Steps that can turn India into the next global electronics powerhouse
R Swaminathan | June 27, 2014
By 2020 the demand for electronic goods in India is expected to breach the US$400 billion mark, with the import bill estimated to set the country back by US$300 billion. In fact, it is expected to trump the energy import bill. India is staring at an import nightmare of unprecedented proportions that can push the country into a spiral of high imports that would necessarily require higher external and internal borrowings. There are several South American economies that have gone down that route for us to learn our lessons and not implode.
The National Policy on Electronics (NPE) 2012 is primarily aimed at ramping up India’s Electronic Design and Manufacturing (ESDM) capability. It is by far the most comprehensive policy intervention in post-independent India to boost indigenous production of semiconductor components and chips. The policy comes on the back of a strong and sustained demand for consumer electronic goods that accounted for a hefty bill of US$125 billion last year.
However, just about 10 percent of India’s consumption was produced internally; the rest was imported. In the last two decades China has become the second largest manufacturer of electronics goods in the world with its sales revenues crossing US$840 billion in 2013. This development must necessarily be seen in the context of China having overtaken the US in 2010 to become the world’s dominant manufacturing economy. China literally beat its competitors in world manufacturing, notching up US$2.9 trillion in output in 2013. In contrast, the US generated US$2.43 trillion. The Indian sales revenues for the year 2012 stood at slightly above US $68 billion, less than even one-tenth the size of the Chinese juggernaut.
This policy paper by R. Swaminathan -- Governance Now Contributing Editor and Senior Fellow of Observer Research Foundation -- decodes and analyses China’s rapid rise as an electronic powerhouse and draws lessons for India’s efforts to become a leading global player. The paper specifically focuses on India’s National Policy of Electronics, 2012, which is possibly the most comprehensive policy framework for electronics sector in the last four decades, and suggests concrete policy and implementation measures for Indian policy makers to make the country a leading electronics manufacturing country.
The paper is particularly useful for senior management of electronics and electronics component manufacturing companies, policy researchers, decision makers, academics, top bureaucrats, consultancy professionals and industry and corporate bodies. The paper is useful for universities, think tanks and any individual interested in understanding the phenomenal rise of China as a global electronics powerhouse.
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