India Electronics Industry 2021

ICEA
INDIA CELLULAR
AND ELECTRONICS
ASSOCIATION
Inspire.Enable.Lead
India’s Electronics Industry:

Potential for Domestic
Manufacturing and Exports
August 2021
1
DISCLAIMER: Opinions and recommendations in the report are
exclusively of the author(s) and not of any other individual or institution
including ICRIER. This report has been prepared in good faith on the
basis of information available at the date of publication. All interactions and
transactions with industry sponsors and their representatives have been
transparent and conducted in an open, honest and independent manner
as enshrined in ICRIER Memorandum of Association. ICRIER does not
accept any corporate funding that comes with a mandated research area
which is not in line with ICRIER’s research agenda. The corporate funding
of an ICRIER activity does not, in any way, imply ICRIER’s endorsement
of the views of the sponsoring organization or its products or policies.
ICRIER does not conduct research that is focused on any specific product
or service provided by the corporate sponsor.
ICEA
INDIA CELLULAR
AND ELECTRONICS
ASSOCIATION
Inspire.Enable.Lead
India’s Electronics Industry:

Potential for Domestic
Manufacturing and Exports
August 2021
Authors: Neha Gupta, Priya Kumar and Rachit Saini

4
Table of Contents
Acknowledgments��6
Executive Summary��7
1. Centrality of India’s Electronics Industry�� 11
1.1 Background and Rationale��11
1.2 Review of Literature and Existing Gaps��12
1.3 Objective, Scope and Methodology��13
1.4 Structure of the Report��13
2. Production, Trade and Value Chains��14
2.1 Domestic Production: Trends and Issues��14
2.2 Exports and Imports Trends��18
2.2.1 Export-Profile of Indian Electronics��19
2.2.2 Import-Profile of Indian Electronics�� 22
2.3 Changes in Electronics Ecosystem�� 25
2.4 Deep Dive into Smartphones, Tablets, and Laptops Value Chains�� 30
3. Decoupling Opportunities and Challenges��39
3.1 Decoupling by India and Opportunities�� 39
3.2 Central Policies and Schemes�� 43
3.3 States’ Electronics Policies�� 49
3.4 India’s Challenges in Electronics Industry�� 53
4. Findings and Conclusions��57
5. Key Policy Interventions��63
Appendix��64
ACKNOWLEDGEMENTS
We offer immense gratitude to our sponsor ICEA for giving us the opportunity to
undertake this Study on comprehending opportunities and challenges in Indian
electronics manufacturing ecosystem in light of the emerging global scenario
especially due to COVID-19, and suggesting how India can respond to those
opportunities, including fast-tracking decoupling from China. We are thankful to
all the members of ICEA in terms of their continuous guidance and support in
finalizing the scope, objectives and key findings of this Study. We are particularly
grateful to the valuable inputs provided by Shri Saurabh Gaur, Joint Secretary,
Ministry of Electronics and Information Technology (MeitY); Shri Neeraj Sinha,
Adviser (S&T), NITI Aayog; Shri Devraj Singh, Vice President, Electronic Sector
Skills Council of India, and their teams.
We would like to thank Dr Deepak Mishra for rewriting the Executive Summary of
the Report. We would like to say special thanks to Dr Rajat Kathuria for his useful
comments, which helped in bringing the Report to reality. We are also thankful
to Dr Mansi Kedia for her inputs, especially at inception stage and during data
collection and analysis phases. We are grateful to Varsha Jain, Riya Roy, and
Hari Krishna Devanshu for their brilliant work with data and extensive literature
review. We are utmost grateful to our team at ICRIER for their unending support
and intellectual discussions, and for giving us hope during these tough times of
the pandemic. All errors are our own.
6
EXECUTIVE SUMMARY
Now or Never?
Several factors at home and abroad have aligned in recent years to give India a rare opportunity to
create a globally competitive manufacturing sector. From a geo-political perspective, the world is looking
to India – with its youthful, English-speaking, large and relatively cheap labor force and long democratic traditions
– to counterbalance China as the world’s factory. With the Covid-19 pandemic exposing the fragility of Global Value
Chains (GVCs), the multinationals are increasingly adopting the China Plus One strategy.1 The US-China trade war
and the hardening of rhetoric on both sides to decouple their economies have meant a new world trade order is
evolving, giving India a second chance to rethink its trade and industrial policies. Keeping these global developments
in mind, and their continued effort to catapult India into a global manufacturing hub, the Indian policymakers have
announced a slew of programs during the past one decade including the National Manufacturing Policy (2011), the
National Policy on Electronics (2012), Make in India initiative (2014), the Phased Manufacturing Programme (2017)
and Remission of Duties and Taxes on Exported Products (RoDTEP). In recent months, there are encouraging signs
that India’s trade policy may be decisively shifting towards greater export promotion (see Box 1).
Central to this planned manufacturing renaissance is the creation of a globally competitive
electronics industry. The rise of automation and the servification of the economy are changing the future of
manufacturing, with trade in high-skilled, knowledge products, such as electronics, growing at [twice] the rate of
global trade. India, with its impressive track record of exporting modern services and a large domestic market
for electronic products, is in a strong position to leverage these trends. In order to level the playing field with
countries such as China and Vietnam – that have emerged as electronic manufacturing hubs for the world because
of their significant cost advantage and favorable investment climate – the Government of India has announced
several policies such as Production Linked Incentive (PLI), Scheme for Promotion of Electronic Components and
Semiconductors (SPECS), Electronics Manufacturing Clusters (EMC) 2.0, and a new National Policy on Electronics
(2019).
If the current window of opportunity Figure 1: Exports of electronics products
is not fully utilized, India is unlikely to
get a second look by the investors for in USD billion, 1985-2020
a long time. Vietnam created an electronics
manufacturing industry from scratch in a 700 640
decade, increasing its exports from USD 7 600
billion in 2010 to USD 100 billion in 2020 – a China
fifteen-fold increase on back of the entry of a 500
single firm, namely Samsung (Figure 1)2. China,
whose global electronics exports are sixty-fold 400
more than that of India, has witnessed robust 300
exports growth rate after opening its economy
to the rest of the world. On the other hand, 200
China joins WTO Samsung Vietnam
Malaysia, which was once a highly successful
100 starts operation in VNM 98
micro-electronics exporter, has fallen behind
because of its inability to adapt to shifts in India
- 14
technology and market forces. Lessons from
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2015
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2013
these countries suggest that unless India, which

accounts for only 1 percent of global electronic
exports, quickly demonstrates its ability to
create an ecosystem that can support efficient production and rapid expansion of electronics manufacturing,
investors would start looking elsewhere.
This study examines the effectiveness of India’s current policies and programs to achieve the
goal of “Make in India for the World,” with emphasis on the electronics manufacturing industry.
It analyzes three specific questions: (i) the efficacy of current measures in raising production and exports of
electronics manufacturing; (ii) in light of the ongoing geo-political tensions, can India build a competitive electronics
manufacturing industry while at the same time trying to decouple its economy from China? and (iii) ways the current
policy environment can be fine-tuned to achieve the stated goal. A key part of this exercise has been to gauge the
electronics’ manufacturing ecosystem in India, which involved wide ranging consultations with key government
departments including MeitY, NITI Aayog, Electronics Sector Skills Council of India, as well as with the important
private sector players. The field-based surveys have been complemented with detail analysis of data, including HS
(Harmonised System) production classification using India’s tariff lines (8-digit codes), from the Export-Import Data
Bank of Department of Commerce, Government of India.
China Plus One strategy is a business strategy to avoid investing only in China and diversify business into other countries.
1
From data and measurement perspective, electrical appliances industry is considered a part of the electronics industry.
2
7
A modest but promising beginning
After years of stagnation, there is a new lease of life in India’s electronic manufacturing industry,
albeit from a very low base. India’s
electronics exports have nearly doubled in
the past five years – from USD 9 billion in Figure 2: India’s exports of electronics in USD billion
2014 to USD 15 billion in 2019 (Figure 2).
The top export items include smartphones Covid-19
(increased to USD 3.8 billion from USD 0.24 pandemic
16 Make in
billion in the last five years), battery chargers, India: 2014 :2020
inverters, solar cells, electric apparatus 14
Global
for electric control and their parts, voltage 12 Financial
stabilisers, and data transmission machines. 10 Crisis: 2009
The share of intermediate electronic parts 8
in exports declined, while final products 6
increased between 2013-14 and 2019-20. 4
The key export destinations are the USA, 2
Netherlands, Germany, and few ASEAN,
-
South, East and Central Asian economies,
and the Middle-East. Smartphones made
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in India are being exported to UAE, Russia,
South Africa and Turkey.
Given the two-way nature of trade in electronics products, imports have also increased. India’s
electronic imports stood at nearly USD 51 billion in 2019, resulting in an overall trade deficit of nearly USD 36
billion, out of which China accounted for USD 19 billion. Top imported items during 2019-20 were parts of phones,
PCs, data transmission machines, parts of LCD/LED TVs, Integrated Circuits (ICs), cameras, and servers – these
are covered under Information Technology Agreement (ITA)-1 and Free Trade Agreements (FTAs) with ASEAN,
Singapore, Japan, Korea, and Preferential Trade Agreements (PTAs) with Malaysia. It is worth noting that the signing
of ITA-1 has been (wrongly) blamed for rising trade deficit in electronics product – one of those instances where
the correlation has been interpreted as causation – overlooking the overall benefits of imports in terms of consumer
welfare and its contribution to the competitiveness of exports of modern services from India.
Increased domestic value addition and the rise of a nascent electronics ecosystem are some of the
other successes of the current policies. Assembly has been growing and there has been a shift from Semi
Knocked Down (SKD) to Completely Knocked Down (CKD) level showing progress in value added contents. The
consumer electronics (CE) segment is growing fast too, especially the TV segment has experienced a variety of new
technological developments (from CRT TVs to LED/LCD TVs to Smart TVs). Several firms are choosing to develop
smartphone value chains in India, owing to a growing presence of R&D centres, assembly plants and rising exports
of finished products. Several Centres of Excellence have been set up along with rise in R&D activities, accompanied
with some designing and IP registrations. Overall, the most visible impact has been for mobile phones, which
accounted for more than 40 percent share in total electronics production in 2019-20. Electronics manufacturing
firms such as Apple, Samsung and Xiaomi have begun moving manufacturing to India. These firms or their contract
manufacturers have made early investments in India.
Well begun but barely done: A multitude of existing and emerging constraints
While production and exports of electronic products have shown encouraging signs, the rate of
progress has been extremely slow. Vietnam raised its electronics exports by seven-fold in five years after
the entry of Samsung (2010 to 2015), while India barely doubled its electronics exports in five years after the
announcement of Make in India program (2014 to 2019). Our analysis shows that India’s electronics industry
remains significantly less attractive compared to competing destinations in East Asia because of four critical factors:
unfavourable tariff and tax policies; low scale-high cost trap; need of more complementary policies; and growing
inconsistencies between industrial and trade policies.
• Current tariff and tax policies neither meet the industry needs nor maximize fiscal revenues.
India’s high tariff rates and basic customs duties (BCD) relative to the East Asian countries continue to affect
the competitiveness of the industry. The inverted duty structure – high tariff rates for intermediates goods
relative to final product – makes production less attractive than imports. High-end mobile phones also attract
high BCD, GST and cess (Combined average tariff arbitrage of over 40 percent), which is sufficient to create
artificial price arbitrage and shift demand to the grey-market (viz. sales of around 55-60 percent). Studies
show that the government is losing revenues close to INR 2,400 crores each year on the account of smuggled
handsets and grey market operations.
• Caught in the vicious cycle of small-scale and high costs. The scale of electronics manufacturing in
India is small even by the size of its domestic market. It also operates at the lower ends in GVCs including the
assembly activities for smartphones. India’s value chain participation has been weighed down by limited activities
in implementation of strategies at the pre-manufacturing stage (R&D and designing) and non-existence of fabs.
8
• Absence of complementary supporting policies. Notwithstanding India’s improved ranking in the World
Bank’s Ease of Doing Business indicators, the business environment remains a hindrance in attracting foreign
investors, mainly due to uncertain and unpredictable compliance requirements, poor infrastructure and logistics
to name a few. This is exacerbated by high capital and production costs. The FDI inflows to Indian electronics
industry have been low, even from FTAs partners. Moreover, there is a lack of skilled workforce needed to produce
complex parts and components and particularly of specialized technicians combined with policy uncertainty of
shifting GVC’s international ecosystem partners. The policies and institutions involving intellectual property (IP)
are viewed by the industry as weak for development, facilitation and protection of rights.
• Conflict between trade and industrial polices. The global electronics value chains comprise of thousands
of parts and suppliers scattered across the world. Therefore, to make India their production base, the investors
need to be able to reliably import these parts to make their products globally competitive. This implies, for the
‘Make in India’ industrial policy to succeed, the country needs an open and liberal trade regime. But the latter
is at odds with the policy of Phased Manufacturing Programme (PMP), which requires continuous rise in basic
customs duty (BCD). Similarly, the rise of anti-China sentiments and calls to rapidly end India’s imports from
China are counterproductive to the goal of making India a global production hub. Unlike India, China announced
its ‘Made in China’ program in 2015, at a time when it had already become the world’s largest trading nation and
had pursued a highly open trade and investment regime.
Strong commitment, stable policies and sustained efforts can achieve a breakthrough
While India is favourably placed to create a globally competitive electronics industry, achieving such
a breakthrough is neither assured nor automatic. It calls for strong commitment from the top leadership,
stable and market friendly policies from the authorities and sustained and effective implementation of policies to
actions. Specifically, the report calls for the following five broad interventions.
Box 1: Renewed emphasis on export promotion?

While India has been a strong advocate of free and fair trade, its trade policy at times has
been a surprising mix of measures aimed at both export promotion and import substitution.
Lessons from India’s own experience as well as experience of other countries show that these
two goals are not always compatible – it’s hard to promote exports while at the same time
trying to substitute imports, especially if the substitution includes intermediary inputs. There
are some signs that the stance may finally be shifting towards greater export promotion.
For example, Prime Minister Modi recently emphasized the need to expand exports as part of
his ‘Make in India for the World’ campaign and to develop sector-wise champions for GVCs3.
In his speech, he mentioned four interesting aspects of the new stance: (i) manufacturing has
to be qualitatively competitive (rather than just price-based); (ii) there is a need to remove
problems of transportation and logistics, where Centre, States and private stakeholders will
have to work in partnership; (iii) the government (including State government/Export Coun-
cils) should work in close collaboration with the exporters; and (iv) the international market
must be expanded for the Indian products. He specifically stated, “Considering the size of our
economy and potential, our manufacturing and service industry base, there is tremendous
potential for export growth”, thereby citing opportunities to strengthen exports to the existing
partners and to venture out into the new regions.
• Continuation of the PLI scheme. In absence of radical tariff, tax and investment climate reforms, India will
have to continue to provide some form of incentives to make it an attractive destination for manufacturing. Our
analysis suggests that capital-based subsidies schemes have not been helpful, while output-based incentive
schemes like PLI has shown some success in boosting production and exports. Therefore, the continuation of
PLI as the guiding instrument for export promotion seems reasonable. Furthermore, scope of PLI needs to be
extended to all the consumer electronics and their parts, similar to the mobile phones and IT hardware policies.
Studies have shown that PLI itself funds future PLIs and that the increase in exports and the forex exchange
earnings will surpass the incentive provided4.
• Alignment of national and subnational policies. Historically, many States offer subsidies on land, power,
etc., but such incentives have generally not been market-linked and meant mainly to mitigate existing disabilities
such as a relief from high tariff on power and excessive taxes. Encouragingly, in 2020-21, several States
“Prime Minister interacts with Heads of Indian Missions abroad and stakeholders of the trade & commerce sector”, August 06, 2021.
3
ICEA-FICCI-EY Report, 2019, ‘Mobile manufacturing: A US$ 245 bn opportunity, Impact on GDP, Jobs, Taxes, Forex Outflow’.
4
9
introduced schemes to offer incentives similar to PLI, viz. Andhra Pradesh has its own PLI scheme with financial
incentives up to 5 percent, while Karnataka offers 1 percent. Tamil Nadu has its own turnover based incentive
scheme. Linking incentives to continuously expanding production, or preferably exports, would ensure that the
system supports efficient and high productivity firms and not keep zombie firms alive.
• Decision to reduce dependency on China needs to be strategic and meticulously planned. Some
economic inter-dependencies between India and China are not only inevitable but desirable in a globalized world.
But if geo-political considerations call for reducing these dependencies, such decisions need to be informed
by deep analysis of the global supply chain ecosystem in electronics. One strategy will be to develop lead firms
in domestic value chains to capture a higher share of the pie in GVCs over time. However, in the interim and
to develop India’s electronics manufacturing ecosystem, GVCs based out of China should be encouraged to
set up base and expand in India. They have the required expertise, technical knowhow and experience to build
manufacturing capacities and scale within a short period of time. Experience suggest that these lead firms
move with their ecosystem. Preventing the GVC ecosystems to shift will not only stifle large scale production,
but also adversely impact domestic value addition, as lead firms will turn to imports for components.
• Industrial policy can best succeed in a pro-trade and pro-market environment. In the short-
run, India should try to reap the maximum benefits from existing global players (GVCs) and from its current
FTAs as well as explore new trade partners, and to scale up assembly activities in smartphones. All efforts
need to be directed to build competitiveness domestically and to drive exports. Linking to GVCs, as well as
inviting more FDI inflows, requires a liberalised yet stable environment with a focus on reducing cost of doing
business. Interventions include: (i) moving away from traditional subsidies to production or exports based
incentives, along with a single window clearance; (ii) the need to strengthen enforcement mechanisms and
IP system specially to plug grey market operations in case of high-end mobile phones; (iii) time bound efforts
for R&D with high funding options for Fabs; (iv) an enhanced partnership between academia, government and
the private sector can help to pool right knowledge, strategies and finance; and (v) complementary strategies
involving curriculum changes in order to upgrade skilling in Indian electronics industry. The focus on finished
products, sub-assemblies, components, semiconductors, development of SEZs, bonded manufacturing zones
and clusters with world-class infrastructure, emphasis on flexible labour laws and on R&D, and a market-based
industrial policy are some ideas that, while not new to policy makers in India, need to be implemented effectively.
• More investment on data and research. The non-availability of database for Indian electronics production
(value and volume terms) at disaggregated level is a major limitation for undertaking credible analysis. To
elaborate, production data by the Ministry are currently available at a much-aggregated level for 7 broad
verticals, namely, Consumer Electronics, Industrial Electronics, Computer Hardware, Mobile Phones, Strategic
Electronics, Electronics Components, and Light Emitting Diodes (LED). Disaggregated data are available only
for few segments in MeitY’s Annual Reports such as for TVs, PCs, etc., but they are reported neither for all the
years nor as per India’s product classifications such as NIC-08 (unlike US and Japan). Empirically, there is a
lack of detailed analysis of state governments’ policies and a paucity of studies on value chain analysis for key
electronic items for India such as smartphones, TVs, PCs, laptops, etc. MeitY and MoPSI, working together with
other policy think tanks in the country, should make data collection and their availability to researchers a priority.
10
I. CENTRALITY OF INDIA’S
ELECTRONICS INDUSTRY
1.1 Background and Rationale

