The government think tank NITI Aayog has suggested various reforms to facilitate growth of the domestic electronics sector. In a new report, it has called for simpler import duties on components and fiscal support to local electronics producers.
As per the report released yesterday, India’s electronics market needs to expand five-fold to $500 billion by 2030 from the current $100 billion. However, high import levies are hampering the competitiveness of local manufacturers in global markets. The report notes that average tariffs on relevant electronics items are around 7.5% in India compared to 4% in China and lower rates in other competing nations like Malaysia and Mexico. It recommends rationalization of the duty structure to unlock export potential.
Besides tariff changes, the report emphasizes opex subsidies for scaling up production of components requiring low capital spending. Components with high investment needs may get capex assistance and hybrid support covering both capital and operational costs. It also suggests fiscal incentives for locally designed products and components to encourage innovation. For bolstering supply chains, the Aayog proposes industrial clusters for electronics manufacturing with both greenfield and brownfield expansions.
Strengthening the components ecosystem was highlighted as a key priorityarea. Existing schemes have seen limited success due to inadequacies in addressing the specifics of this sector. The reportthus calls for a new component manufacturing scheme. It puts forth several other suggestions around skills development, technology transfers and cluster infrastructure to promote India as an electronics production hub.
The Aayog estimates Indian electronics exports may reach $240 billion in 2030 compared to current $24 billion if these recommendations are implemented otherwise the sector will only touch $275 billion in a business-as-usual case. Officialsexpressed commitment to take the report’s inputs forward for necessary policy actions towards fulfilling the goal of a $500 billion electronics industry.
