The electronics industry in India has become one of the largest and most renowned sectors in the world, mainly thanks to the country’s low production costs coupled with soaring domestic demand of electronics and telecom products. With the aim of further strengthening the leading position of India’s electronics industry in the global market, the government in India sets to provide stronger support in various areas to provide a boost for the industry and its future.
According to recent figures from the Indian government, the electronics industry in India was valued around US$ 31.6 billion in 2015 and is expected to grow at a compound annual growth rate (CAGR) of 66.1% to US$ 400 billion in 2020. The industry growth is believed to be mainly driven by the rising demand of electronic products in the global scale, increasing disposable income, and changing lifestyles with surging digital literacy.
Government support is attributed as one of the biggest factors for fueling the industry growth over the recent years. Currently, Indian government is working on export-oriented policies for India-made electronic products. With new policies being implemented, government hopes to increase exports of electronic products and attract larger foreign investments by setting up port-based electronic manufacturing clusters.
The latest government support comes as the newly issued policy for Goods and Services Tax (GST) will significantly reduce the cost of domestic electronics manufactures in India. Under GST, cascading effects of taxes will be eliminated for electronics manufacturers and vendors in India’s electronics industry will also be able to reduce expenses incurred in warehousing and logistics which stood at approximately 5-8%. “GST will give a major boost to the Indian electronics industry thereby, leading to subsequent increase in demand of locally-manufactured electronics,” said the report of India Times.
Over the recent years, several new initiatives, including Make in India, Digital India, Electronic Hardware Technology Parks (EHTPs), Special Economic Zones (SEZs) have already been implemented and brought about a favourable climate for Foreign Direct Investment (FDI). India Brand Equity Foundation also reports that the government has increased liberalisation and relaxed tariffs to promote growth in the electronics sector. In addition, it has given the nod to Modified Special Incentive Package Scheme (MSIPS) under which the central government will be offering up to US$ 1.7 billion in benefits to the electronics sector in next five years.
In near future, the soaring demand and customer base are projected to be witnessed in some major segments of India’s electronics industry, such as consumer electronics and durables, computers, communication and broadcasting equipment, strategic electronics and electronic components. Also, the growing internet penetration in the country is likely to bring more opportunities for companies in the electronics industry.