The Fourth Industrial Revolution (IR4), coupled with value chains as most of the countries are still dependent
progress in innovation and digital technologies (DTs), on Chinese economy for its infrastructural set up,
has immensely transformed the global economic and intermediate inputs, etc., and their firms would require
human development landscape. These technologies are lucrative incentives (like subsidies, tax benefits, etc.)
highly revolutionizing the way people live, work, play, and to relocate away from Chinese companies. Moreover,
interact across the globe, especially since the spread of China’s recovery in exports, particularly since the 3rd
COVID-19. US, Europe and developed Asia already have quarter of 2020 and more so in 2021, has further raised
a flexible policy space while developing strong DTs, and questions about feasibility of decoupling – higher growth
consequently have larger digital value-added proportion is also expected during 2021 for China at 8.1%. As
in domestic production and exported finished products. per UNCTAD Trade and Development Report of 2020,
Among emerging nations, India has one of the fastest India was expected to bear 5.9% loss in 2020, but with
developing DT arenas, where focus of US, Germany, chances of some recovery during 2021 (at a lower rate
East and South-East Asia including China, Singapore, of 3.9%)i.
etc. (Information Technology Agreement (ITA)-wise net
exporters) is increasingly growing. However, developing Keeping these global developments in mind, and
countries usually suffer due to rising digital divide, limited their continued effort to catapult India into a global
success in usage of AI, Internet of Things (IoT), etc. while manufacturing hub, the Indian policymakers have
building production capacities in their industries. announced a slew of programs during the past one decade
including the National Manufacturing Policy (2011), the
Along with greater e-commerce activities since the National Policy on Electronics (2012), Make in India
pandemic, there is a concurrent rise in the demand initiative (2014), the Phased Manufacturing Programme
(globally and in India) for laptops, tablets and especially (2017) and Remission of Duties and Taxes on Exported
smartphones due to prolonged months of Work from
Products (RoDTEP – 2021). Central to this planned
Home (WfH) and Learning from Home (LfH). Such
manufacturing renaissance is the creation of a globally
demands, along with the rise of automation and the
competitive electronics industry. In recent months, there
servification of the economy, are changing the future
are also encouraging signs that India’s trade policy may
of manufacturing, with trade in high-skilled, knowledge
products, such as electronics, growing at [twice] the rate be decisively shifting towards greater export promotion,
of global trade. India, with its impressive track record of as exemplified in the case of mobile phones.
exporting modern services and a large domestic market However, if this current window of opportunity is not
for electronic products, is in a strong position to leverage fully utilized, India is unlikely to get a second look by the
these trends. investors for a long time. To elaborate, Vietnam created
Several factors at home and abroad have aligned in an electronics manufacturing industry from scratch in a
recent years to give India a rare opportunity to create decade, increasing its exports from USD 7 billion in 2010
a globally competitive manufacturing sector. From a to USD 100 billion in 2020 – a fifteen-fold increase
geo-political perspective, the world is looking to India – on back of the entry of a single firm, namely Samsung
with its youthful, English-speaking, large and relatively (Figure 1.1). China, whose global electronics exports
cheap labour force and long democratic traditions – to are sixty-fold more than that of India, has witnessed
counterbalance China as the world’s factory. With the robust exports growth rate after opening its economy
Covid-19 pandemic exposing the fragility of Global to the rest of the world. On the other hand, Malaysia,
Value Chains (GVCs), the multinationals are increasingly which was once a highly successful micro-electronics
adopting the China Plus One strategy (i.e., a strategy exporter, has fallen behind because of its inability
meant to avoid investments only in China and diversify to adapt to shifts in technology and market forces.
business into other countries). The US-China trade war Lessons from these countries suggest that unless India,
and the hardening of rhetoric on both sides to decouple which accounts for only 1 percent of global electronic
their economies have meant a new world trade order exports, quickly demonstrates its ability to create an
is evolving, giving India a second chance to rethink its ecosystem that can support efficient production and
trade and industrial policies. However, easy decoupling rapid expansion of electronics manufacturing, investors
may not happen fast in terms of relocation of entire would start looking elsewhere.
11
In order to level the playing field with countries such as Figure 1.1: Exports of electronics products
China and Vietnam – that have emerged as electronic in USD billion, 1985-2020
manufacturing hubs for the world because of their
significant cost advantage and favourable investment
climate – the Government of India has particularly 700 640
announced several policies such as Production Linked
Incentive (PLI), Scheme for Promotion of Electronic 600
China
Components and Semiconductors (SPECS), Electronics 500
Manufacturing Clusters (EMC) 2.0 in 2020, and a
400
new National Policy on Electronics (2019). The Report
assesses the success of these policy initiatives. 300
200 Samsung
China joins WTO Vietnam
1.2 Review of Literature and Existing Gaps starts operation in VNM 98
100
Various studies have been undertaken with regard India
14
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to efficacy of Indian government policies/schemes
for promoting electronics manufacturing and skill
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development. Focus has been over Make in India, NMP,
MSIPS, PMP, Merchandise Exports from India Scheme
(MEIS), PLI, etc. with mixed reviews. Illustratively, ICEA and Source: WITS Software (data also include electrical appliances in
McKinsey (2018) mentioned PMP as a less successful electronics industry)
scheme in inviting investments by big manufacturers;
while ICEA and EY (2020) have appreciated the PLI
scheme for attracting manufacturing companies into Another trend has also been observed with regard to
India. This stressed on initiatives particularly in mobile exports. In 1996, electronic items constituted only 3.2%
phones’ segment, such as capitalizing labour arbitrage, of India’s total exports, thereby growing at an annual rate
manufacturing at large scale, developing an investor- of 3.5% during 1996-2000. This was followed by higher
friendly tax regime and reducing tariff and non-tariff average growth rate of 22% during 2001-2005 and
barriers on imports of mobiles’ P&C. Interventions have 31% during 2006-2010. MVIRDC World Trade Centre
been suggested to provide incentives for developing (2020) shows rapidly rising share of mobile phones and
long-term innovation capabilities of the manufacturers line telephone sets in exports of electronic goods from
in this segmentii. This is because existing studies have 4% in 2015-16 to 35% in 2019-20vii.
also highlighted potentials for India to become a major
producer as well as exporter of mobile phones due to ICEA and IKDHVAJ (2019) have examined some
GVCs reorientation caused by pandemic. Greater scope State-level incentives offered to electronics in India,
is also stated for attracting more foreign investments such as refunding of VAT/SGST, offering capital subsidy,
into the country since many global electronic brands providing land at concessional rates, subsidies on skill
are looking for alternative destinations to diversify their development, etc.; but do not offer detailed investigation
supply chains.iii of any particular State. However, there are very few
States-specific work – Ilavarasan and Hutchinson
Broad challenges for India’s electronic industry are (2013) and Saripalle (2015), who have discussed growth
also listed in existing literature, even for mobile phone patterns of Tamil Nadu’s electronic industryviii. In 2020-
segment, such as high cost of capital, duty free imports 21, State Governments of Tamil Nadu, Karnataka, and
of PCBs, lack of adequate infrastructure, low focus Andhra Pradesh have introduced electronic-specific
on MSME, absence of long-term export incentives, schemes based on incentives; however, a formal study
availability of cheap imports from China, Vietnam and to capture their impacts is yet to be conducted.
Taiwan, etc.iv
Electronics GVCs have been examined in numerous
Although literature stated rising deficit in trading of studies globally, viz. to test the ‘smiling curve’, which
ITA-1 products by USD 17 billion during 2013-19, this concluded that the lead firms and active component
agreement may not be a big hindrance as imports suppliers capture higher net margins, where former
might have grown organically due to high demands specialize in high-value added activities like R&D,
but low production at home. Also, as custom duties on branding and product designingix.
ITA-1 products are not applicable across the globe, the
real factors responsible for India’s rising imports need GVCs analysis has mainly been done segment-wise at
greater considerationv. global level, such as on hardware segment, with a focus
on East Asia; for TV segments in case of UK; on Apple’s
Several studies have stressed on import dependence iPods and notebook PC models of Hewlett-Packard
nature of this industry during 1990s and 2000s. They (HP) and Lenovo. Interestingly, multiple studies are on
have estimated high annual import growth rates for the GVCs of mobile phones. For instance, Ali-Yrkkö,
electronics of about 22% during 1996-2000, which Rouvinen, Seppälä, and Ylä-Anttila (2011) looked at the
increased to 35% during 2002-2005. Misra and value chains of Nokia N95 smartphone during 2007
Shankar (2018) have mentioned that India’s imports and found that Europe captured around 68% of the
of electronic goods increased from USD 0.9 billion in total value added when the phone was assembled and
1993-94 to USD 51.5 billion in 2017-18 at an annual sold there. Even when N95 phone was assembled in
growth rate of over 15%vi. China and sold in US, Europe accounted for a whopping
12
51% share. WIPO (2017) has studied the value chains current measures in raising production and exports of
of Apple, Huawei and Samsung smartphones and found electronics manufacturing; (ii) in light of the ongoing
that their GVCs are not organized as a linear value chain geo-political tensions, can India build a competitive
but in a spider form. That is, Apple sources P&C majorly electronics manufacturing industry while at the same
from outside suppliers, while Samsung and Huawei time trying to decouple its economy from China? and (iii)
source them from within their firms. Only few Asian ways the current policy environment can be fine-tuned
countries and US capture vast proportion in productionx. to achieve the stated goal.
Furthermore, as per our analysis, literature remains
sparse for in-depth GVCs analysis for Indian electronic A key part of this exercise has been to gauge the
segments mainly mobile phones, tablets and TVs. electronics’ manufacturing ecosystem in India,
which involved wide ranging consultations with key
Illustratively, KPMG and ICA (2011a, 2011b) have government departments including MeitY, NITI Aayog,
elaborately discussed India’s participation in mobile Electronics Sector Skills Council of India, as well as with
phone handsets’ value chains. Latter highlighted India’s the important private sector players. The field-based
success in processes involved in manufacture of surveys have been complemented with detail analysis
mobile handsets, such as plastic and metal molding or of data, including HS (Harmonised System) production
fabrication, box build and PCB assembly – all of which classification using India’s tariff lines (8-digit codes) –
require significant labour. Gupta (2016) has looked at identified 380 electronic products (see Appendix Table
the low GVCs participation in case of India’s electrical 1), from the Export-Import Data Bank of Department
machinery. Dash and Chanda (2017) has undertaken of Commerce, Government of India. Both 2019-20 (as
most elaborated workxi, with a finding that most of the the normal year) and 2020-21 have been considered
value added is limited to final assembly. But India can for analysis (from 2012-13 onwards when NPE was
utilize opportunities therein also; viz. Ministry of Finance, introduced). 2020-21 may not follow the trends of
Government of India (2020)xii, in Chapter 5 of its previous years owing to the pandemic; however, the year
Economic Survey, puts forward integration of ‘Assemble has been rewarding in terms of government schemes.
in India for the World’ into ‘Make in India’ that can enable
India to emerge as an export-oriented economy in 1.4 Structure of the Report
electronics.
The second chapter details issues and information
relating to India’s production and trade in electronics,
1.3 Objective, Scope and Methodolgy about ecosystem (mainly with focus on mobile phones
Current literature is scattered and do not focus on and finished electronic items, i.e. laptops and tablets as
understanding nuances of Indian electronics in the well as certain consumer electronics) and offers value
light of new government policies and debate of free chain analysis. The third chapter presents decoupling
trade vs protectionism. This study thus examines the trends for India, followed by reviews of Central and State
effectiveness of India’s current policies and programs to Governments’ policies and schemes. This chapter ends with
achieve the goal of “Make in India for the World,” with focus on key challenges being faced by Indian electronics
emphasis on the electronics manufacturing industry. industry. The fourth chapter mentions key findings of the
It analyzes three specific questions: (i) the efficacy of Report, followed by the policy recommendations.
13
II. PRODUCTION, TRADE AND
VALUE CHAINS
2.1 Domestic Production: Trends and Issues
India’s electronics contributed 2.5% to GDP during items, owing to remarkable fall in their prices. Their
2020xiii, and its production increased from about INR usage also increased in traffic light, auto industry,
147000 crores during 2012-13 to over INR 530000 entertainment and communication, etc. and in Smart
crores in 2019-20, with 40% and above contribution cities projects. LED lighting market in India is likely
from mobile phones segment. However, given global to touch USD 3.76 billion by 2022.
production of USD 2.1 trillion, India’s proportion
increased by just USD 5.7 billion from 2018-19 to 2019- (ii) In value terms, mobile phones production became
20 (to USD 75.7 billion – accounting for 3.6% share in almost half from 2012-13 to 2014-15; but growth
global production)xiv. was approximately 1100% from 2014-15 to 2019-
20. Share of handsets production declined sharply
India’s apex organization, the Ministry of Electronics and to 10% in 2014-15 due to fall in its volume from 155
Information Technology (MeitY) provides electronics million units in 2011-12 to 130 million in 2013-14 to
production data. Firstly, MeitY works closely with 58 million units in 2014-15, because of shut-down
different associations namely ICEA, ELCINA, etc. to of Nokia’s manufacturing facility. But production
collect production values for 7 identified verticals but increased thereafter (see Tick-mark shaped curve in
at a much-aggregated level (Table 2.1). However, key Figure 2.1 and Figure 2.2) owing to Make in India and
data on few sub-segments (at a more disaggregated Digital India, which hold significant place for cellular
level, see Table 2.2) are also available for TVs, PCs, mobile phones and their sub-assemblies. 2015 was
etc. – but data lack amenability due to non-systematic also the time when outreach increased to leading
presentation and their availability only for a few years (as ESDM destinations namely Taiwan and Japan.
and when are reported by different channels). Other contributing factors were establishment of
new manufacturing units, viz. 268 units (cumulative
Secondly, production data on private databases are 2016-17 to 2018-19). A push came with the
based either on MeitY's information or reported in a introduction of PMP, followed by NPE 2019 and rise
scattered format for few segments and that too for in basic custom duty (BCD) to 20% during Budget
different time-periods (viz. by CEIC, Statista – Appendix 2018-19 (increased from 10%, as applicable till 13th
Table 2, or in industry specific reports, namely, NEC- December 2017, to 15% upto end of January 2018)
ASSOCHAM, 2017; IBEF, 2019;xv etc.). Thirdly, India to discourage mobile phones’ imports and increase
still does not provide latest year’s production data as domestic value-added. India is thus mentioned as
per global product classifications, such as HS codes, second home to the production networks of big
or even at its own classification NIC-08 (ASI based brands namely Samsung, Xiaomi, Oppo, Vivo, and
on NIC provides data on output value till 2017-18). On Apple. It is slated as the second largest producer of
the other hand, using own product classifications, USA mobile sets and market for smartphones, thereby
and Japan have provided production data at a more expanding ecosystem.
descriptive level (Appendix Table 3). Japan’s database
is robustly available for the months of 2020-21, unlike In fact, tariffs at that time seems to have stimulated
India, including information both at value and volume domestic production of other areas too in electronics
level, provided by its government agency METI, and such as for LED lamps (HS 85395000), colour TVs (HS
that too for a number of finished goods and parts/ 852872), TV set-top box (HS 85287100), microwave
components (data collected from wide range of firm-level ovens (HS 8516500) – duty increased from 10%
surveys by METI). This brings out the need to create a (upto mid-December 2017) to 20% (since 14.12.2017).
comprehensive electronics production data-base in India However, it may not be advisable to move forward with
at a disaggregated level, where Government and private high BCD rates by following PMP, as this is against the
agencies can create a sound network in association with free trade doctrine.
the international agencies. Note that India’s electronics
production is projected to grow at a much higher rate of The production shares for CE prominently declined over
over 500% during 2019-25 period (Figure 2.3). time due to fall in demand and production of conventional
TVs (with picture tubes) and DVD players, owing to rise
The analysis over the period 2012-13 to 2019-20 (as in demand for LCD/LED TVs and use of DTH services,
normal year) shows the rising shares in total production coupled with growing digitalization in networks (cable
in case of Mobile Phones and LED (Figure 2.1), mainly TV ones) and usage of set-top boxes. Nevertheless, as a
since 2014-15xvi. success story, the growth in demand for LCD/LED TVs
has been rapid due to sharp picture quality, which also
(i) Success in LED has occurred owing to growing helped in lowering their prices. During 2019, Government
needs to conserve energy and fight against climate also reduced BCD on Open cells (15.6” and above), that
change, especially with Indian Government’s are utilized in producing TV panels, from 5% to nil to fuel
mandate to deal with high electricity costs. Rising the demand (also exempted duty on chip on film, PCB,
urban population further fuelled demand for LED glass board, etc. to boost local production of open cells).
14
Table 2.1: Electronics Production by Sectors (in INR Crores)xvii
Average Average Average

2012- 2014- 2017- 2020-
Item / Vertical 2018-19 2019-20 (2014-15 - (2017-18 - (2018-19-
13 15 18 21 (E)
2016-17) 2019-20) 2020-21)
Consumer
Electronics 40447 55806 73524 77000 81000 70000 58771.0 77174.66 76000
(CE)
Industrial
25800 39374 69057 80850 92200 77760 48890.3 80702.3 83603.33
Electronics
Computer
9376 18691 21401 21180 21500 22000 19652.7 21360.33 21560
Hardware
Mobile Phones 34600 18900 132000 170000 214000 220000 54300.0 172000 201333.3
Strategic
9000 15700 23562 28270 32800 28864 18171.7 28210.7 29978
Electronics
Electronics
26645 39723 59132 67706 75800 64430 45735.0 67546.0 69312
Components
Light Emitting
1275 2172 9630 13000 16250 14430 4799.3 12960.0 14560
Diodes (LED)
Source: MeitY, Government of India (2017a, 2020a, 2021)
Figure 2.1: Indian Electronics Production Shares in % (2012-13 to 2020-21)
45 44.2
40
35
30
27.5
25
23.5
20 17.5
18.1 15.6
15 14.1
13.0
10
6.4
6.1 5.8
5 4.4
0.9 2.9
0
2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 (E)
Consumer Electronics (CE) Industrial Electronics Computer Hardware

