facilitate R&D and innovation for
next generation solid-state batteries and power electronics for
electric vehicles (EVs), Promote exports, launch Phased
Manufacturing Programme (PMP) for automotive electronic
products”.
Promotion of Strategic Electronics Industry
“Promote sourcing of locally made electronic goods/ systems
in strategic and core infrastructure sectors.; Create long-term
partnerships between domestic ESDM industries and the
strategic sectors and facilitate training and subsequent transfer
of technology (ToT))”.
Promotion of Electronics Manufacturing Services (EMS)

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 Industry
(Engineering and design of PCBs, PCB assembly / sub-
assemblies, Functional testing, Product and component design)
Promotion of Assembly, Testing, Marking and Packaging
(ATMP) Industry
Other Measures Promote processing of e-Waste in environment friendly
manner in PPP Mode across the country.
Reduce the lead time and make components and raw materials
available just-in-time (JIT) by facilitating warehousing.
Focus on acquiring mines of rare earth metals in foreign
required for electronics manufacturing.
Device various schemes for promotion of electronics hardware
manufacturing,
Monitor status and growth of electronics manufacturing
industry with help of appropriate indicators for ESDM sectors
Promote national-level market research
Source: National Policy on Electronics 2019 (NPE 2019), THE GAZETTE OF INDIA:
EXTRAORDINARY. New Delhi, the 25th February, 2019

Telecom Equipment and Services Export Promotion Council (TEPC)

Established by GOI the TEPC is committed to promote and develop export of telecom
equipment and services through export facilitation. It plays a pivotal role in enhancing
exports of commodities and services including Telecom Hardware, Telecom Services,
Software and Consulting services. It leverages upon “Market Access Initiative Schemes of
the Department of Commerce, Ministry of Commerce & Industry India” to facilitate exports.
TEPC also organises various promotional events to promote exports from India. Some of
such events recently organised by TEPC include: ConnecTech Asia 2022 organised from
June 1-3, 2022 in Singapore; Telecom Investor Round Table held on July 30, 2022 in
Mumbai; India Africa ICT Expo & Conference, organised on September 14-15, 2022 in
Accra, Ghana; India Mobile Congress organised during October 1-4, 2022 in New Delhi,
India and AFRICACOM 2022 held from November 8-10, 2022 in Cape Town, South Africa

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Under the patronage of MEITY and as mandated by the NPE 2019, various schemes have
been launched by the Government to promote manufacturing of electronics products and also
to expand their exports. The following Figure 4 highlights the 4 major schemes aimed at
supporting growth of electronics sector in the country.

Figure 4: Important schemes for supporting manufacturing of electronics goods

Source:Ministry of Electronics and Information Technology

The Table 6 below summarises the salient features of the 4 major schemes introduced by the
Government to support growth of electronics sector.

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 Table 6: An overview of Major Schemes for Supporting Electronics Sector
PLI Scheme for PLI scheme for SPECS EMC 2.0
Large Scale IT Hardware
manufacturing
Outlay 40951 crore 7300 crore 3285 crore 3762 crore
Incentive on 3% to 5% on 2% to 4% on 25% on up to 50% of
goods incremental incremental sales Capital project cost
manufacture sales Expenditure subject to certain
d in India including R & conditions
D expenditure
Target Components, Laptops, Tablets, Electronic State
Segment semiconductor All-in-One PCs, Components, Governments,
devices, and Servers Semiconducto State
resistors, rs, Specialized Implementing
capacitors, Sub- Agencies etc.
PCBs, Assemblies
actuators, Micro etc.
/ Nano-
electronic
components,
Assembly,
Testing,
Marking and
Packaging
(ATMP) units

Eligibility Incremental Incremental Investments in Requirement of

investment (25 investment (500 New Units & Anchor Units
Cr) and Cr) and Expansion of Purchase/lease at-
incremental incremental sales Existing Units least 20% of the
sales of of manufactured land area
manufactured goods (10000 Cr)
goods (100 Cr)

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Tenure of 4 years 4 years applicable 3 years for For applications:
the Scheme applicable from from 01.04.2021 applying; 5 3 years.
01.04.2021 years for For disbursement
investment of funds: 5 years
Source: MEITY,

The following Figure 5 shows the process of availing benefits of the above cited 4 schemes.

