Daily Hot Topic
Topic : Electronics: Powering India’s Participation in Global Value Chains (GVCs)
GS-3 Mains : Economy
Global Value Chains (GVCs) in Electronics
- International division of labor for electronics production.
- Global market: US$ 4.3 trillion.
- Key Players: China (60% share), Taiwan, USA, South Korea, Vietnam, Japan, Mexico, Malaysia.
India’s Electronics Sector
- Current Value (FY23): US$ 155 billion
- Finished Goods: US$ 86 billion
- Components: US$ 15 billion
- Growth Driver: Mobile Phones (43% of production)
- Export Target (FY26): US$ 120 billion
- Recent Growth (May 2024): 22.97%
Government Initiatives
- Scheme for Semiconductor Fabs: Attract investment for domestic chip manufacturing.
- Make in India & Digital India: Boost domestic manufacturing and attract FDI.
- Design Linked Incentive (DLI) Scheme: Encourage chip design and manufacturing.
- 100% FDI allowed (automatic route) for electronics sector (except defense electronics).
Challenges
- Market Competition: Dominated by China, Taiwan, etc. (India’s share < 1%).
- Technical Skills Shortage: Lack of trained personnel for advanced processes.
- Capital Intensive Industry: High investment, risk, and long payback periods.
- Import Reliance: Vulnerable to supply chain disruptions (especially semiconductors).
- Limited Design & Component Manufacturing Capabilities.
Way Ahead
- Target: US$ 500 billion in electronics manufacturing by 2030.
- Strategies:
- Localize high-tech components.
- Strengthen design capabilities (R&D).
- Forge partnerships with global leaders.
- Action Areas:
- Promote component & capital goods manufacturing.
- Incentivize R&D and Design.
- Rationalize tariffs.
- Invest in skill development.
- Facilitate technology transfers.
- Develop infrastructure.
Conclusion
India has the potential to become a global leader in electronics manufacturing. By addressing challenges and seizing opportunities, India can transform this sector into a driver of economic growth and job creation.
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