Mobile Phones Strategic Electronics Electronics Components
LED
Source: Own Calculations based on Production data, MeitY, Government of India (2017a, 2020a, 2021)
From 2019-20 to 2020-21, shares of mobile phones 2.1), not because of mobile phones, but rather due to
in production increased by 4 percentage points owing significant fall in production of CE, components and LED.
to output-based incentives schemes like PLI, but this This necessitates focused policy intervention in case of
declined in volume terms (Figure 2.2). In fact, overall consumer electronics, whose shares in production has
electronics production declined in 2020-21 (Table declined by almost 13 percentage points during 2012-21.
15
Figure 2.2: Production of Mobile Phones in India (Volume-wise in Million)
Source: ICEA
Figure 2.3: Indian Electronics Production Forecast: 2017-25
Source: ICEA
16
Table 2.2: Production Trends/Market Size as reported in MEITY Annual Reports (AR) 2012-13 to 2020-21at disaggregated level
Electronic Products 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
LCD/LED TVs 5.5 million units in About 7 million units 8.75 million units 12 million units (INR 14.5 million units 16 million units (INR 12 million units (38 12.5 million TV
2012 (from 4 million (INR 16,200 crores) 21,000 crores); (INR 23,925 26,400 crores) factories involved in sets manufactured
units in 2011) crores) production)
Conventional TV Fall in production 4.5 million units Decreased to 3.5 Further decreased Negative growth Expected 1 million
due to fall in million units (INR to 2.5 million (INR units (INR 400
(CRT TVs) demand 1400 crores) 1000 crores) crores)
Home Theatre 0.48 million in 2012 0.7 million units Estimated 0.76
(0.40 million in (INR 840 Crores) million units(INR
2011) 924 crores)
DVD 3.7 million in 2012 Production reduced Production reduced
(declined from due to DTH, set-top
4 million units in boxes
2011)
AC, Micro-wave, INR 38,035 crores Growth rate of
refrigerator, Washing 17.2%; production
Machine (Production of worth INR 44,590
home-appliance: crores
INR 64,742 crores)
Computer Hardware INR 9376 crore Notebooks – INR 9010 Notebooks – INR INR 19,885 crores INR 20,382 crores Expected India’s PC
(Laptops, PCs) Crores; 10542 Crores; (Annual growth rate production of INR penetration – 15
12 million PC units Tablet PCs – INR of 2.5%) 21,401 crores per 1000 people
Tablet PCs – INR 1126 1430 Crores; (Annual growth rate
Crores; of 5%)
Desktop PCs –
Desktop PCs – INR 4309 INR 3620 Crore
Crores
Electro-mechanical Components with Electromechanical Dominated by Size of market – INR 52,099 crores 25-30% value Dominated by Size of market -
components cover largest share by components (27%), passives electromechanical (70% exported, only addition in electromechanical USD 25.3 billion
PCBs, switches, value – connectors (22%), Active components components (29%), INR 45,383 crores 25% for domestic components; components (29%), (excluding the
connectors; passives (USD 256 Mn), (24%), Associate passives (24%), use) passives (24%), imported PCB-
include capacitors, speakers (USD 327 Components (29%) Active components Expected Active components Assemblies)
resistors, wound Mn), Cables (USD (18%), Associate Production as INR (18%), Associate
components, etc.; 30 Mn), switches Components as per higher Components (29%) 58,351 crores Components (29%)
actives are ICs, (USD 226 Mn), shares in local production:
diodes, transistors; PCBs (USD 157 wound components ($924 Demand over USD (Over 70%
associated million), etc. Mn); connectors ($516 Mn); 16 billion exported)
components cover speakers ($450 Mn), PCBs
optical discs, USD 5.19 Bn (30% ($427 Mn), etc.
magnets, FR tuners, exported) – from
etc. USD 4.99 Bn in Demand over USD 14 billion
2011-12
17
Source: MEITY’s Annual Reports (MeitY, Government of India, 2013, 2014, 2015, 2016, 2017a, 2018, 2019a, 2020a,2021)
2.2 Exports and Imports Trends
Indian electronics industry has been accorded a new (85% growth). Production of electronic items also
lease of life, after years of stagnation. That is, its exports improved since then but lesser in proportion to demand,
(including appliances) nearly doubled during 2014- thereby leading to India’s large deficit (viz. former was
19 (from USD 9 billion to USD 15 billion). Using 380 USD 70 billion in 2018-19, while demand was around
identified products in this study, the exports of India’s USD 106 billion in 2017-18). Interestingly, imports
electronics industry declined by about 24% from 2013- declined post 2018 (Figure 2.4). Table 2.3 shows the
14 to 2016-17, but increased rapidly during 2017-19 contribution segment-wise.
Figure 2.4: India’s Exports and Imports of Electronics Products (2013-14 to 2020-21)
80
60 55.9 52.9 52.8

51.7
39.6 41.7
36.4
40 32.1
Values in USD Billion
20 11.3 10.7
7.5 6.0 5.7 5.7 6.1 8.4
0
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
-20
-24.6 -33.9
-30.4 -36.0
-45.6 -47.5 -41.6 -42.1
-40
-60
Trade Balance India's Global Exports India's Global Imports
Source: Own Calculations, Export-Import Bank of India, DoC, Government of India
India’s imports of electronic items have been significant February 2021. Encouragingly, month-wise, the exports
even during COVID period (2020-21), especially post show continuously rising trend (Figure 2.5).
Figure 2.5: Changing India’s Exports and Imports of Electronics (April 2020-February 2021)
18
Table 2.3: India’s Exports and Imports in Electronics at HS 2-digit level (USD billion)
Indicator 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-2021

HS 84 (General machinery and parts)
Exports 0.49 0.48 0.51 0.42 0.47 0.55 0.60 0.50
Imports 6.95 7.29 7.57 7.15 8.36 9.25 9.32 10.66
HS 85 (Electrical machinery and equipment)
Exports 6.38 4.70 4.34 4.36 4.75 6.78 9.48 9.03
Imports 22.53 26.33 28.94 31.45 39.82 42.68 39.91 38.72
HS 90 (Optical, photographic, cinematographic, measuring, medical apparatus, etc.)
Exports 0.63 0.74 0.81 0.87 0.85 1.08 1.15 1.12
Imports 2.53 2.75 3.07 3.00 3.39 3.80 3.55 3.42
2.2.1 Export-Profile of Indian Electronics

Figure 2.6: India’s Top 10 Exports in 2013-14 in Indian Electronics Industry (USD billion) and their
trajectory till 2019-20 (Normal year)
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
2013- 2014- 2015- 2016- 2017- 2018- 2019-
14 15 16 17 18 19 20
Smart Phones 1.91 0.24 0.21 0.16 0.21 1.60 3.80
Parts of Phones 0.59 0.46 0.32 0.49 0.21 0.19 0.16
Parts for Use with Electronic Panels 0.34 0.32 0.29 0.31 0.44 0.44 0.44
Solar Cells 0.28 0.17 0.17 0.07 0.14 0.12 0.21
Panels/apparatus for electric control 0.25 0.33 0.34 0.34 0.34 0.38 0.44
Set-Top Box 0.21 0.18 0.14 0.05 0.001 0.002 0.07
PCBs 0.15 0.14 0.13 0.13 0.13 0.14 0.12
Line Telephone Sets - Cordless 0.14 0.01 0.01 0.01 0.00 0.01 0.01
Static Convertors: Industrial 0.12 0.22 0.21 0.24 0.31 0.37 0.48
Boards & Consoles for Industrial Use 0.11 0.16 0.13 0.14 0.15 0.14 0.17
Source: Own Calculations, Export-Import Bank, DoC, Government of India
During 2013-14, 'Smart Phones' was the most exported Overall trend indicates exports of top electronic items from
item, followed by its parts (Figure 2.6). Out of top 10, India to UAE and Russia mainly in case of smart phones,
five retained the space in 2019-20 (Table 2.4 for top USA, Turkey, South Africa, number of European countries
10), namely, smartphones, voltage stabilisers, electrical such as Netherlands and Germany, China, Hong Kong
apparatus like control panels and their parts, and solar and few Central, Middle-East and South Asian countries
cells (whereas, new five ones that gained shares are in case of smart phones, battery chargers and solar cells.
given in Figure 2.7). Share of parts of phones (HS Further, India’s value chains for smartphones, parts of
85177090) decreased over these years from 8% to 1%, transformers and solar cells during 2019-20 have been
of set top box (HS 85287100) from 3% to 1%, of PCBs slightly divergent from existing GVCs, which include more
(HS 85340000) from 2% to 1%, of line telephone set East Asian countries like Hong Kong, Japan, etc. among
(HS 85171190) from 2% to 0.1%, etc. the global top importers (Table 2.4).
19
Figure 2.7: Five New Exports Items in Top Ten Export Commodities in 2019-20 (USD billion)
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
Battery Chargers 0.03 0.10 0.09 0.14 0.12 0.24 0.47
Machines for data transmission with
communication apparatus 0.08 0.12 0.13 0.17 0.49 0.61 0.45
Electric Inverter 0.11 0.12 0.17 0.10 0.10 0.15 0.24
Parts of Office Machines 0.09 0.10 0.11 0.14 0.10 0.17 0.21
Parts of Transformers 0.11 0.12 0.12 0.13 0.14 0.15 0.17
Source: Own Calculations, Export-Import Data Bank, DoC, Government of India
Major reasons for Saucer-shaped Curve for Nevertheless, India’s brand-wise exports to these
Smartphones: (i) sharp fall in its exports in 2014-15 countries are not explicitly known. The reason being,
due to massive decline in production from 24% in 2012- various brands, such as Samsung, Apple, Huawei,
13 to 10% in 2014-15, attributable to shutting down Oppo, Vivo, etc. have started exporting smartphones
of Nokia’s factory in Chennai, Tamil Nadu. (ii) Although from India during 2018, and this might be intra-firm –
export shares declined by almost 23% from 2013-14 sending to headquarter in Korea, US, China – or to other
to 2016-17, these increased by more magnitude from destinations such as UAE, Russia, etc. Such information
2016-17 till 2019-20, due to rise in India’s production is not clearly available on authentic databasesxix.
for mobile phone handsets (from below 20 crore units
in 2016 to over 30 crore units in 2019), due to PMP Some evidences are though available but only for few
and capex incentive schemes. Since 2017-18, outward brands: exports by Xiaomi India (in 2019) to Nepal
shipments of smartphones to UAE, US, Russia, South and Bangladesh; and by OnePlus India to US and EU
Africa, Netherlands and China have increased (as also marketsxx. Using private databases (authenticity yet to
mentioned by RBI, 2019xviii), leading to increase in India’s be verified), Samsung used to export mobile phones
electronics exports during 2019-20. Exported value from India (via air cargo from Bombay, Kolkata, etc.) to
of smartphones to UAE increased almost eight times Dubai/UAE, Germany, Singapore, Manchester, Colombo,
during April to December 2018. etc. during 2016xxi.
20
Table 2.4: India’s Top Exports in the Electronics Sector in 2019-20 (USD billion)
Share in Total Percentage point Changes in Shares

Top 10 Export Global Top 10
HS Code Exports of From From From
Partners (with shares Importers at HS 6
Description Electronics 2013-14 to 2013-14 to 2016-17 to
in %) (with share)
(%) 2019-20 2016-17 2019-20
UAE (55), Russia (14), HS 851712 - USA (21),
South Africa (5), Turkey Hong Kong (14), UAE (7),
85171290 (4), Netherlands (4), Japan (6), Germany (5),
33.7 8.4 -22.5 30.9
Smart Phone Germany (2), Morocco UK (4), Czech Republic
(2), Nepal (2), Kazakhstan (3), France (2), Russia (2),
(2) and USA (1) Canada (2)
USA (40), France (11),
85044090 Netherland (7), Germany
Voltage (5), China (4), Italy (4), 4.3 2.7 2.8 -0.02
Stabilisers Singapore (4), Poland (3),
Taiwan (2) and UAE (2)
China (94), Hong
HS 850440 - USA (18),
Kong (2), Germany
China (12), Germany
(1), Netherland (0.4),
85044030 (7), Hong Kong (7),
USA (0.3), Oman (0.2), 4.2 3.8 2.1 1.7
Battery Chargers Netherland (4), Japan (4),
Bangladesh (0.2),
Korea (3), France (3), UK
Philippines (0.2) and
(3), Canada (2), Italy (2)
Vietnam (0.2)
USA (450), UAE (6),
Japan (6), Vietnam (5),
85044010
Mexico (4), South Africa 2.2 0.7 0.2 0.5
Electric Invertors
(4), Egypt (3), China (3),
Nigeria (2) and Korea (2)
85176290 USA (34), Netherland HS 851762 - USA (25),
Machines for (15), China (10), Hong Netherland (9), Germany
transmission of Kong (10), Singapore (6), (6), UK (5), Hong Kong
4.0 2.9 1.8 1.1
data including Hungary (3), Malaysia (2), (5), China (4), Japan (4),
communication UAE (2), Norway (2) and France (3), Canada (3),
apparatus UK (2) Czech Republic (2)
USA (34), Netherland HS 853710 - USA (23),
85371000 (15), China (10), Hong Germany (13), China
Panels, electric Kong (10), Singapore (6), (9), UK (3), Canada
3.94 0.6 2.7 -2.1
apparatus for Hungary (3), Malaysia (2), (3), France (3), Korea
electric control UAE (2), Norway (2) and (2), Thailand (2), Czech
UK (2) Republic (2), Japan (2)
HS 853890 – China (15),
USA (27), Germany (10),
85389000 USA (12), Germany (8),
France (8), UK (7), UAE
Parts for Use with Italy (4), Korea (4), Hong
(5), China (3), Mexico 3.90 -0.6 1.0 -1.6
Electronic Boards, Kong (4), France (4),
(3), Singapore (3), Saudi
Panels Japan (3), Czech Republic
Arabia (2) and Italy (2)
(3), Singapore (3)
HS 854140 - USA (16),
USA (81), Turkey (5),
China (13), Hong Kong
Belgium (3), South Africa
(8), Japan (7), Vietnam
85414011 (3), Nepal (2), UAE (1),
1.89 -1.9 -2.5 0.7 (6), Germany (6), Korea
Solar Cells China (1), Oman (1) and
(6), Netherland (4),
Somalia (0.6) and Spain
Australia (3) (India among
(0.4)
top 10 at 5%)
HS 847340 - Hong Kong
USA (52), Hungary (22),
84734090 (12), USA (11), Hungary
Brazil (4), South Africa
Parts of office (9), China (8), Spain (7),
(3), Germany (2), UK (2),
machines (except 1.88 0.6 1.1 -0.5 Japan (6), Netherland
France (2), Mexico (2),
duplicating, stencil (5), Brazil (3), UK (2)
Netherland (2) and Hong
ones) (India among top with 9%
Kong (1)
share)
USA (16), Oman (10), HS 850490 – Hong
85049010 Germany (7), UAE Kong (18), USA (13),
Parts of Electric (5), Saudi Arabia (5), 1.51 0.1 0.9 -0.8 China (11), Germany (8),
Static Converter Indonesia (4), Brazil (3), Singapore (3), UK, Italy,
Transformer Kuwait (4), Croatia (2), & Japan, France (2 each)
Austria (2) (India among top with 6%)
21
Note that India’s electronics exports are projected restrictions), India’s top export basket did not change
to grow stupendously until 2025 (see Figure 2.9). much as compared to corresponding period of 2019-20
Future appears to be bright for Indian electronics. Note (Figure 2.8), except inclusion of PCBA, parts of phones,
that during 2020-21 (period coinciding COVID-19 etc. during 2020 among the top exported items.
Figure 2.8: India’s Exports of Electronics during 2020-21
Smartphones
28% Data transmission
Others machines
44% 6%
Panels, electric
apparatus for
electric control
4%
Parts for Use with
Parts of Phones Voltage Electronic Boards,
2% Battery Chargers Electric Inverters Stabilisers Panels
2% PCBA of Phones 4% 4% 4%
2%
Figure 2.9: Projected Growth of India’s Exports of Electronics
Source: ICEA
2.2.2 Import-Profile of Indian Electronics

India’s most significant import item in electronics during sharply; however, the latter kept on declining (Figure 2.10).
2013-14 was Smart Phones, followed by their parts (viz. Since October 2014 (close to Make in India), the imports
display) and PCs. In smartphones, mirror-image trend of finished smartphones began declining – PMP further
occurred from 2013-14 to 2014-15: exports increased fueled it as CVD was imposed on their imports, followed by
rapidly (see previous section), while imports declined rise in BCD to 20% in February 2018xxii. But this has been
22
accompanied by rise in imports of their P&C facilitated by items during 2019-20. Parts of data storage system are
differential excise duty structure for domestic production also excluded from the top list. Imports of memories (ICs)
of mobile phones under PMP. Such factors explain why and cameras have increased fast (Figure 2.11), as well as
smartphones are no longer among the top 10 imported of phone parts, PCs and processors since 2017-18.
Figure 2.10: India’s Top Electronics Imports in 2013-14 & changes till 2019-20 (USD billion)
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
Smart Phones 5.5 7.6 5.9 3.7 2.6 1.2 0.7
Parts of Phones 2.6 2.6 4.5 6.3 6.7 6.6 7.2
PCs 1.7 2.1 2.2 2.1 2.7 3.0 3.2
Data Transmission Machines 1.3 2.3 2.3 2.4 4.1 5.3 3.1
Parts of LCD, LED TVs 1.0 1.1 1.1 1.3 1.4 1.3 1.3
Processors/Controllers: ICs 0.9 0.7 0.8 0.8 1.1 4.7 5.2
Digital Processing Units: Server 0.8 1.0 1.4 1.2 1.5 1.8 1.7
Solar Cells 0.7 0.8 2.3 3.2 3.8 2.2 1.7
Parts of Data Storage System 0.6 0.5 0.5 0.4 0.5 0.5 0.5
Electronic ICs: Other 0.6 0.5 0.7 0.8 1.1 1.6 2.5
Source: Own Calculations, Export-Import Data Bank, Government of India
Important inferences from the analysis are:

ITA-1 list. India also has preferential agreements
1. Unlike exports, India has been importing mainly such as FTAs with ASEAN, Singapore, Japan,
from East and South-East Asia, signifying its lack Korea, and PTAs with Malaysia. Also, some of India’s
in being strong part of GVCs in terms of forward partners, viz. US, Germany, etc. are also the global
linkages. exporters of certain top items.
2. India also imports from US, Israel and few European 4. Rise in imports of parts of phones, communication
countries: Germany, Sweden, UK, Netherlands, etc. devices for data transmission, and other cameras,
3. Most top imported items are covered under ITA-1. during 2016-17 to 2019-20, has not been much
Out of 380 tariff lines, about 169 are covered under related to rise in standard tariff rates (Table 2.5).
Figure 2.11: New Imports Items in Top 10 Imports in 2019-20 as compared to 2013-14 (USD billion)
2.0
1.9
1.5
1.4
1.3
1.0
0.9
0.6
0.5
0.4 0.4
0.2 0.2
0.1 0.1 0.1 0.1 0.1
0.0
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
Memories Cameras
23
Table 2.5: India’s Top Imports in the Electronics Sector in 2019-20 (USD billion)
Percentage Point changes in Shares
HS Code Value Value from
Top 10 Import Route of Imports
(Share in Total 2019-20 2016-17
Partners (with share) for Top Partners 2013-14 to 2013-14 to 2016-17 to
Imports) (tariff) (tariff)
2019-20 2016-17 2019-20
85177090 (13.7) India’s FTA with
(30), Vietnam (17), Korea
Parts of mobile ASEAN, and with 6.3
(3), Taiwan (1), Japan
phones, such as Korea, Singapore, 7.2 (15%) 5.7 7.0 -1.4
(0.9), Singapore (0.7), (Free)
display, touch Thailand, Japan,
Malaysia (0.3), USA (0.2),
screen PTA with Malaysia
Thailand (0.2)
Hong Kong (42), China Duty-free; Covered
85423100 (9.7) (39), Singapore (9), under ITA-1; FTAs
0.8
Processors and Taiwan (3), Korea (2), with ASEAN, and
5.2 (Free) 6.8 -1.0 7.9
controllers – Japan (1), USA (1), with Singapore, (Free)
Monolithic ICs Malaysia (1), Israel (1), Korea, Japan, PTA
Finland (1) with Malaysia
Currently zero duty,
China (76), Hong Kong freely importable;
(9), Singapore (9), Taiwan Covered under
2.1
84713010 (6.0) (2), Malaysia (1), USA ITA-1; FTAs with
3.2 (Zero) 0.6 -0.3 0.8
PCs (0.18), Germany (0.08), ASEAN, and with (Zero)
Denmark (0.05), Korea Singapore, Korea,
(0.04), Netherland (0.04) Japan, PTA with
Malaysia
Covered under
China (30), Singapore
85176290 (5.8) ITA-1; FTAs with
(13), Hong Kong (11), 2.4
Data transmission ASEAN, with
Vietnam (11), USA (8), 3.1 (20%) 1.8 1.8 0.04
machines with Singapore, Korea, (10%)
Malaysia (5), Israel (3),
comm. apparatus Japan; PTA with
Thailand (3), France (2)
Malaysia
85423900 (4.8)
Korea (47), Singapore
Electronic ICs Covered under
(17), China (14), Hong
(other than in ITA-1; FTAs with 0.8
Kong (10), USA (3),
smart cards, sim ASEAN; Korea, 2.5 (7.5%) 2.9 0.2 2.7
Japan (2), Taiwan (2), (7.5%)
cards), Assembly Japan; Malaysia
Vietnam (1), Israel (1),
flex circuits, (PTA)
Malaysia (1)
accelerometer
Currently zero duty,
84715000 (3.2)
Singapore (25), China freely importable;
Digital Processing
(23), USA (16), Hong Covered under
Units (other than 1.2
Kong (10), Taiwan (6), ITA-1; FTAs with
PCs, large or 1.7 (Zero) 0.8 0.5 0.3
Malaysia (6), Mexico (5), ASEAN, and with (Zero)
microcomputer,
Ireland (4), Netherland Singapore, Korea,
and parts of
(1), Canada (1) Japan; PTA with
system): Servers
Malaysia
Currently zero duty;
China (77), Vietnam (8),
Covered under
Thailand (7), Singapore
ITA-1; FTAs with 3.2
85414011 (3.2) (2), Hong Kong (2),
ASEAN, and with 1.7 (Zero) 1.0 5.5 -4.5
Solar/photocells Canada (0.5), Cambodia (Zero)
Singapore, Korea,
(0.4), Malaysia (0.2),
Japan, with LDCs,
Germany (0.2)
PTA with Malaysia
Hong Kong (77),
China (15), USA (3.4), Duty-free; Covered
Singapore (0.77), Korea under ITA-1; FTAs
0.1
85423200 (0.47), Taiwan (0.25), with ASEAN, and
1.4 (Free) 2.3 -0.2 2.5
Memories (2.6) Philippines (0.08), with Singapore, (Free)
Netherland (0.06), Virgin Korea, Japan; PTA
Island (0.05), Finland with Malaysia
(0.04)
85258090 (27.8), Vietnam (5), FTAs with ASEAN,
0.4
Cameras other Singapore (2), Taiwan and with Singapore,
1.3 (20%) 1.9 0.2 1.7
than digital, video (1), Korea (1), USA (1), Japan; PTA with (10%)
and TV ones (2.5) Germany (0.5), Japan Malaysia
(0.4), Thailand (0.3)
China (64), Hong Kong Covered under
85299090 (2.5)
(10), Malaysia (6), ITA-1xxiii; FTAs
Parts of LCD and
Korea (5), Israel (4), with ASEAN, and
LED TV Panels, 1.3 (15%) 1.3 (10%) 1.9 0.2 1.7
Thailand (2), Vietnam (2), Singapore, Korea,
Set-top box and
Singapore (1), USA (1), Japan; PTA with
other TVs
Taiwan (1) Malaysia
24
Figure 2.12: Projected Growth of India’s Imports of Electronics
Source: ICEA
Figure 2.13: India’s Imports of Electronics during 2020-21
Parts of Mobile
Phones
12%
Monolithic ICs
10%
Others
44%
PCs
9%
Data Transmission
machines
7% Other ICs,
Accelerometer
Smartphones 4%
Other photocells Parts of LCD 4%
2% DPUs, Servers and LED TVs
4% 4%
During 2020-21, top import items have been similar to that 2.3 Changes in Electronics Ecosystem
of corresponding period of 2019-20 (Figure 2.13), except
for rising imports of smartphones during pandemic, owing In 2010-11, India’s electronics and IT-ITeS industry
recorded a growing trend of 13.1% post-global financial
to shutting down of factories in India. However, schemes crisis of 2008-09, but most of the recovery was
launched since 2017 were meant to reduce imports and attributed to the export driven software sector. Hardware
keep them at stable level, as also projected in Figure 2.12. segment’s importance was realized soon due to its ample
25
potential for high value addition and exports, which led ICs for commercial use were imported even during
to launch of NPE-12, and India’s electronics ecosystem 2018). Nevertheless, India did progress in Very Large-
has undergone several changes since then. Scale Integration (VLSI)xxvi.
Prior to NPE-12, domestic electronics ecosystem was NPE-19, however, prompted Government to develop
restricted (Figure 2.15) as many components, viz., PCBs, further the Indian Semiconductor ecosystem. Till
batteries, displays, semiconductors were manufactured date, India reports two semiconductor fabs: SITAR in
in China, Taiwan and Korea and later imported by Bangalore and SCL in Chandigarh – but both are for
Indian companies. Tier III suppliers imported several strategic purposes including defence and space.
raw materials from China, while only limited amount of
plastic and metal parts were indigenously manufactured From 2011-12 to 2019-20. Indian electronics ecosystem
during 2011. In case of post-manufacturing activities, has thus evolved (see Figure 2.16)xxvii. Assembly activities
India lacked in testing and packaging services, exports look more prevalent now mostly for smartphones, along
and after-sales services. R&D and designing were with a close knit after-sales services network for phones,
largely inadequate in India, despite some progress in CE and appliances (like LCD TVs). India has many OEMs
chip design. Post 2012, some OEMs started to invest and EMS providers including Wistron, Foxconn, Lava,
in India, including Bosch. There was also expansion in Oppo, Amber, Voltas, Bluestar, Wingtech and Micromax.
activities of Samsung and Nokia.
Moreover, as of March 2020, there were 240 SEZs
Focus on mobile phones as a separate vertical gained operational in the country, out of which roughly 150 have
traction but more prominently post-2014, when their been solely for IT/ITeS and electronic hardware related
production increased rapidly along with emphasis on activities. Some important electronic SEZs are Sri City
exports. ‘Make in India’ also helped to attract more Pvt. Ltd. in Andhra Pradesh, Noida SEZ in Uttar Pradesh,
investments for expanding country’s manufacturing and Sriperumbudur in Tamil Nadu.
capacity, which proved to be successful particularly
for mobile phones. During 2016-17, more companies Importantly, there has been gradual shift from import
invested in India, such as, Xiaomi, Oppo and Apple. This substitution to export oriented growth – shift from
was also the time when the domestic production of direct imports of Completely Built Units (CBU), moving
electronics exceeded total imports (former's value was towards a ‘ZERO’ import status (Figure 2.14) to more
USD 49 billion, while imports were worth USD 43 billion, local assembly of Semi Knocked Down (SKD) and
as against reverse trend during 2015-16xxiv). Completely Knocked Down (CKD) units.
Over the years, significance given to Semiconductor Notably, production of cellular mobile handsets shifted
ICs and Semiconductor Fabrication Units (Fab) has over the years from SKD level to CKD. For instance,
increased. But, NPE based schemes concentrated share of CKD production rose from 43% in 2018(Q1)
more on electronic components with incentives to to 57% in Q4, while SKD declined from 61% to 38%
attract investments; however, Semiconductor ICs and over the same time (CMR, 2019axxviii). This is sign of
PCBs continued to be imported. Reasons such as huge rising value added in electronics industry, as in SKD
investments and running costs, high costs of power and case, only certain parts are assembled when imported,
finance, transportation and a poor supply chainxxv did not while in case of CKD, individual parts are imported for
let Fabs to come up, and this problem persisted (most full assembling purpose.
Figure 2.14: Decline in CBU Imports
Imports as a % of Total Imports as a % of Total

Market (Volume) Market (Value)
83.0%
78%
59.0%
56%
45.0%
22.0% 30%
19%
7.0% 1.5% 6% 3%
2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019
Source: ICEA
26
Figure 2.15: Domestic Electronics Ecosystem in India (2011-12)
Research and Development

Mostly carried out in developed countries, viz
Activities
Japan, Taiwan, USA, Korea
(Small presence in 2011-12)
Sourcing Raw
Semiconductor ICs,
Materials NPE 2012 aims to build on emerging
Passives, Actives, PCB
(Imported more, less of Chip Design; create a supply system of
(limited manufacturing in India)
domestic sourcing) raw materials, parts and components
large dependance on imports
Most parts and components imported Mostly sourced

from China, Taiwan, US, and Japan from China
PCBAs
Combining ICs, passives and actives with
PCBs Other elctronics parts and
-
(Mostly Imported; India lacked high-tech components (P&Cs)
technologies and advanced labour skilling)
Assembly of P&C to produce Most finished electronic products imported

final product Nokia, Samsung, Karbonn, Spice Mobiles, Micromax,
(Limited Assembly in India) Lava (among mobile-phones); LG among consumer
electronics- started domestic production
Testing/ Packaging
(Small Scale in India)
In 2011-12, India heavily dependent on imports of handsets from China & Vietnam,
importing close to 80 million handsets per year; Nokia set up one of its largest
manufacturing facilities in Chennai, but handsets produced were insufficient for
Domestic Sales/Exports domestic demand
(low contribution to exports; but
rise in domestic sales) Imports of electronic goods remained high worth INR 1273 Bn in 2011 and INR 1633
Bn in 2012
NPE (2012) [MSIPS (2012), EMC (2012)] aimed to create globally competitive
After Sales Services ESDM sector and promote indigenous value chains
(repair/servicing)
Source: Own Illustration
Figure 2.16: Domestic Electronics Value Chain and Ecosystem (2019-20)
Designing, R&D, IP Raw Materials Assembly by ODMs/EMSs Final Output

development – setting Metals (Copper, (by Indian manufacturers and/or
Centres of Excellence Aluminium), Plastic and foreign subsidiaries – Move from
Silicon SKD To CKD) Consumer Electronics
Even in 2019-20, limited innovations & IP
development; but rise in Industrial Design Domestic sourcing/Imports Computers Hardware
Registration for Mobile Phones Most assembly in States
(within SEZs especially): Industrial Electronics
Tamil Nadu, Uttar Pradesh,
Samsung, Xiaomi, HP, Motorola, Phillips, Karnataka, Andhra Pradesh Strategic Electronics
Microsoft have technology development Sub-assemblies and main parts & Maharashtra
centres in India Other Electronics
Parts and PCBA Other parts

Components [ICs, Passives, actives mounted Quality Testing of
Battery, displays,
Semiconductor ICs, on PCBs using Surface Mount electronics
motors outer coverings
Passives and Actives Technology (SMT)]
Semiconductor producers Samsung, Small fraction of demand of PCBs met Samsung during 2020 Domestic sales/Exports
Intel, Texas Instruments, through indigenous manufacturing invested in new (Export Expansion in
STMicroelectronics have design (35% according to ELCINA & 15% display and battery Mobile Phones)
centres in India but no according to others) in 2019-20 manufacturing units in
manufacturing plants (India has no In 2020, more than 350 PCB India (near Noida) for
foundries for commercial purposes) manufacturers in India – most in mobile phones
unorganised sector
NPE 2019 stresses on developing - Xiaomi manufactures Distributed
semiconductor industry; SPECS 2020 PCBAs for mobile phones in through dealers
provides incentives for firms to invest collaboration with Foxconn and retailers
India still relies mostly on imports of parts from China, Taiwan, US, etc
Customers
Private Individuals;
Private and Public
Organisations;
Government
Success in Mobile Phones Segment
• NPE (2019) [PLI (2020), SPECS (2020)] emphasised on mobile phones as key exporting items; 16 mobile phones & SEC companies
approved under PLI to invest in India, including Samsung, Foxconn, Pegatron, Ascent Circuits, etc; India’s manufacturing base expanded After Sales
viz 268 units manufacturing mobile phones and parts in 2019-20 compared to only 2 in 2013-14 Services
• Mobile Phones assembly steadily moving from SKD to CKD (P&C imported from China, Vietnam, Singapore, etc) Repairing and
• Mobile Phones assembled by OEMs or EMS (Foxconn, Wistron, etc) in Tamil Nadu, Noida (UP), Andhra Pradesh, etc replacing parts by
company specific
centres
27
Improvement in Design/R&D Activities
Over last few years, there has been a rise in the number registrations, viz. in case of mobile phones (mainly by
of R&D centres in the country with the start of designing foreign brands – Figure 2.17 and Table 2.6). To facilitate
operations. Illustratively, Samsung, Xiaomi, HP have their R&D, the Government of India has set up Centres of
R&D centres in Bangalore. However, R&D activities Excellence (5 have already commenced activities; around
in India still remain limited. Nevertheless, the pace has 12 are in the last stages of approval), and set aside an
picked up in IP development with rise in industrial design Electronic Development Fund (EDF) for Start-ups.
Figure 2.17: Industrial Design Registration of Mobile Phones in India’s Patent Office as Per Journal Publication
Year (2014 – 2020 October)
120 108
100
No. of Registrations
80
61
60 53 55
44 45
40
18
20
0
2014 2015 2016 2017 2018 2019 2020
Source: Own findings (data collated from Patent Office, Government of India)xxix
Table 2.6: Mobile Phone Companies Registering for Design in India
Year Mobile Phone Companies (No. of Registrations)

2014 LG (1), Apple (2), Xiaomi (1), Nokia (7), Vertu (3), Meizu (1), IXONOS PLC (1), Samsung (1),
Research in Motion Ltd (1)
2015 LG (13), Jensationell (1), Microsoft (4), Research in Motion (2), Gionee (2), Samsung (6), Meizu (2),
Motorola (2), Apple (3), Nokia (5), Blackberry (1), Vivo (2)
2016 Vivo (7), Samsung (12), Oppo (1), Motorola (2), Gionee (6), LG (15), Kyong Sung Energy Co. Ltd. (1),
Sharp Kabushiki (1), Lemobile Information Tech. (1), Xiamen Meitu (2), Microsoft (3), Blackberry (1)
2017 Samsung (11), Gionee (6), LG (7), Huawei (8), Vivo (3), Microsoft (2), Apple (1), Sogou Tech. (1),
Oppo (2), Lemobile (2), Smartisan Digital (1), Xiamen (1)
2018 Samsung (17), Lemobile (1), Huawei (5), Vivo (3), Essential Products Inc. (1), Xiaomi (2), Oppo (5),
LG (8), Kabushiki Kaisha (2), KneeVoice (1), Meizu (1), Gionee (3), HMD Global (2), Gree Electrical
Appliances (1), Sogou Tech. (1), Visa International (1)
2019 Xiaomi (9), Huawei (9), LG (6), Vivo (13), Samsung (25), HMD Global (16), Sogou Tech. (3), Google
(1), Oppo (14), Microsoft (1), Lemobile (1), Apple (2), Meizu (1), Gionee (5), Live.Me (1), TG & Co. (1)
2020 Samsung (23), HMD Global (6), Realme (2), Xiaomi (8), Huawei (7), Apple (2), Oppo (8), LG (1), Vivo
(Oct) (3), Google (1), Gionee (1)
Source: Own findings (data collated from Patent Office, Government of India)
Mobile Phones- The Champion Segment

To reinstate, India has recorded the highest success rates in wired headsets – these targets became specific since PMP
mobile phone ecosystem and production. Phones' shipments 2017. Imports of finished mobile phones did decrease since
increased by 7% on year-to-year basis during 2019, while then, and this has been visible in more assembling activities
exports of smartphones became over USD 3 billion. Since by Tamil Nadu, Maharashtra, Uttar Pradesh and Andhra
2015, India has made efforts to substitute imports with Pradesh. However, imports of sub-assemblies and their
domestic production by imposing duties on imports of parts/components remained high. Nevertheless, PLI 2020
finished mobile phones and parts like batteries, chargers, is meant to push exports of phonesxxx.
28
Note that presence of OEMs in India in 2011-12 was Noida and Punexxxi. But the list has expanded (Table 2.7).
very limited – only brands such as Nokia, Samsung, LG As a success, the exports of battery chargers and PCBA
and Motorola with manufacturing facilities in Chennai, of phones have increased rapidly (Figure 2.18).
Table 2.7: Mobile Phone Brands (OEMs/EMS) with Figure 2.18: Exports of Battery Chargers and
Assembly Activities in India PCBAs by India
Contract
OEM Location
Manufacturers Export of Battery Chargers
Nokia (HMD Chennai (Value in INR Crores)
Global)
4050 3348
Samsung Noida and Chennai
LG Pune 3050
Motorola Chennai 2050 1670
789
Micromax Uttarakhand 1050
Apple Foxconn and Chennai (Foxconn), Bangalore 50
Wistron (Wistron)
2017 2018 2019
Xiaomi Foxconn Andhra Pradesh;
Sriperumbudur, Tamil Nadu
(Foxconn in both locations) Export of PCBAs (Value in INR
Oppo Greater Noida Crores)
Vivo Greater Noida 2050
Realme Noida
1045
OnePlus Noida (Relies on Oppo’s plant) 1050
510
Huawei Flex limited Tamil Nadu 286
Asus Andhra Pradesh 50
Reliance Jio Mumbai, Maharashtra 2017 2018 2019
Source: ICEA
Deviations in Demand for CE & Hardware
Despite declining share of CE in production, the demand are working on creating successful models in home
remains high mainly for refrigerators, TVs, washing appliances. However, there still lacks focused initiative
machines, and ACs, and is expected to increase owing by Government in recent years to particularly target the
to growing middle-class/youth population, coupled growth in CE segment, unlike mobile phones.
with advantages of falling prices and
digital expansion (Table 2.8). Demand
for Computer hardware has gone up Figure 2.19: Indicative Value Chains/Ecosystem in India
due to WfH. Ecosystem has changed, mainly for LED/LCD TV
mainly with evolutionary move from
conventional TVs to flat LCD/LED
(value chain given in Figure 2.19). In
India, one of the most popular contract
Assembly of TVs
manufacturers for consumer durables Raw Materials and
P&C (Mostly imported) Onida TV, T-Series, Videocon
is Dixon Technologies. Samsung India Sony and LG locally
(domestic brands); Samsung
& Xiaomi ( via Dixon Tech);
provides research support for the Indian assembles TV panels,
PCBs, moulds
Panasonic & Sony -
TV ecosystem through its R&D centre assemble TVs in India
in Noida (SRI-D) . Up until 2018,

xxxii
Samsung had a TV manufacturing plant

in Chennai, after which this shifted to
Vietnam due to the import duty on open
cells display panels in India. During
January 2020, Samsung formed a tie up After Sales Services Domestic Sales/ Exports
with Dixon Technologies to manufacture Service and repair centres Covers rural and urban India
TVs in India, as the import duty on display spread across the country
[Company
(through retailers and
e-commerce)
panels was removed in September specific/General] LG, Sony (India)
2019. However, NPE targeted to boost export TVs
production for entire electronics industry

including CE, as done by MSIPS 2012,
notably for TVs, Digital Cameras,
Camcorders, etc., and the companies Source: Own Illustration
29
Table 2.8: Summary of CE & Computer Hardware in India (data not updated for many segments)
Recent available
Product Segment Shipment/production Changing Ecosystem Key Players
values
• 15 million units of • Started with manufacture of colour • TV market dominated by