Figure 5: Process for Availing Incentives under PLI, SPECS and EMC 2.0

Source: MEITY

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10.6 FUTURE PROSPECTS AND STRATEGIC RESPONSES

The Following Table 7 shows growth in exports from India and imports into India during past
five years. It can be seen that growth rate of imports has been lower than the growth of
exports, which is a good sign as a result of various initiatives of the Government of India
undertaken to boost production of electronics goods in the country.
Table 7: Growth of Indian Exports and Imports

Year
Year on Year Increase in Foreign Trade of Electronic Goods
Exports Imports
2017-18 4.36% 17.59%
2018-19 43.28% 17.13%
2019-20 30.63% -3.75%
2020-21 -1.63% 3.71%
2021-22 40.16% 36.35%
Average 23.36% 14.21%
Source: calculation based on MEITY Data

According to MEITY annual report 2021-22, it is also worth noting that the domestic
production of electronic goods has increased substantially Further it may be noted that the
value of imports have now become less than value of production of electronics commodities,
which is a good sign off late.

Given the strategic importance of electronics commodities in national economy and its role in
various industries including security and defence applications, the Government has accorded
top priority to electronics sector to boost manufacturing, import substitution and exports.
Some of the initiatives that shall further boost the production in electrnics sector include the
following:

The Phased Manufacturing Programme (PMP) for mobile handsets and related sub-
assemblies/ components has brought significant results as production of mobile phones
increased about 7 times during past 5 years. Extending PMP scheme to other segments of

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electronics sector shall definitely position India as top producer of electronics goods, attract
required investment and forge necessary alliances for R & D.

SAMRIDH

“SAMRIDH, the Startup Accelerator of MEITY for Product Innovation, Development and
Growth program provides startups with a platform to enhance their products and secure
investments for scaling their business (MEITY, 2022). SAMRIDH acts as an enabler for the
emerging companies/start-ups to take their products/solutions from prototype stage to
commercialization.

The program will focus on accelerating the startups by providing the following types of
support

 customer connect,
 investor connect, and
 internationalization connect services.

MeitY Startup Hub (MSH), shall act as the implementing agency for SAMRIDH. The
scheme commits an investment of up to ₹ 40 lakh to the startup with equal matching
investment by the accelerator / investor of up to ₹ 40 lakh based on the current valuation and
growth stage of the start-up.

SAMRIDH Provides following assistance:

1. Expert diagnostic for market research and product positioning

2. Mentoring of Startups through experts on the basis of tech vertical

3. Legal Assistance for all matters

5. Co-learning

6. Weekly meets between founders of all startups

7. Demo Day: Presentation to VCs and angel investors

8. Assistance to startups in negotiating and closing investment deals with VCs and angel
investors

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Institutional Support for Electronics Sector

Government of India has established various institutions to support R & D for Building
Electronics Commodities Manufacturing Eco System in India including: “National Centres of
Excellence at Indian Institute of Technology (IIT) Bombay for technology solutions in
internal national security”, “National Centres of Excellence at Indian Institute of Technology
(IIT) Kanpur for flexible electronics” and “Centre of Excellence in Bangalore in collaboration
with the National Association of Software and Services Companies (NASSCOM) for Internet
of Things (IoT)”.

Support for medical electronics devices industry:

Initiatives to support medical electronics devices industry include: Building infrastructure for
a proper regulatory structure, R&D supported by public-private partnership,
commercialisation of technologies developed by academic laboratories or private- sector
R&D institutions, Establishment of industrial parks with appropriate infrastructure and
subsidised access by MSMEs to testing, evaluation, accreditation and compliance,
establishing Centres of Excellence and common manufacturing facilities may help boost
production of medical electronic devices in the country.