shipment in 2019 (15% Cathode Ray Tube (CRT) TVs (demand Samsung; Others include
growth) declined since 2012-13); progressively LG, Sony and Panasonic
shifted to high technology LED/LCD
• TV market size increased • Xiaomi, VU, TCL and
flat panel TVs
from USD 8.3 billion in OnePlus capturing
2014 to USD 13.3 billion in • Production of LED/LCD TVs increased shares of Smart TV
TVs 2020 (estimated) from 5.5 million units in 2012 to 12 segment
million units during 2018-19 – focus
now mostly shifting to smart TVs (25%
annual growth from 2019 to 2020)
• Non-smart TVs segment grew by only
7% in 2019 with top brands such as
Sansui (mainly targeting rural areas)
• Production of 12.27 million • Sales starting to cover rural India • Samsung, LG, Godrej,
units in 2020 Hitachi, Whirlpool,
• Shift to energy efficient models
Bluestar – cover most of
• 27% share of consumer
• 70% of refrigerators belonged to the India’s demand
appliance market
direct cool segment in 2018, while
Refrigerator remaining in the frost-free area
• Not a large change in number of
refrigerators produced: 11.12 million
units in 2013, 13.05 million in 2017, and
12.27 million units in 2020
• Production of 5.79 million • Focus has been shifting from semi- • Samsung, Bosch,
units at INR 7000 crores automatic to automatic models Whirlpool, Godrej and LG
in 2018
Washing • Since 2018, started to penetrate India’s
Machine Tier 2 and 3 towns
• Production of 5.5 million • Split ACs had 85% of the market share • Hitachi, LG, Voltas, Daikin
units in 2018 during 2018 – due to shift away from and Haier
window ACs
• Market size of ACs is less than that of
refrigerators and TVs (no penetration in
rural India)
Air-conditioner • In 2018 – 5.5 million units of ACs
(AC) produced in comparison to 11.88 million
units of refrigerators,12 million units of
LCD/LED TVs
• Indian room AC market expected to
increase to 7 million units by 2021
• India’s traditional PC • Manufacturing capacity of PCs in • Market leaders in PC &
market (desktops, India was 80% underutilised in 2019 laptop segment are HP,
notebooks, workstations) (due to cheaper imports and owing Lenovo, Dell and Asus
– 11 million units of to cost disabilities in India vis-à-vis
• Apple, Samsung, Lenovo
shipment in 2019 foreign counterparts – making local PC
and iball have high
manufacturing unsustainable)
market shares in case of
Tablet, • HP has a manufacturing plant in tablets
Laptop, PCs Pantnagar in Uttarakhand since 2006
for PCs; Lenovo has a manufacturing
plant in Pondicherry for PCs
• India still lags behind in indigenous
production of laptops and tablets –
whose demands have increased owing
to the COVID
2.4 Deep Dive into Smartphones, Tablets and Laptops Value Chains
The section lists key parts and components (P&Cs) (8-digit level) (see Tables 2.9, 2.10 and 2.11), along with
and accessories for India used in Smartphones, Tablets GLIxxxiv values (relatively much lower for laptops’ and
and Laptops, with their identified HS codes at tariff line tablets’ accessories/parts).
30
Table 2.9: HS Codes identified as P&Cs/Accessories for Smartphones at HS 8-digit level
(highlighted some parts/accessories where GLI is significant – 50% and above)
HS Code
(GLI for Intra-industry Trade in Smartphone P&Cs and Accessories
2019-20)
39079990 (0.37) Inputs (Liquid Crystal Polymer) for connectors
Heat Dissipation Sticker Battery Cover, Protective Film for Main Lens, Mylar covering
39199090 (0.29)
Battery, Film-front flash, Sticker-Battery Slot
39209999 (0.14) Battery Cover (Front, Back, Middle), Main Lens, Camera Lens, Antenna
39269091 (0.32) PU Case/Sealing Gasket
Moulded Plastics for Mobile chargers/ Sim Socket/ Conductive cloth/
39269099 (0.62)
LCD conductive foam/ BT foam/Antenna
40169990 (0.95) Microphone Rubber Case/ Sensor Rubber Case
73181500 (0.88) Screws (Mechanics)
73269099 (0.96) Sim sockets (metal)/Rudder Equipment (Mechanics)
85177010 (0.35) PCBA of cellular mobile phones
85340000 (0.33) Printed Circuits/PCBs
85049090 (0.39) PCBA of Battery Chargers/adapters
85044030 (0.19) Battery Chargers
85065000 (0.14)
85068090 (0.29) Battery & parts
85069000 (0.71)
85076000 (0.02) Lithium-ion battery of mobile phones
85079090 (0.12) Parts/PCBA for use in manufacture of Battery packs
Parts of Cellular phones (Display assembly/ Touch Screen; Fingerprint Reader/
85177090 (0.04) scanner; touch panel/cover glass assembly; camera module for use in phones;
GSM antenna/antenna of any technology of phone; etc.)
85181000 (0.09) Microphone
85182900 (0.07) Speakers for telecom equipment, wired headset, receiver
85183000 (0.04) Headphones and Earphones
85189000 (0.15) Parts/PC Assemblies of speakers/microphones
85235100 (0.24) SD Card (Storage Devices)
85235210 (0.52) Sim Cards
85235220 (0.65) Memory Cards
85258020 (0.07)
Camera (Digital, others)
85258090 (0.03)
85411000 (0.03)
Diodes/LED (Diode)
85414090 (0.07)
85366990 (0.23) Connectors/Sockets for Sim Cards
85389000 (0.87) Side Button
85423100 (0.04)
Integrated Circuits, Flash Memory, Memory ICs (Power/ Charging/ Audio/ Flash),
85423200 (0.01)
Processor, etc.
85423900 (0.10)
85441990 (0.52)
85444299 (0.56) USB Cable and Connectors
85444999 (0.50)
India’s Top Import Partners India’s Top Export Partners
China, Germany, Hong Kong,

USA, UK, UAE, Malaysia, Australia, Nepal, Oman, Philippines, Nigeria, Kuwait, Israel,
Vietnam, USA, Singapore, Japan,
France, Hong Kong, Germany, Taiwan, Singapore, Switzerland, Rwanda, China,
Turkey, France, Switzerland, Korea,
Korea, Vietnam, Indonesia, Algeria, Ireland, Brazil, Poland, Mexico, Saudi Arabia,
Malaysia, Portugal, Spain, UAE,
Finland, Italy, Fiji, Afghanistan, Netherlands, Zambia, Austria, Kenya, Hungary,
Taiwan, Israel, Finland, Italy, UK,
Bangladesh, Antigua, Malawi, British Virgin Island, Ghana, Congo, Egypt, Iraq,
Australia, Thailand, Ireland, Cote
Canada, Mauritius, Spain, South Africa, Turkey, Morocco, Yemen, Ethiopia, Czech
D’Ivoire, Sweden, Saudi Arabia,
Republic, Bhutan, Myanmar, Sri Lanka, Burkina Faso, Guatemala, Sudan, Namibia,
Mexico, Netherlands, Hungary,
Sweden, Thailand, Qatar, Ghana, Uganda, Iran, and Japan
Belgium, Philippines
31
Findings from product mapping for smartphone • Imports have been over USD 27000 million during
parts and accessories for India: 2019-20 as compared to their exports of over USD
• During 2019-20, India mostly exported mechanics 3700 million. Top imported items included parts of
(metals), battery chargers, side buttons, plastic mobile phones, types of semiconductor ICs, camera,
battery covers, parts of mobile phones, followed by lithium-ion battery, sim sockets (metal), plastic
microphone/sensor rubber case, PCBA of phones, battery covers, etc.
ICs, etc. • But imports have declined majorly for PCBA of
• But, exports have increased more (during 2017- phones in 2019 since 2017 and marginally in case
2019) for ICs, battery chargers, PCBA, batteries and of batteries, their chargers, memory and sim cards,
parts, mylar covering battery, sealing gasket, wired screws, USB cables, rubber case, side buttons, and
headsets, & headphones. inputs for connectors.
Table 2.10: HS Codes for Parts of Tablets with Intra-Industry Trade (highlighted where GLI is high)
HS Code
Parts and Accessories of Tablets
(GLI-IIT in 2019-20)
85285200 (0.05)
Touchscreen Display; LCD Display
85285900 (0.07)
Screen
85287390 (0.74)
84733030 (0.18) Tablet Board (PCB)
85258090 (0.03) Camera
84733020 (0.21) Motherboard
85444299 (0.56)
HDMI Cable – Connectors and USD Data Cables
85444999 (0.50)
85182900 (0.07) Speakers
85183000 (0.04) Micro-phones (mic parts)
39269099 (0.62) Tablet Power Button
84733091 (0.002) Network Access Controllers
84733099 (0.16) PCBA/parts for tablets (including volume key, Pen); Front and Back Cameras
85423100 (0.04) Power Management chip/Power IC, SMD IC, Flash ICs; IC Optic Sensors,
85423900 (0.10) Accelerometer
84733010 (0.08) CPU/Microprocessor
85065000 (0.14) Battery
85076000 (0.02) Lithium-ion Battery
85369090 (0.61) Touch Connectors/Adapters for Tablets
China, Japan, Korea, UK, USA, USA, Hong Kong, Germany, France, Singapore Netherland, UK China, UAE, Italy,
UAE, Germany, Singapore, Hong Sri Lanka, Bangladesh, Burkina Faso, Niger, Malaysia, Thailand, Ireland, Israel,
Kong, France, Korea, Vietnam, Korea, Vietnam, Belgium, Poland, Australia, Philippines, Oman, Kuwait, Nigeria,
Taiwan, Malaysia, Russia, Nepal, Taiwan, Egypt, Finland, Russia, Kenya, Hungary, South Africa, Turkey, Sudan,
Netherland, Switzerland, Turkey, Japan, Qatar, and Saudi Arabia
Canada, Philippines, Israel,
Thailand, and Ireland
Key findings for India in case of identified parts/ • During 2019-20, most exported ones included
accessories of tablets are: wireless network connections, internal fan,
• During 2019-20, India largely exported power button semiconductor ICs, PCBA for adapters, followed
(plastics), connectors, processors and flash ICs, by SSD, touchpad assembly, mother board, etc. But,
HDMI cables, followed by PCBA for tablets, camera, since 2017, the exports increased for processors
mother board, etc. (values much lower than that of and flash ICs, parts for adapters, heat sink and
imports). However, exports increased for most of the fans, SSD, display screens, as well as battery,
parts/accessories from 2017-18 to 2019-20, mainly headphones, speakers, etc.
for display, ICs, speakers, batter, HDMI, etc. • Top imported items have been types of ICs, LCD
• Import values increased since 2017 for ICs, network screens, lithium-ion battery, microprocessors,
access controllers, battery, camera, speakers/ touchpad assembly, HDD, etc. (Values of imports
headphones, etc. However, most imported ones have been much higher than that of exports). But
during 2019-20 included ICs, camera, lithium- over the period of 2017-18 to 2019-20, there has
ion battery, as well as power buttons, connectors, been significant rise in imports in case of all ICs
microprocessor, etc.
of HS 8542 category, lithium-ion battery, display
Findings for India from product mapping for laptop screen, etc.; while the fall has been more in case of
parts and accessories are: wireless connections, HDD, PCBs, DVD Drive, etc.
32
Table 2.11: Key Parts & Accessories of Laptops (highlighted very few items with high GLI)
HS Code (GLI: Intra-Industry

Laptop P&Cs and Accessories
Trade in 2019-20)
85235100 (0.24) Solid-State storage devices (SSD)
84717020 (0.07) Hard Disk Drive (HDD)
85423100 (0.04)
85423200 (0.01) Memory Module, RAM, Processors, ICs, Dual Inline Memory Module (Memory DIMM)
85423900 (0.10)
84717070 (0.06) Digital Video Disc (DVD) Drive
85076000 (0.02) Lithium-ion Battery
84716040 (0.04) Keyboard
84716060 (0.01) Bluetooth Mouse
85285200 (0.05)
85287219 (0.01) Laptop Monitor Screen, LCD Screen, LED, Display Screen
85287390 (0.74)
84733020 (0.21) Motherboard
84733092 (0.12) Graphic Cards
85182900 (0.07) Speakers
85183000 (0.04) Headsets, Earphones that are used with laptops, combined microphone and speaker sets
84733030 (0.18) Mounted PCBs
84733099 (0.16) Touchpad Assembly, Palm Rest Assembly
85176290 (0.26) Wireless Network Connections
85049090 (0.39) Spare parts for laptops such as PCBA for adapters
84733010 (0.08) Processor/CPU
84145990 (0.32) System Fan
84149090 (0.91) Laptop Internal CPU Fan, Heat Sink
China, USA, Germany, Japan, USA, UAE, UK, Germany, France, Poland, Hungary, Korea, China, Romania,
Italy, Korea, UK, France, Malaysia, Singapore, Philippines, Hong Kong, Sweden, Netherland, Nepal, Indonesia,
Switzerland, Malaysia, Vietnam, Vietnam, Czech Republic, Norway, Belgium, Bangladesh, Sri Lanka, Egypt, Burkina
Hong Kong, Singapore, Thailand, Faso, Niger, Thailand, Ireland, Taiwan, Brazil, Finland, Maldives, Kenya, Bhutan,
Israel, Canada, Philippines, Korea, Mexico, Nigeria, Turkey, and Philippines
UAE, Czech Republic, Netherlands,
Finland, Mexico
The increase in demand and sales have been higher in (Figure 2.21(b)), whereas Apple leads the ultra-premium
case of tablets and laptops owing to an effect of growing segment in 2020 (Q3). Table 2.12 shows those models
WfH and LfH. Notably, shipments of Smartphones, with high demand in India during 2019-20.
tablets and laptops have declined in the early
parts of 2020 due to the pandemic, both globally and Case for Laptops: In India, HP took the leading
in India, but these trends reversed by Q3 of 2020 position in 2020 (Q3), followed by Lenovo and Dell
due to the pent-up demand during the lockdown period (Figure 2.21 (f)) – these top players in Laptop and
(Figure 2.20). Figures 2.21 and 2.22 compare their PCs market captured cumulative share of about 70%:
market shares in the global and Indian contexts over two (i) For HP, cheapest laptop in 2020 has been HP 250
time periods – 2020 (Q3) and 2018 (Q3), respectively. G7 Notebook at INR 22,300 and most expensive as
There have not been many changes with ranking of HP z-Book 17 G6 Mobile Workstation at INR 3,17,900.
top brands mainly in case of laptops/PCs. But among Some well-known laptop series include Notebook,
smartphones, Apple and Huawei hold a significant share Spectre, Pavilion, Elite, Envy, Omen, etc. (ii) For Lenovo,
globally. In India, shares of Chinese brands namely Vivo laptops range from IdeaPad D330 4GB, 64GB at INR
and Realme are higher. Similarly, in case of tablets, 22,999 (being the cheapest) to Legion 7i 39.62cm at
Huawei and Amazon (significant global players) do not INR 2,76,690. Lenovo too has a large variety like Legion,
have much presence in India. Yoga, IdeaPad, ThinkPad, ThinkBook, etc.
Case for Smartphones: Globally, since 2018 (Q2), Case for Tablets: In India, Samsung displaced Lenovo
smartphones’ market has been dominated by 5 brands, to lead the tablet market in 2020 (Q3) – constituted 70%
namely, Huawei, Samsung, Apple, Xiaomi and Oppo of market share (Figure 2.21(d)), followed by Apple and
(Figure 2.20). Most of these are of Chinese origin, i-ball. Lenovo’s tablet shipments grew 24% in 2020 (Q2)
challenging easy decoupling. What is interesting is that from previous quarter and remained stable even in next
India has emerged as the second largest producer of quarter; while Samsung’s shipment grew much faster by
mobile phone handsets and market for smartphones. 120%, followed by Apple which grew by a humongous
Samsung and Xiaomi hold the highest market share 135%. Table 2.13 lists highly demanded models.
33
Figure 2.20: Shipments and Growth Trends (Q1- Q3 2020)xxxv
• Global: S hipments declined by 56 million from 2019 (Q2) to 2020 (Q2), reaching 2764
million (fall of 169%); but increased by 32% from Q2 to Q3 2020, to reach 3656 million
SMARTPHONES • India: For April May '20, India’s demand declined by 51% y o y (reaching 182 million
units); recovered in 2020 (Q3) (9% y o y growth to cross 53 million units)
• Global: Shipments declined to 246 million units (fall of 182% y o y) in 2020 (Q1);
186% y o y growth 2020 (Q2) with 386 million units; but increased to 476 million
TABLETS units in 2020 (Q3) (249% y o y growth)
• India: I n 2020 (Q2), growth at a quarterly rate of 23%; during 2020 (Q2) to 2020 (Q3),
tablet market grew by a stellar 77%
• Global: S hipments grew at 146% in 2020 (Q3) (y o y), reaching 813 million units of
laptops, workstations & desktop; global laptop market size expected to reach USD
LAPTOPS 10891 billion by 2025
• India: D eclined by 373% during 2020(Q2) (y o y); sale/demand of desktop PCs
declined by 464%; In 2020 (Q3), shipments reached 34 million (92% y o y growth)
Table 2.12: Highly Demanded Smartphones in India (Q4 2019 to Q3 2020)xxxvi
Price Range
2019 (Q4) 2020 (Q1) 2020 (Q2) 2020 (Q3)
(IDC, 2020c)
Low (< $200) Samsung- Galaxy A20s, Samsung- Galaxy A20s, Galaxy Redmi Note 8/8A Dual; Samsung- Realme- C3, C2,
(< INR 14,600) Galaxy A30s; Oppo- A5s, A30s; Realme C3, C2, 5i; Oppo- Galaxy A20s, Galaxy A30s; Oppo- Narzo Series,
A5; Realme C3, C2; Vivo A5s, A5, A31; Vivo Y20; Redmi A5s, A5, A31 Realme 6; Redmi
Y20; Readmi Note 6A, Note 8/8A Dual 9, Note 9; Oppo-
Redmi Note 7 Pro, Redmi A12, A11K
Note 8/8A Dual
Mid-Range Samsung- Galaxy A50s, Samsung- Galaxy A51, Galaxy Samsung- Galaxy A51, A71, A50s, OnePlus Nord;
($200-$500) Galaxy M30s; Oppo- A9, M30s; Realme X2 Pro; Oppo- M30s; OnePlus Nord; Vivo V19 Vivo S1, Y30,
(INR 14,600- Reno 2 series; Realme X2 A9; Vivo S1; Redmi Note 8 Pro, Y30, Y50; Redmi Note 8 Pro, Y50; Realme 7
INR 36,500) Pro; Vivo S1 Redmi Note 9 Pro Redmi Note 9 Pro
High (> $500) OnePlus 7; Apple iPhone Samsung- Galaxy S10, Note 10 Samsung- Galaxy S10, Note 10 Apple iPhone
(> INR XR, iPhone 11 lite; OnePlus 8 Pro; Apple iPhone lite; Apple iPhone 11, iPhone XR, SE, iPhone 11;
36,500) 11 iPhone SE; OnePlus 8; Oppo Reno OnePlus 8; Vivo
10X; Vivo X50 pro; Xiaomi Mi 10 X50 pro
Table 2.13: Highly Demanded Tablets in India (Q4 2019 to Q3 2020)xxxvii
Price Range 2019 (Q4) 2020 (Q1) 2020 (Q2) 2020 (Q3)
Low- Below Lenovo-Tab M10 (HD, Lenovo- Tab M10 (HD, FHD); Lenovo- Tab M10 (HD, FHD, Samsung- Galaxy Tab
$330 FHD), Tab E, M, V series; Samsung- Galaxy Tab A 10.1, FHD Plus); Samsung- Galaxy A8.0; Lenovo- Tab
(Below INR Galaxy Tab A10.1, Galaxy Galaxy Tab A8.0; iBall- iTab Tab A 10.1, Tab A series; iBall- M10 (HD, FHD, FHD
24,090) Tab A8.0 Slide, iTab Bizniz iTab Twinkle Plus);
High- Above Lenovo- Tab P series; Samsung- Galaxy Tab S5e, Samsung- Galaxy Tab S6, Samsung- Galaxy Tab
$330 Samsung- Galaxy Tab S5e, Galaxy Tab S6; Apple- iPad Galaxy Tab S6 lite; iPad 7, iPad S7 plus, Galaxy Tab
(Above INR Galaxy Tab S6; Apple- iPad Mini 2019, iPad Air 2019, Air 2019, iPad Mini 2019; iTab S7; Apple iPad 8
24,090) Mini 2019, iPad Air 2019, iPad 7 Moviez
iPad 7
34
Figure 2.21: Global Market Share of Smartphones, Tablets & Laptops in Q3 of 2018 & 2020 (in %)xxxviii
Q3 2018 Q3 2020
14.614.6 14.7
14.7
3434 29.7 29.7
14.6
14.7
14.6 20.320.3 22.7
34 22.7
29.7 14.7
34
829.7 8
8.48.4 20.3
14.6 22.7
14.6
13.213.2 20.3 13.1 13.1 11.8 11.8
9.59.5 14.7 14.722.7
34 34 8
29.7 29.7
Huawei
Huawei 8.4
Samsung
Samsung Apple
Apple Xiaomi
Xiaomi OPPOOPPO OthersOthers 8 Samsung Apple AppleXiaomi XiaomiOppo OppoOthers
HuaweiHuawei Samsung Others
13.2 11.8
13.1
8.4 9.5 20.3 20.3
13.2 13.1 11.8 22.7 22.7
9.5
(a) Smartphones Huawei 8 Samsung
(b) Smartphones
Apple Xiaomi Oppo Others
Huawei Samsung Apple Xiaomi OPPO Others 8
Huawei Samsung Apple Xiaomi OPPO Others Huawei Samsung Apple Xiaomi Oppo Others
8.4 8.4
27.9
27.9 13.2 29.6
13.229.6 20.9 13.1 13.1 11.8 11.8
9.5 9.5 20.9 29.2
29.2
HuaweiHuawei Samsung
Samsung Apple Apple Xiaomi Xiaomi OPPO OPPO Others Others Huawei Huawei8.6SamsungSamsung Apple Apple Xiaomi Xiaomi Oppo Oppo Others Others
27.9 29.6 8.6 20.9
5.3 27.9 29.6
5.3 20.9 29.2
11.4 29.2
10.6 17.3
10.6 17.3 11.4 19.8
9.3 8.6 10.2 19.8
27.9 27.9 29.6 29.6 8.6
5.3 9.3 20.9 20.9 10.2
5.3
Apple Samsung Huawei Apple Samsung 29.2 29.2 Huawei
11.4
Apple 10.610.6
Amazon.com Samsung 17.3 17.3
Lenovo OthersHuawei Apple11.4
Amazon.com Lenovo Samsung Others Huawei
19.8
Amazon.com Lenovo Others Amazon.com 19.8
Lenovo Others
9.3 9.3 8.6 8.6 10.2 10.2
5.3 5.3
AppleApple Samsung
Samsung Huawei Apple Apple11.4 11.4 Samsung Samsung Huawei Huawei
10.6 17.3 17.3 Huawei
Amazon.com 10.6
Amazon.com LenovoLenovo Others Others Amazon.com
Amazon.com Lenovo Lenovo
19.8 19.8 Others Others
25.2 23.6 22.7
9.3 9.3 10.2 10.2 25.7
25.2 23.6 22.7
25.7
(c) Tablets
Apple Apple (Q4 2018)* (No data for Huawei
Samsung
Samsung Q3)Huawei Apple Apple (d) Tablets
Samsung
Samsung Huawei Huawei
Amazon.com LenovoLenovo Others Others Amazon.com
Amazon.com Lenovo Lenovo Others Others
Amazon.com
6.1 7.1
25.225.2 23.6 23.6 22.7 22.7 25.7 25.7
6.17.3 21.8 7.1
7.7
21.6
7.3 21.8
16 7.7
6.1 6.125.2 25.2 23.6 23.6 7.1 15.2
22.7 22.7 21.6
7.1 25.7 25.7
16
Lenovo HP Inc. 21.8 Dell Technologies Lenovo 15.2
HP Inc. Dell Technologies
7.3 21.8 7.7
Apple 7.3 Acer Group Others Apple 7.7 Acer Group 21.6 Others
Lenovo HP Inc. Dell Technologies Lenovo HP Inc. 21.6 Dell Technologies
6.1 6.1 16 7.1
Apple Acer
16 Group Others Apple 7.1 15.2 Acer Group Others
15.2
7.3 7.3 21.8 21.8
Lenovo HP Inc. Dell Technologies Lenovo 7.7 7.7 HP Inc. Dell Technologies
Lenovo HP Inc. 21.6 21.6
Apple Acer Group Others Dell Technologies Apple Lenovo Acer GroupHP Inc. Others Dell Technologies
Apple 16 Acer
16 Group Others Apple Acer Group Others
15.2 15.2
LenovoLenovo HP Inc.HP Inc. Dell Technologies

Dell Technologies Lenovo Lenovo HP Inc. HP Inc. Dell Technologies
Dell Technologies
Apple Apple Acer Group Others Others Apple Apple Acer Group
Acer Group Others Others
Acer Group
(e) Laptops and PCs (f) Laptops and PCs
35
Figure 2.22: Indian Market Share of Smartphones, Tablets & Laptops in Q3 2018 & 2020 (%)xxxix
Q3 2018 Q3 2020
12 12
23 23 24 24
29 29
10 10
12 12
23 23 24 24
29 29
10 10
15 15
12 12
8 8
23 23 24
24 23 23
29 3 29 27 27
3 1510 15 10
10 10 16 16
8 8
27 27 23 23
Samsung
Samsung 3
3Xiaomi
Xiaomi VivoVivo Realme
Realme OppoOppo Others
Others Samsung
Samsung Xiaomi
Xiaomi VivoVivo Realme
Realme OppoOppo Others
Others
10 10 15 16 16
15
8 8 (a) Smartphones (b) Smartphones
Samsung
Samsung XiaomiXiaomi Vivo Vivo Realme
Realme Oppo27
27
Oppo OthersOthers Samsung
Samsung 23 OthersOthers
Realme23 Oppo Oppo
XiaomiXiaomi Vivo Vivo Realme
3 3
12
2210
10 16 12 16
22 2 2
32 32 33 33
Samsung Samsung Xiaomi XiaomiVivo Vivo
Realme RealmeOppo OppoOthers Others Samsung SamsungXiaomi Xiaomi
Vivo Vivo
Realme RealmeOppo Oppo
Others Others
12 12
22 22 16 16 2 2
32 32 33 33
15 15
16 16 12 12
22 22 2
2
15 15 17 1732 32 33 33
14 14 37 37
16 16
Lenovo
Lenovo Samsung
Samsung Apple
Apple i-balli-ball Others
Others Lenovo
Lenovo Samsung
Samsung Apple
Apple i-balli-ball Others
Others
17 17
14 14 37 37
15 15
LenovoLenovo Samsung
Samsung AppleApple i-ball i-ball OthersOthers LenovoLenovo Samsung
Samsung AppleApple i-ball i-ball OthersOthers
8.88.8 11.811.8
4.24.2 17 17
14 14 37 37
30.730.7 7.57.5 28.228.2
(c) Tablets (Q2 2019) (No data for Q3) (d) Tablets
12.112.1
Lenovo Lenovo 8.8 8.8
Samsung Samsung Apple Apple i-ball i-ballOthers Others 11.8 11.8
Lenovo LenovoSamsung Samsung Apple Applei-ball i-ballOthers Others
4.2 4.2
9.59.5 28.2 28.2
30.7 30.7 7.5 7.5
12.1 12.1
8.8 8.8 11.8
22.9 9.5 9.5 11.8
4.222.9 4.2
21.321.3 21.321.3 21.721.7 28.2
28.2
30.7 30.7 7.5 7.5
12.1 12.1
22.9 22.9
HP HP
Inc9.5
Inc 9.5
21.3 21.3 Lenovo
Lenovo 21.7 21.7 DellDell
Technologies
Technologies
HP HP
Inc Inc Lenovo 21.3 21.3
Lenovo DellDell
Technologies
Technologies
AcerAcer
Group
Group ASUS
ASUS Others
Others AcerAcer
Group
Group ASUS
ASUS Others
Others
22.9 LenovoLenovo HP IncHP Inc LenovoLenovo Dell Technologies

Dell Technologies
HP IncHP Inc 22.9 Dell Technologies
Dell Technologies
Acer Group
Acer Group ASUSASUS 21.3 OthersOthers Acer Group 21.3
Acer Group ASUSASUS
21.3 21.7 21.7Others
Others
21.3
HP Inc HP Inc Lenovo Lenovo Dell Technologies

Dell Technologies
HP Inc HP Inc Lenovo Lenovo Dell Technologies
Dell Technologies
Acer GroupAcer Group ASUS ASUS Others Others Acer GroupAcer Group ASUS ASUS Others Others
(e) Laptops and PCs (f) Laptops and PCs
36
Using value chain (VC) analysis (Table 2.14), players including Xiaomi, Oppo and Vivo. That is, Indian
smartphones’ value chains are found to be more companies showed little progress in this field. Secondly,
developed in India, with growing presence of R&D centres, HP and Lenovo have manufacturing facilities for PCs in
assembly plants and rising exports of finished products, the country, but there are limited tablet manufacturing
in comparison to that of India’s laptops and tablets. units within India by these companies. The VC analysis
The results also indicate India’s greater participation undertaken offers reliable and useful trends to enable
in post-manufacturing services mainly the after-sales better data generating system and policy formulation
services. While India’s participation seems to be on the for smartphones, tablets and laptops’ domestic value
rise in assembling, repairing activities and providing chains and linkages if any into GVCs (which are still
better customer care services, its involvement has been low yet steadily growing). Nevertheless, as depicted by
lacking in the electronic component manufacturing Figure 2.23, the value chains of smartphones, tablets
sphere. For instance, Surface Mount Technology (SMT) and laptops are wide, spanning from the initial stages
used in India continues to be smartphone specific, but such as R&D and Design to the higher presence at the
its production has been pushed up by top 5 smartphone post-manufacturing stage of after-sales services.
Figure 2.23: General Value Chain for Smartphones, Tablets and Laptops
37
Table 2.14: Extent of Presence in Stages of the Value Chain across electronics products (Smartphones, Tablets and Laptops) in India
38
Component Domestic Sales and After Sales Services
R&D and Design, etc. Assembly of the Product
Manufacturing Export (viz. service centres)
• Rising trend in R&D and • High dependence on • Smartphone value chains • High domestic sales • High presence in
designing activities imports for P&Cs of more developed in terms of this stage – brand
Brands manage sales
smartphones assembling activities specific and general
• Setting up of R&D through stores and
service centres spread
centres in India by • Slow growth • Growing role of OEMs and e-commerce
across the country
prominent brands (viz. in indigenous EMS providers [viz. Xiaomi Xiaomi manages sales
SMARTPHONES (viz. Xiaomi and Apple
Xiaomi and Samsung manufacture of assembles smartphones in rural areas through its have exclusive service
have R&D centres in components (viz. (with Foxconn) in Tamil network of over 500 Mi centres in main cities;
Bangalore) Xiaomi with Foxconn Nadu & Andhra Pradesh; stores Samsung has over
started manufacturing Samsung in Tamil Nadu &
• Growing exports of 3000 service centres
PCBA in 2018) Uttar Pradesh; Apple (with
finished smartphones to across India)
Foxconn) in Tamil Nadu]
countries like UAE and
Russia
• Low presence of top • Parts and • Very limited assembly • Volume of domestic • High presence due
brands (Lenovo, Apple, Components are activities sales lower than that of to brand specific
etc.) in R&D and Design mostly imported (but smartphones and general service
• Top market share holders
overall there are centres (viz. Apple
import tablet models usually Brands manage sales
limited imports as has exclusive service
assembled in China [viz. through stores and
TABLETS number of tablets centres in main cities;
Lenovo India imports tablets e-commerce
assembled in India is Lenovo service centres
produced in China; Apple • Hardly any export
very low) present across India)
iPads are also imported] opportunities (as
very limited tablets
assembled in the
country)
• Low presence in pre- • P&C are largely • Very limited level of • Domestic sales' volume • High presence of
manufacturing activities imported (but as assembly activities lower than that of service centres (viz.
within India laptops hardly smartphones HP has service centres
• Top players import laptops,
assembled in India, in more than 150
• But certain prominent usually assembled in Brands manage sales
so import bills remain cities; Lenovo service
brands recently China [viz. Lenovo India through stores and
LAPTOPS lower) centres present across
established centres in imports laptops produced e-commerce
India)
India (viz. HP has a lab in China (Lenovo’s plant • Very low exports (due
and Print R&D centre in in Pondicherry produces to assembling of very
Bangalore) PCs and not Laptops); HP limited laptops in India)
laptops available in India are
also Made in China]
III. DECOUPLING OPPORTUNITIES
AND CHALLENGES
3.1 Decoupling by India and Opportunities
For India, policy considerations aimed at decoupling to USD 63 billion during 2017, before declining to
from China has not been a new phenomenon. Since USD 49 billion in 2019xl; however, it still remains huge.
2009-10, India had embarked upon countable Nevertheless, some decoupling trends in India also
opportunities (Figure 3.1) for overcoming large imports became visible in 2019/20 (Box 3.1), mainly owing to
from China. Illustratively, India’s trade deficit with China the pandemic which is perceived as an opportunity for
stood at USD 49 billion during 2015, which increased growth of manufacturing.
Figure 3.1: Opportunities for India to decouple over the yearsxli
• Aimed at moving towards self-reliance & expanding India’s

manufacturing sector’s share in country’s GDP to 25% by 2022
Enactment of NMP 2011
& Make in India 2014 • Emphasis was also to foster innovation and development in IT
• Make in India allowed 100% FDI in ESDM via automatic route
• Top Indian sectors that could have benefitted that time were anticipated
as electronics, ICT, machine tools and pharmaceuticals; however, trade
diversification effects during first-half of 2019 were very high for Taiwan,
US China Trade War of Mexico, EU and Vietnam, but not for India
2018
• India’s less integration into GVCs as compared to China has been one of
the major reasons; India’s weak domestic investment environment also
made difficult to attract FDI into its manufacturing
• GoI announced ‘Atma-Nirbhar’ Bharat scheme during May 2020, entailing

an economic package of INR 20 lakh crores; Five pillars are outlined as
COVID -19 Pandemic “Economy, Infrastructure, System, Vibrant Demography and Demand”
• Importantly, new schemes launched in 2020, ie, PLI, SPECS, EMC and
RoDTEP, to support production and exports of Indian electronic items
Box 3.1: India’s Decoupling from China – Some key Evidencesxlii
• During 2020, Foxconn, Pegatron and Wistron got approvals under India’s PLI scheme
• Korea-based Samsung closed its production unit in China during 2019 and is expanding its
production facility in India
• China-based Oppo expanded its production in India from 15 million in 2018 to 50 million in 2019
39
Using case of top ten countries for India’s imports there was no great decoupling trend in 2020 as was
of HS 85 (during 2019-20), the Study comprehends anticipated for electronics industry (when ‘imports by
decoupling trends during pandemic. Figure 3.2 stipulates India’ is used as the criterion).
remarkable reduction in India’s imports of electronic First, decoupling may not be immediately feasible
goods from China, as well as from neighboring countries at large scale due to heavy dependence on Chinese
viz. Hong Kong, during early months of 2020 mainly goods over so many years and due to much lower size
in February’20. However, imports of Chinese goods of Indian electronics industry. Second, there could
doubled July onwards – probably due to China’s fast be possibility that India may have been importing
recovery in exports since June and Q3 of 2020. In Chinese goods (which may not be Chinese-labeled)
fact, globally, recoveries in trade in the field of electrical from neighboring Asian economies (while reducing
machinery and communication equipment were faster its import dependence from China and opting for
during July-August 2020 (1 and 8 percentage change alternative countries). As an instance, similar case can
on y-o-y basis, respectively) as compared to that during be highlighted from a study (Veen & Mechelen, 2020),
Q2 of 2020 (when change was negative and/or nil)xliii. where US imports from Vietnam almost doubled during
However, after continuous decline during lockdown, 2019, but there were actually the imports of relabeled
India’s growth in exports recovered in September 2020 Chinese manufactured goods.
(6-percentage change y-o-y basis as compared to -12.6 At global level, trade recoveries in case of machinery,
during August). Imports also displayed sign of revival office and communication equipment also became faster
during September 2020 (-19.6% change y-o-y as during Q1 of 2021 (growth of 23%, 37% and 38% y-o-y
compared -26 in previous month) mainly owing to upgrade basis, respectively, relative to Q1 of 2020)xlv. Along with
in demand, as reflected in greater imports of goods other this, China’s growth in exports of goods [worth 20%
than POL, gold and silver. Similar pattern is also observed change (in relation to the average of 2020) and 25%
in India’s electronic imports from China during this period. change (in relation to the average of 2019)] became the
Interestingly, India’s imports from other Asian countries driving force in rebounding of world trade. This reiterates
remained quite stable yet rising especially post mid-2020, continuous dependence of many countries on Chinese
mainly with Hong Kong, Singapore and US. items even after the first wave of the pandemic.
Note that India witnessed some fast diversion from However, India’s imports of electronics goods mainly
China during February-April 2020 for smartphones of smartphones and PCs, even from China, witnessed
(Table 3.1), while its imports from other Asian countries decline in early months of 2021 – but this may also
increased. There was a small diversion from China in corroborate with the rising production trends at home in
case of PCs (84713010) during that time. Overall, India after much easing out of lockdown restrictions.
Figure 3.2: Some Decoupling Trends (reduced imports by India from China of electronics goods)
Source: Own Calculations based on the Export-Import Data Bank, DoC, Government of India
40
Table 3.1: India’s Imports of Smartphones & PCs/Laptops from Different Countries (USD Million)
SMARTPHONES
Cty Dec’19 Feb’20 Apr’20 June’20 Aug’20 Oct’20 Dec’20 Mar’21
Ch 62.12 0.45 10.95 177.17 70.96 237.37 100.03 34.22
Grm 0.01 0 0.01 0 0
HK 3.27 0.05 0.79 17.92 51.60 66.53 1.29 0.13
Jp 0.02 0.03 0
Kr 1.14 0.01 1.87 0.56 1.02 19.13 1.76 6.45
Sgp 3.26 0.11 2.66 5.11 3.45
US 0.03 0.03 1.07 0.44 0.52 0.07 0.03
Vtn 43.08 94.37 11.13 17.2 4.80 11.93
PCs/LAPTOPS
Cty Dec’19 Feb’20 Apr’20 June’20 Aug’20 Oct’20 Dec’20 Mar’21
Ch 195.38 75.91 120.93 174.47 298.84 364.75 335.59 353.08
Grm 0.01 0.1 0.05 0.17 0.05 0.32 0.59
HK 35.2 10.99 25.96 37.22 65.00 43.8 74.46 68.93
Jp 0.23 0.23 0.05 0.08 0.10 0.33
Kr 0.17 0.04 0.01 0.64 0.13 0.07
Mly 4.00 4.10 1.38 5.35 4.92 5.30 5.28 5.80
Sgp 14.91 12.93 20.01 29.08 36.36 38.38 45.26 28.36
Th 0 0.01
USA 0.40 0.36 2.53 1.42 0.53 0.39 0.82 0.38
Vtn 0.11 0 1.14
Source: Own Calculations, Export-Import Data Bank, DoC, Government of India (*Note- Ch – China; Jp - Japan; Kr – Korea; Sgp-Singapore;
Grm-Germany; HK-Hong Kong; Mly-Malaysia; Vtn-Vietnam; Th-Thailand)
The Study also assesses ‘Potential decoupling from potentially take place. Alternative importing partners for
China’: i) where India’s global export unit costs for that India have been identified as Hong Kong, Singapore
product is lower than its import unit values from China for and Malaysia, as well as Japan, Korea and Vietnam (as
that product, plus (ii) where India has lower import unit per the items). However, this list is indicative only based
values from more than 3 countries (other than China) on unit costs, as quality and quantity of electronic goods
as compared to unit costs from China. This uses simple being imported by India from alternative locations may not
concept of ‘import unit values/costs’ which is equal to be comparable to those available from China.
(Import Value)*(1+Tariff)/ (Import Volume), calculated Also, decoupling need not to be be limited only to
as average of 3 years (2017-18 to 2019-20). Analysis reducing imports of China (as has been the commonly
is done for imports by India from same 10 countries. perceived policy stance since US-China trade war), but
Export unit cost (EOU) based on gross exports is used also may require reducing excessive reliance on foreign
as a proxy for India’s domestic production cost. Potential technologies/products, providing more governmental
items are given in Table 3.2, mainly smartphones, parts support for domestic industries, as well as maintaining
of ICs, and TVs. In 2020, there has been an initiative competitive share in GVCs (as has been the objective of
of putting ceiling on imports of colour TVs (allowed till China’s ‘Dual Circulation’ Strategy of 2021-25). In short,
INR 600- 700 crores each month ), which has emerged the term ‘decoupling dependence’ must be redefined in
as one of the main items where higher decoupling can the Indian context, in terms of both trade and investments.
Table 3.2: Potential Decoupling from China in certain Electronics Items which may be more profitable for India
while importing from Alternative Locations (as highlighted)
HS Code India’s Import Unit Cost from EOU