Incentives for fabless chip design: Chip design and manufacturing is considered as a
backbone of electronics sector. Applying provisions of “Public Procurement (Preference to
Make in India) Order 2017 (PPO 2017)” for preferential purchase of locally made chips,
assisting filing for international patents, enabling collaboration with international
organisations for R & D, product design and development, setting up a National Fabless
Semiconductor Centre etc may help create an enabling environment for fabless chip design
industry to flourish.

Electronics Development Fund (EDF)

The MEITY Launched a “fund of funds” known as Electronics Development Fund (EDF)
to foster R&D and innovation in the electronics sector for market driven research. The fund is
jointly managed by MEITY and Canbank Venture Capital Funds Ltd. The Table below shows
support given to startups in the electronics sector

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Check Your Progress B
1 Write three mission of national policy on electronics 2019.
…………………………………………………………………………………………
…………………………………………………………………………………………
………………………………………………………………………………………
2 Write three major schemes for supporting electronics sector.
…………………………………………………………………………………………
…………………………………………………………………………………………
………………………………………………………………………………………
3 Write three assistances provided by SAMRIDH.
…………………………………………………………………………………………
…………………………………………………………………………………………
………………………………………………………………………………………

10.7 LET US SUM UP

From the forgoing discussion it is clear that historically India has lagged far behind in the
area of production of electronic goods and depends heavily on imports mainly from China.
Given the strategic importance of the electronics sector, Government of India has come up
with variety of schemes to support electronics industry. Apart from the initiatives already in
place there is need to make provision of training to provide adequate pool of talent, introduce
research-based courses meeting international standards and quality and organise more
advocacy and outreach programmes

10.8 TERMINAL QUESTIONS

1. Describe major initiatives and action proposed by the National Policy on Electronic
2019.
2. Briefly explain the major trends of import and export of electronic goods in India
3. Describe various measures taken by the Government of India to promote growth of
electronics industry in the country.
4. Explain why it is important to have a strong domestic electronics industry in the
country

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 5. Write shot notes on the following
a. SAMRIDH Scheme
b. PLI Scheme
c. M – SIPS scheme
6. Describe major contributions of the National Policy on Electronic 2012.

FURTHER READINGS

• ET Government (November 05, 2021). Centre selects 42 companies under PLI

scheme for white goods to invest Rs 4,614 Crores. Available at:
https://government.economictimes.indiatimes.com/news/governance/centre-selects-
42-companies-under-pli-scheme-for-white-goods-to-invest-rs-4614-crore/87533238

• Invest India (n.d.) Incentive Schemes for Electronics Manufacturing

o https://www.investindia.gov.in/schemes-for-electronics-manufacturing Date
accessed: 10th December, 2022.

• Jiang Y China: Trade, Foreign Direct Investment and Development Strategies.

Elsevier – Chandos Asian Studies Series.

• KPMG (n.d.). Human Resource and Skills Requirement in the Electronics and the IT
Hardware Sector, 2013-17, 2017-22
o https://www.meity.gov.in/writereaddata/files/NSDC%20Electronics-IT-
hardware%20report.pdf. Date Accessed: 3rd December, 2022

• MEITY (n.d.) INDIA’S TRILLION-DOLLAR DIGITAL OPPORTUNITY

o https://www.meity.gov.in/content/india%E2%80%99s-trillion-dollar-digital-
opportunity. Date Accessed: 24th November, 2022

• MEITY (2022). “SAMRIDH, the Startup Accelerator of MeitY for Product

Innovation, Development and Growth
https://www.meity.gov.in/writereaddata/files/SAMRIDH%20Scheme%20Document.p
df
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• PLI Gazette Notification - 01.04.20_0.pdf (investindia.gov.in)
o https://static.investindia.gov.in/2020-04/PLI%20Gazette%20Notification%20-
%2001.04.20_0.pdf. Date Accessed: 24th November, 2022

• PLI-Guidelines-01062020.pdf (investindia.gov.in)
o https://static.investindia.gov.in/2020-06/PLI-Guidelines-01062020.pdf. Date
Accessed: 30th November, 2022

• Singh, K. Foreign Trade of India. 1991 – 2014. New Century Publications, New Delhi
o https://www.indiabudget.gov.in/economicsurvey/doc/eschapter/echap08.pdf

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