Items Ch Jp US Kr Sgp Grm HK Mly Vtn Th (India)
84433910
4.61 9.11 2.91 72.67 2.66 4.83 2.39 1.00 1.13
Ink-jet printing machinery
84439951
Ink cartridges with print 0.06 0.01 0.36 0.01 0.20 0.01 0.03 0.01
head assembly
41
84439952
Ink cartridges without print 0.08 0.02 0.28 0.02 0.12 0.01 0.02 0.03 0.04 0.02
head assembly
84717020
0.05 0.08 0.02 0.03 0.06 0.24 0.03 0.04 0.08 0.05 0.04
Hard disc drives
84717030
0.09 0.01 0.07 0.13 0.09 0.03 0.04 0.08 0.07 0.09 0.08
Removal disc drives
84717040
1.07 3.08 0.28 1.00 1.38 1.50 0.17 0.13 0.27 0.64
Magnetic tape drives
85042200
Liquid dielectric
transformers with power 13.72 8.00 7.19 15.00 0.25 114.40 9.90 7.00 12.98
handling >650 KVA
but<=10000 KVA
85165000
0.24 1.92 3.90 0.17 0.06 2.00 0.23 0.08 0.06 0.08
Microwave ovens
85171290
0.48 0.66 0.18 0.37 0.15 0.55 0.10 0.12 0.07 0.06 0.09
Smart phone
85176100
8.97 22.92 7.56 6.25 0.22 0.68 2.25 1.00 0.30 0.62
Base stations
85177090
0.43 0.33 0.73 0.11 0.24 0.59 0.14 0.18 0.08 0.34 0.05
Parts of phone (display)
85235100
Solid-state non-volatile 0.03 0.01 0.91 0.01 0.02 0.32 0.005 0.005 0.03 0.01 0.02
storage devices
85258030
1.08 0.71 0.54 0.04 0.56 0.96 0.73 0.14 1.06 0.32
Video camera recorders
85269200
Other radio remote control 0.06 0.05 0.08 0.01 0.01 0.09 0.01 0.04 0.01 0.01 0.02
apparatus
85272100
Radio broadcast receivers 0.14 0.12 2.67 0.10 0.05 2.10 0.03 0.22 0.22 0.09 0.06
with recording apparatus
85272900
0.08 0.11 1.34 0.12 0.01 0.52 0.06 0.28 0.19 0.07 0.04
radio-telephone
85287100
Other reception apparatus 0.08 1.55 0.16 0.02 0.02 0.17 0.03 0.01 0.02 0.02 0.07
for Colour TV etc.
85287211
Colour TV set of screen 0.55 7.90 0.26 1.60 0.02 0.15 0.02 0.09
size up to 36 cm
85287213
Colour TV set of screen 0.35 0.10 1.06 1.88 0.11 0.11 0.70 0.03 0.08
size between 54 & 68 cm
85287219
0.64 1.77 6.13 0.70 0.86 6.74 0.17 0.24 0.25 0.03 0.16
Other LCD TV set
85287310
LCD TV set of screen size 0.34 0.34 0.21 0.14 0.22 0.27
below 25cm
85299020
Parts for radio 0.01 0.003 0.04 0.36 0.001 0.001 0.003 0.00
communication equipment
85371000
Boards etc. for a 0.13 0.08 0.34 0.03 0.05 0.35 0.25 0.12 0.06 0.06 0.02
voltage<=1000
85381090
Boards, panels, consoles 0.05 0.03 0.63 0.03 0.06 0.26 0.08 0.04 0.03 0.08 0.01
etc. for other use
85429000
Parts of electronic
1.18 0.07 0.14 0.09 0.15 0.18 0.13 0.15 0.10 0.11
integrated circuits and
micro assemblies
85437069
0.23 0.19 0.99 0.02 0.14 0.19 0.001 0.37 0.04
Amplifier
Source: Data calculated using Export-Import Data Bank, DoC, Government of India
42
In terms of opportunities, the most palpable shift is from particularly for mobile phones. That is, there are encouraging
an overtly import-substituting positioning to one that signs that India’s trade policy may be decisively shifting
recognises the importance of an export-oriented thrust towards greater export promotion (Box 3.2).
Box 3.2: Renewed emphasis on export promotion?

While India has been a strong advocate of free and fair trade, its trade policy at times has been a surprising mix
of measures aimed at both export promotion and import substitution. Lessons from India’s own experience as
well as experience of other countries show that these two goals are not always compatible – it’s hard to promote
exports while at the same time trying to substitute imports, especially if the substitution includes intermediary
inputs. There are some signs that the stance may finally be shifting towards greater export promotion.
For example, Prime Minister Modi recently emphasized the need to expand exports as part of his ‘Make in India
for the World’ campaign and to develop sector-wise champions for GVCs. In his speech on August 6, 2021,
he mentioned four interesting aspects of the new stance: (i) manufacturing has to be qualitatively competitive
(rather than just price-based); (ii) there is a need to remove problems of transportation and logistics, where
Centre, States and private stakeholders will have to work in partnership; (iii) the government (including State
government/Export Councils) should work in close collaboration with the exporters; and (iv) the international
market must be expanded for the Indian products. He specifically stated, “Considering the size of our economy
and potential, our manufacturing and service industry base, there is tremendous potential for export growth”,
thereby citing opportunities to strengthen exports to the existing partners and to venture out into the new regions.
3.2 Central Policies and Schemes

National Policy on Electronics (NPE)-12 projected with CAGR of 23% since 2014-15, and thus the targets
domestic manufacturing’s turnover to be USD 400 envisaged by NPE-12 still seemed far to be achievable.
billion by 2020, given expectation of rise in demand for NPE-19 document, however, accordingly extended
electronic items due to income effects, rising automation, the turnover target to 2025 (Box 3.3) to transit towards
e-governance process, etc. However, at that time itself, exports expansion. Several NPE-based schemes have
even industry bodies like ICEA criticized it for wrong been introduced (Table 3.3).
projections and their likely prospects to boost import- Importantly, industry representatives presented the
substitution. Illustratively, with a turnover USD 45 billion framework in April 2020 of ‘Restart, Restore and
during 2008-09, India’s potential was to meet only USD Resurgence’ to capture higher share in global markets
100 billion demand by 2020. in ESDM, building on the success of mobile phone
In fact, India’s production of electronics hardware handsets’ production and exportsxlvii. Its progress can be
became just about USD 75.7 billion during 2019-20, gauged as lockdown restriction eases up.
Box 3.3: NPE as an Overarching Policy for Holistic Development of Indian Electronicsxlviii
NPE 2012
• Game changer to strengthen domestic manufacturing along complete ESDM value chain by involving local procurement of
raw materials and inputs and set the base for gaining competitiveness at the global level
• Highlighted challenges as well as India’s growing role as host for chip designing – suggested strategies to capture
success in value chains at product development level (viz. creating Semiconductor Wafer Fab)
• Special focus on promoting R&D activities and setting up innovative ecosystem to support production of key components,
sub-assemblies & finished products, and on development of sound IP system (encouraged in NPE-19)
NPE 2019
• An eye-opener that marked concern over competition with number of MNCs coming into India, making it imperative to
develop strength in core areas of technologies (design and manufacturing, IP/standards development) and to generate
extra capacities for Semiconductor and display Fabrication activities
• High importance given to manufacturing and exports of mobile phones in its overall strategy: Goals for 2025 cover
production of 1 billion (100 crore) mobile handsets (worth USD 190 billion) – out of which, 600 million handsets (worth
USD 110 billion) for exports, rest (worth USD 80 billion) for domestic needs
• Industry-led R&D system to be fueled by industrial revolution and digitalisation that will include promoting start-ups and
innovations at grassroot level, even in advanced areas of 5G, AI, Machine Learning (ML), Virtual Reality, robotics, IoT,
additive manufacturing, nano technology, etc.
• Stressed upon higher DVA & lower allowance for imports, as well as on proper utilisation of skills, technologies, and on
scalability in international space; targeted to stimulate India’s linkages into GVCs and export-led growth
Both emphasized on gaining a large share of the pie for India in Electronic Manufacturing Services (EMS), which has been slated
as upcoming segment due to rising outsourcing of designing and engineering tasks to EMS companies (who also integrate final
system, provide logistical help, etc.)
While NPE-12 was focused more on indigenous manufacturing, NPE-19 in particular stressed on certain activities in this area,
viz., design and assembly of PCB, testing, after-sales services, etc.
43
Other initiatives included Preferential Market Access Coin/Disc-Operated Record Players, Pick-Up Cartridge,
(PMA) Policy of 2013, which gave more preferences Walkie Talkie Set, Video Camera Recorders, Colour TV
to domestically produced items (desktop, laptop Set of Screen Size up to 36 cm and between 54 and 68
and tablets, Dot Matrix Printers, LED, etc.) in public cm and Between 74 and 87 cm, Relays for Voltage not
procurementxlix. Subsequently, more items have been exceeding 60 V, Cathode-Ray Tubes and parts, Metal
notified under the Public Procurement (Preference to Detector, pocket watches, etc. – many of these have
Make in India) Order of 2017 i.e., Biometric Access been identified as potential items in Table 3.2.
Control/ Authentication Devices, Fingerprint Sensors, Electronics Sector Skills Council of India (ESSCI) has
and Iris Sensors, Servers as well as mobile phones.l also been playing a vital role, even during pandemic,
Here is the list of electronic items, whose exports have in creating more jobs and skills. Some of initiatives in
increased continuously since 2017-18 to 2019-20 but 2020 included training on “Remote Based Customer
imports have declined: Dot Matrix Printer, Ink Jet Printer, care services” for various CE and IT Hardware Services,
Ink Cartridges Without Print Head Assembly, Electronic Micro entrepreneurship [Digital Home Technician, VLE
Calculators (Excl. External Pocket-Size), Graphic Printer, (WiFi & Broadband services/Solar & LED)], training
Battery Chargers/Rectifier, Line telephone sets- in IoT, AI/ML for Hardware Engineers and Smart
cordless, Smart Phone, Telecom Equipment for Voice Manufacturing, provision of online project internships
Communication, Routers, Loaded or Stuffed PCBs, and so on.
Table 3.3: Central Schemes for Indian Electronics Industry (2012-21)li
MSIPS 2012
To overcome cost disabilities, limited access to finance, & infrastructural issues related to both domestic and foreign
investments into industry (specifically for nano-electronics & telecom products, IT hardware, consumer electronics, etc.)
• Capital subsidy of 20% for investments in SEZs and 25% in non-SEZs for promoting large scale manufacturing
• Modified in 2017 to give incentives over 5 years from date of approval of the project (instead of 10 years)
Status/Progress (as on 31 December’ 2020)
351 proposals received for investments more than INR 1 lakh crores; approvals given to 286 applicants with investments of
around INR 79951 crores (stupendous rise from just 33 in 2014-15 with investment worth INR 7213 crores); 188 units started
production for commercial purposes (turnover of INR 216090 crores; exports as INR 36146 crores; revenue to GoI of INR
29777 crores; & employment to over 1 lakh persons)
MSIPS quite successful in promoting investments (especially for mobile phones); but, most investments
mainly entered into low value-added arenas rather than into PCBs, semiconductors, microprocessors,
ATMP, etc., raising concerns over the continuation of the scheme; MSIPS discontinued on 31st December
2018 for new applications
MEIS 2015
Policy for entire manufacturing but with electronics as focus area to promote exports and counterbalance effects of
inefficiencies and costs of exports – Provided incentives as duty scrips (2% and 5%) of the FOB value of the exports
• In 2017, incentives on mobile phone exports increased from 2% to 4%; and 2% on exports of components like charger/
adapter, battery packs and wired headset; Reversed to 2% for mobiles with effect from 1st January, 2020
Status/Progress
Decline in allocations to the cap of INR 2 Crore per exporter during 2020; Online module not available since July 2020;
Incentives questioned in WTO: way to design alternative WTO-compliant export promotion policies
EMC 2012 and Modified EMC 2020 (April)

Most successful scheme where contribution of States remain significant; Useful to create necessary infrastructure for
improving entire ecosystem and value chains in electronics industry and for supporting exports
• EMC 2012: Greenfield EMCs – financial assistance of 50% of the project cost related to a ceiling of INR 50 crores per 100
acres of land. Brownfield EMCs – assistance is 75% of the project costs (infrastructure) with respect to ceiling of INR 50
crores per project
• EMC 2020: EMC Projects – financial assistance of 50% of the project cost subject to a ceiling of INR 70 crores per 100
acres of land. Common Facility Centres – assistance is 75% of the project costs subject to a ceiling of INR 75 crores per
project; EMC 2.0 has a more efficient mechanism for releasing funds in three instalments, unlike EMC 1.0
Status till December’ 2020
Out of total 50 Applications, Approval of 19 Greenfield EMCs and 3 Common Facility Centers (CFCs) over an area of 3464
acres (project cost being INR 3743 crores & grant-in aid as INR 1527 crores from MeitY); Expected to get investment of
Rs.52000 crore with jobs for over 6.3 lakh persons.
227 units got booked (for more than 900 acres) for setting up production factories in EMCs (from just 22 in 2015-16 and
95 during 2017-18) – 33 units started production with investments of INR 5100 crores (generating jobs for more than 17910
persons)
44
PMP (notified in April 2017)
Vision similar to NMP 2011 & Make in India 2014 but more focused to increase the manufacturing of mobile phones and
components in particular; More as import substitution strategy
• Aimed to promote indigenous manufacture of cellular phones and parts (which were largely imported) through incentives;
PMP targets production of 1200 million mobile handsets valued at approximately USD 230 billion and exports worth USD
150 billion by 2025-26
• Follows a step wise road map of production to progressively increase DVA:
Phase 1 – chargers, adapters, battery pack, wired headset (2016-2017)
Phase 2 – Mechanics, Die-cut parts, Keypad, USB cable, Microphone and receiver (2017-2018)
Phase 3 – PCBA, camera modules and connectors (2018-2019)
Last Phase – Manufacture of touch panel/cover glass assembly, display system, vibrator motor (2019-2020)
Status/Progress
Production of mobile phone handsets increased with shift from SKD to CKD level
Delay in implementation of Phase 4 in terms of imposition of import duties owing to the issues (viz. more time requirement)
while setting up of manufacturing facilities for touch panel or display assembly, etc.
SPECS 2020 (April)

Scheme more like the MSIPS, but limited to only benefit the electronic components and semiconductors segments; Aims
to counterbalance disabilities while manufacturing these in order to strengthen electronics ecosystem:
• Incentive of 25% on capital expenditure for electronic components, semiconductor fabrication units, PCBs, ATMP units,
specialized sub-assemblies and capital goods used in manufacturing so as to achieve high value-added
• Incentive on Capital expenditure (including total expenditure on plants, equipment, technology, R&D) – applicable for 5 years
from date of acknowledgement of application
• States/UTs may contribute over and above the 25% already provided by the Centre
Status/Progress
Expected to initiate transition from an assembler to the manufacturer of parts of electronics; By mid-2020, Scheme received
applications from 22 companies (investment about INR 13,500 crores) for segments of active, passive and electromechanical
components, displays and mechanics for mobile phones.
RoDTEP (Notified in January 2021)

Applicable for all manufacturing/exporting sectors; As there are no direct incentives on exports, so treated as WTO compliant
(but not as complete replacement to MEIS); Aims to bring Indian manufacturers/exporters at par with international ones
• To reimburse taxes, duties to the exporters not covered under any pre-existing scheme, under GST, or as refund on exports
(viz., VAT on fuel used in transportation of goods for exports, including Central/State taxes on petrol, diesel, coal cess, etc.,
Mandi tax by APMCs, Duty on electricity utilised while manufacturing items, etc.); Incentives are: (i) In the form of transferable
duty credit or electronic scrip to be maintained in electronic credit ; (ii) Digital refund to exporters of the reimbursable taxes
and duties levied by the government
Status/Progress: Rates are yet to be notified for electronics industry – though expected to be low
PLI for Large Scale Electronics Manufacturing 2020 (April)

Preferred Export led growth scheme unlike import substitution based PMP; Incentives on sales instead of exports, thus
WTO complaint to serve as potential alternative to MEIS; Scheme to support Make in India
Provide financial incentives for boosting domestic manufacturing & attracting profitable investments (domestic & foreign):
• For mobile phones and specified electronic components (SEC) including SMT, passive components, PCBs, micro/nano-
electronic components, sensors and ATMP units, discrete semiconductor devices
• Incentives in range of 4% to 6% on incremental sales of goods manufactured in India applicable for 5 years following the
base FY (2019-20)
Domestic value addition of mobile phones projected to rise to 35-40% range (from 15-20%), and to 45-50% range in case
of SEC; and production to rise over INR 10.5 lakh crores by 2025 and exports around INR 6.5 lakh crores - 22 companies
(Indian and foreign ones) filed application by Jul’20, while 16 got final approval during October’20
PLI for IT Hardware 2021 (March)

Scheme guided by significant investment-based success of PLI in case of mobile handsets and components manufacturing
Provide financial incentives for boosting domestic manufacturing & attracting large investments in value chains:
• For Laptops, Tablets, All-in-One Personal Computers (PCs) and Servers
• Incentives in range of 4% to 2%/1% on incremental sales for goods manufactured in India applicable for 4 years following
the base FY (2019-20)
Domestic value addition expected to rise to 25-30% (from 10-15%); production expected to rise over INR 1.6 lakh crores by
2025 and exports around 0.6 lakh crores; Projected additional investment of INR 2517 crore – 19 companies (Domestic and
IT Hardware companies) filed applications by April’21, while 14 got final approval during July’21
45
Table 3.4: Electronic P&C covered under PMP (Phase-wise) – Trade Trends (USD Million)
Products under PMP India’s Exports India’s Imports

Products (per phase) HS Code 2017-18 2018-19 2019-20 2017-18 2018-19 2019-20
2016-17 Phase
Charger/Adapter 85044030 122.34 236.48 471.81 91.24 68.63 50.41
Battery Pack 85076000 5.49 6.43 9.68 547.6 1,225.87 1,246.22
Wired Headset 85183000 2.85 9.87 5.82 242.63 282.48 312.43
2017-18 Phase
Mechanics
Battery Cover
Front Cover
Front cover with zinc
casting
Middle cover
39209999 19.02 26.03 28.47 108.16 386.75 375.7
GSM Antenna/Antenna
of any technology
Main lens
Camera Lens
Back cover
Side Key 85389000 441.11 440.6 438.72 589.36 632.49 575.02
Screw 73181500 266.08 302.27 293.35 410.46 453.06 374.01
Mic rubber case
Sensor rubber case/ 40169990 184.33 165.64 141.68 169.26 174.8 155.83
sealing gasket
PU case/sealing gasket 39269091 0.47 0.47 1.12 4.28 3.75 5.95
Sealing gaskets/ cases
from PE, PP, EPS, PC
and other polymers
39269099 291.19 322.73 319.14 708.65 649.4 702.38
SIM Socket/other
mechanical items
(plastic)
SIM Socket/other
mechanical items 73269099 724.34 761.41 707.83 511.75 728.49 652.62
(metal)
Die Cut Parts
Conductive Cloth
LCD Conductive foam
LCD Foam 39269099 291.19 322.73 319.14 708.65 649.4 702.38
BT Foam
Keypad
Heat dissipation sticker
battery cover
Sticker battery slot
Protective film for main 39199090 30.6 60.05 63.36 315.6 372.49 380.62
lens
Mylar for LCD, FPC
Film front flash
Microphone and
85181000 10.9 13.02 3.43 40.18 61.89 70.34
receiver
USB Cable 85444999 49.37 70.25 72.89 253.37 250.35 218.24
46
2018-19 Phase
PCBA 85177010 44.37 73.11 145.87 4,855.72 2,120.72 699.73
85258020 29.83 39.58 35.24 348.19 595.31 905.69
Camera module
85258090 25.46 27.29 20.02 592.58 883.04 1,336.61
Connectors 85366990 36.75 38.04 32.43 220.82 230.53 244.47
2019-20 Phase
Display Assembly
Touch Panel/Cover
85177090 214.08 185.63 158.68 6,707.40 6,591.96 7,225.35
glass assembly
Vibrator motor/ringer
Source: Data from Export-Import Data Bank, DoC, Government of India
Score-card of PMP: All electronics P&Cs directly which resulted in production delays (including those
covered under the PMP did not experience continuously while installing relocated plant and machinery).
increasing exports or continuously decreasing imports
simultaneously. However, three items namely Charger/ There were acute shortages in the availability of chips
Adapter, PCBA and USB Cables seem to have benefitted after September 2021, and in fact, the suppliers censored
the most (Table 3.4). supplies to Indian companies by 97% in certain cases.
Further, slowed process of issuance of business visas
Progress of PLI has been commendable, but in November 2020 for international technicians, who
the pandemic has led to several challenges in are key to getting the production lines started, impacted
the short termlii: On August 1, 2020, the Government the setting up of assembly lines. Finally, PLI smartphone
announced filing of applications by 22 companies. manufacturing factories have been concentrated in the
Under the mobile phone vertical – Samsung from States of Andhra Pradesh, Karnataka, Tamil Nadu and
South Korea, Rising Star, Wistron, Foxconn Hon Hai Uttar Pradesh, which were among the worst-hit during the
and Pegatron from Taiwan applied. These international first wave of COVID and among the top 10 States with
firms have been given approval in October 2020 under maximum caseload, as reported during October 2020.
segment of mobile handsets with an invoice value of
INR 15,000 or more. As the global companies are said In light of high investments already on the ground by
to have more than 60% global market share for mobile March 2021 and to cater to the requests by companies
phones, their involvement in Indian manufacturing is and ICEA to declare FY 2020-21 as the ‘Zero Year’ of
anticipated to boost production at a rapid speed. Among Preparation for Smartphone-based PLI, Government of
Indian manufacturing firms, the approved ones include India made an announcement on 28th June 2021 to
Lava, Bhagwati (Micromax), Padget Electronics, UTL extend the scheme by a year, i.e., until 2025-26, where
Neolyncs, Optiemus Electronics (applications by Dixon applicant companies can select any of the five years to
Technologies and Sojo Manufacturing Services were meet their production targets. As per the announcement,
rejected). Under the Components Segment of PLI, all the investments made during 2020-21 will also be
10 companies have applied to avail the benefits of treated as eligible ones.liii
the scheme – 6 got approval, namely, Ascent circuits,
Neolync, AT&S, Visicon, Walsin and Sahasra (excluding Interestingly, since November 2020, PLI has also been
Vitesco, ASIP, SFO Technologies). extended to other segments including telecom items
and white goods like ACs and LED. PLI has also been
During first 5 months of PLI scheme (August-December approved for IT hardware for laptops, PCs, servers and
2020), the companies were able to produce products tablets in March 2021 (given India's 95 percent imports
worth INR 35000 crores, along with investments of INR of laptops and tablets from China), with the estimated
1300 crores. Around 22,000 jobs were created during target for production of about INR 1.6 lakh crores, and
this time, equivalent to 10% of the 5-year target for for exports of INR 0.6 lakh crores over the next 4 years.
direct jobs (leaving apart the expected level of trebled This new scheme received a total of 19 applications till
indirect jobs). Further, in the quarter ending March 2021, April 2021.
PLI applicants together had invested close to the 25%
mark as enshrined in the PLI investment targets. In fact, Prime Minister Modi, in his Speech on 6th August
2021liv, has applauded the scheme by stating that
In fact, the road for PLI Scheme has not been very “Production Linked Incentive Scheme will not only help
smooth. Firstly, the year 2020 has been an abnormal in increasing the scale of our manufacturing but also
year, hit by pandemic based lockdown, due to which most increase the level of global quality and efficiency”.
of the companies failed to achieve the targets for year 1
in case of mobile phones (i.e. incremental sales of INR Finally, amidst all policy initiatives, the consistent rise
4000 crores over base year by international companies in custom duties in every budget has been one of the
and of INR 500 crores over base year by domestic major areas of consideration especially since PMP (see
companies). Pandemic related restrictions led to ban of Table 3.5): As revenue collections from custom tariffs
international flights, limitation on personnel movements, have declined for entire Indian economy (electronics’
cancellation of orders for equipment and machinery, etc. product-wise revenue information could not be obtained),
47
this could also indicate caution while moving ahead with Further, most of the policy initiatives which delved on
greater rise in BCD. Tariff are meant to discourage import substitution since 2017 were erroneously thought
imports; but in order to participate in the GVCs, the to help domestic value added (DVA) content or linkages
aim should be to gain more competitiveness through into GVCs, but how much of it is actually happening is
large scale exports. Moreover, the incentives become still to be measured – this requires better reporting of
unattractive in the face of parallel increase in tariffs. latest data.
Table 3.5: Cases of Rise in BCD in Indian Electronics and its Revenue Collectionlv
(*Capital goods used for manufacturing of PCBA, camera module, charger of mobile phones – tariff changed
from applicable rates to nil in 2019-20)
Items 2016-17 2017-18 2018-19 2019-20 2020-21
BCD (%) and Changes in Imports (Values in USD Million)

Unchanged on
phones, but reduced
Cellular mobile 20 + 10 service
10 15 20 on camera modules,
phones welfare cess
charger and adapter
of mobile phones*
Imports (HS 851712) 3,787.96 3,537.29 1,616.48 1,037.10 691.35
PCBA of and
moulded plastics of
Nil 10 20
charger/adapter of
mobile phones
Imports of PCBA
288.93 318.37 456.48 461.86 84.18
(85049090)
Imports of Moulded 184.37
Plastics (HS 702.15 708.65 649.41 702.38
39269099)
LCD/ LED/OLED TV
Nil 7.5/10 15 - -
Panel and parts
HS 85291099
8.30 8.32 17.08 19.89 10.20
(Imports)
HS 85299090
1271.58 1354.02 1312.69 1317.06 338.90
(Imports)
CCTV camera and IP
Nil 15
camera
Imports (HS 852580) 695.30 1,009.53 1,544.59 2,292.84 387.57
Smart watches/
wearable electronic 10 20
devices
Imports HS 85176290 2387.86 4092.50 5336.11 3052.86 925.44
Revenue Collected from Customs - mainly BCD (Values in INR Crores)
Centre’s Total Tax
1101372 1242488 1317211 1504587 1635909
Revenue
Total Import Duties 222336 128636 115666 123335 135130
BCD 64584 80755 104783 110445 124000
Total Customs 225370 129030 117813 125000 138000
Customs as share of
20.5 10.4 8.9 8.3 8.4
tax revenue (%)
BCD as % of Customs 28.7 62.6 88.9 88.4 89.9
Findings from analysis of Central Schemes launched subsidy. The coverage of segments for SPECS is
during 2020: (i) The beneficiary segments under wider-electronics, whereas PLI Scheme is for mobiles
PLI and SPECS may appear to overlap; however, the handsets over INR 15,000. (ii) Capital subsidies is not
incentives under the schemes differ as PLI offers found to be very fruitful in increasing productivity or
output-based incentives, whereas SPECS offers Capex exports (as per existing literature). (iii) With PLI in action
48
to lead towards fresh era in mobile phones’ growth in Laptops, Tablets, All in one PCs and Servers). Dedicated
India, duty differential under the PMP may be obsolete policies for CE segment such as TVs, washing machines,
to achieve the objectives of increasing the domestic refrigerators, etc. remain missing which affect growth
value content. (iv) Most of the recent policy initiatives of its domestic ecosystem and exports. Scope of PLI
have been focused on mobile phones and their parts, should be extended to all the consumer electronics and
electronic components, and IT Hardware (such as their parts too.
3.3 States’ Electronics Policies

Even prior to NPE-12, some States such as and IT policy after launch of NPE. Interestingly, States
Karnataka, Tamil Nadu and Uttar Pradesh had already with electronics-specific policies have larger number
strengthened their foundations in ESDM, though they of engineering colleges, reflecting better vision for
lacked focused vision at that time. Importantly, there increasing industrial productivity along with creation
exists two main types of policies set-up (see table 3.6), of skills therein, as compared to those with broad IT
followed by specific sub-sector wise and Industrial policies (Table 3.7). This is because technical education
policies with some mandate on electronics. In fact, tends to play a vital role in creating the skilled workforce
sub-sector policies got merged into broad electronics required in ESDM sector.
Table 3.6: Classification of States’ Policies pertaining to Electronics Industry in India (with Time Validity)
States/UTs with electronics States with Electronics- States with specific States with
included in Broad IT policy Industry specific policy sub-sector policy Industrial policies
• Assam Information Technology and • Andhra Pradesh Electronics • Karnataka • Arunachal Pradesh
Electronic Policy (2017) [Valid till 2022] Policy (2020) [Valid till Semiconductor Policy State Industrial and
• Bihar ESDM Vision (2017) [Valid till 2025] (2010) [Subsumed by Investment Policy
2022] • Gujarat New Electronics ESDM 2013 Policy] (2020) [Valid till new
• Chandigarh Information Technology & Policy (2016) [Valid till • Madhya Pradesh policy is released]
Electronics Policy (2013) [Valid until 2021] Analogue • Punjab Industrial
new policy is released] • Karnataka ESDM policy Semiconductor and Business
• Chhattisgarh Electronics, IT and ITeS (2017) [Valid till 2022] Fabrication Development
Investment Policy (2014) [Valid till • Maharashtra Electronics Investment Policy Policy (2017) [Valid
2019] Policy (2016) [Valid till (2015) [Subsumed by until new policy is
• Dadra Nagar & Haveli and Daman & 2021] IT, ITeS, ESDM 2016 released]
Diu IT Policy (2019) [Valid till 2024] • Tamil Nadu Electronics policy] • Tamil Nadu Industrial
• Goa IT Policies (2018) [Valid till 2024] Hardware Manufacturing Policy 2021 [Valid till
• Haryana IT & ESDM Policy (2017) Policy (2020) 31.03.2025]
[Valid till new policy is released] • Telangana Electronic Policy
• Himachal Pradesh IT, ITeS and ESDM (2016) [Valid till 2021]
Policy (2019) [Valid till 2024] • Uttar Pradesh Electronics
• Jammu and Kashmir IT and ITeS Manufacturing Policy
Policy (2020) [Valid until new policy is (2020) [Valid till 2025]
released] • Andhra Pradesh Electronics
• Jharkhand IT and ITeS Policy (2016) Policy 2021-24 [Valid till
[Valid till 2021] 31.03.2024]
• Kerala ESDM & Hardware Policy IT • Karnataka Special
Policy (2017) [Valid till 2022] Incentives Scheme for
• Madhya Pradesh IT, ITeS & ESDM ESDM Sector (2020-25)
Investment Promotion Policy, (2016)
[Valid till 2021]
• Meghalaya IT policy (2004); IT Vision
2020 [Valid till 2035]
• Odisha ICT Policy (2014 – amended in
2019) [Valid till new policy is released]
• Rajasthan E-Governance IT & ITeS
Policy (2015) [Valid until new policy is
released]
• Sikkim Information Technology,
Electronics and Telecommunication
Policy (2020) [Valid till 2025]
• Tripura IT/ITeS Policy (2017) [Valid till
2022]
• Uttarakhand Information and
Communication Technology &
Electronics Policy (2016) [Valid till
2025]
• West Bengal Information Technology
and Electronics Policy (2018) [Valid
until new policy is released]
49
Table 3.7: Number of Engineering Colleges in States/UTs
Engineering Colleges in States/UTs with Engineering Colleges in States/UTs with Broad IT

Electronics-oriented Policies Policy (with section on electronics)
Tamil Nadu 991 Madhya Pradesh 271

Maharashtra 703 Kerala 240
Uttar Pradesh 628 West Bengal 225
Karnataka 480 Haryana 225
Andhra Pradesh 454 Bihar 122
Telangana 295 Chhattisgarh 87
Source: All India Council for Technical Education (AICTE) Approved Institutes, Academic Year 2019-2020
Some of the important incentives provided by the States financial incentives (for 10 years) of up to 5% on the
are capital subsidies, land subsidy, skill upgradation, annual incremental sales over and above the base year
tax rebates, and interest subsidies, etc. (Table 3.8 2021-22. Interestingly, Karnataka provides PLI for new
compares latest electronics policies of four progressing investments and expansions, i.e. 1% of annual turnover
states namely Karnataka, Uttar Pradesh, Tamil Nadu for 5 years, starting from the year of commercial
and Gujarat based on these factors). There have been operations, under Special Incentives scheme for ESDM
considerable efforts at States level to support the growth Sector (2020-25) – applicable to all those units covered
of this industry by giving subsidies. But, it is not yet known under this State’s ESDM Policy 2017-22. Tamil Nadu
whether incentives are actually leading to higher profits Government, on the other hand, provides the investors
or revenue to the industry in those States or leading to an option of turnover based subsidy (as a percentage of
more exports from India, as these subsidies mostly aim turnover in each financial year) up to 4% of cumulative
to mitigate the disabilities and challenges in the industry. investment in Eligible Fixed Assets for 10 years, along
Recently in 2020-21, few states have moved beyond just with a host of other incentives such as R&D training
the disability mitigation measures and offered incentives subsidy, interest subvention and IP creation incentives,
based on turnover or incremental sales. For instance, etc. (firms can choose incentives under Hardware policy
Andhra Pradesh has its own PLI Scheme for firms with 2020 or new Industrial Policy 2021: Table 3.8).
Table 3.8: Comparison of Various State Policies based on different incentives offeredlvi
Karnataka Karnataka Tamil Nadu Tamil Nadu Uttar Pradesh Gujarat Andhra
Electronics Electronics Industrial Electronics Electronics Pradesh
Special
System Hardware Policy 2021 Manufacturing Policy Electronics
Incentives
Design and Manufacturing (Special Policy 2020 2016-21 Policy
Scheme
Manufacturing Policy 2020 Incentives 2021-24
for ESDM
(ESDM) Policy for Sunrise
Sector
2017-22 Sector of
(2020-25)
ESDM)
Capital Subsidy
Up to 10% 25% on 15% to 25% of Additional 15% of 10% of Gross 20% of

capital subsidy, Land (areas Eligible Fixed capital subsidy Fixed Capital Fixed Capital Fixed Capital
up to a other than Assets (EFA) up to 7.5% of Investment (FCI) Investment Investment
maximum of urban/rural (depending on EFA as sunrise up to INR 200 (GFCI) for (FCI) up to
INR 10 Crores Bengaluru) up districts) for booster crore; 15% of ESDM units, INR 20 Crore
to registered to 50 acres investment in for Electronics
KESDM on actual range: INR 200 FCI between GFCI up to Rs. industries; 25
companies procurement Cr - INR 500 Cr; investment 10 crores; 5% % of FCI up to
cost; of INR 200 – of incremental INR 25 Crore
18% to 30% 1000 crores GFCI for for Electronics
20% on Plant of EFA for
(subject to ESDM units - industries
and Machinery investment >
maximum of above INR 10 categorized
INR 500 Cr
INR 150 crores crores as SC/ ST/
subsidy) BC/ Women
enterprises.
50
Land Subsidy
Reimbursement 100% 50% subsidy For SIPCOT 25% on - -

of land reimbursement on cost of projects- 10% prevailing rates
conversion of Land land- subject to concession (Madhyanchal &
fee- 75% for Conversion land cost not in rates Paschimanchal
Start-ups and Fee exceeding 20% (Category regions); 50%
MSMEs; 50% of EFA; subsidy
for Large cap at INR 2 Cr A and B in Bundelkhand
and Mega (for Private land districts); 50% & Purvanchal
enterprises holdings) for district C regions
for land up to
20% EFA;
50% for
private land in
district C (cap
of INR 2 Cr)
Power Subsidy
Industrial Power Power tariff Electricity tax Electricity tax 50% exemption Eligible ESDM Reimbursement
Tariff (instead reimbursement exemption for exemption of Electricity units to be of fixed power
of commercial of INR 1 per a period of 5 for 5 years Duty for a given 100 % cost for 5
power tariff) unit for 5 years from date if power maximum period reimbursement years since
to registered years, 100% of commercial purchased of 10 years to all for electricity commercial
KESDM from ESDM units duty paid for a production
companies exemption production TANGEDCO period of five commencement
& associated from electricity or consumed/ years; power date;
industries within duty for 5 generated tariff subsidy
years from --INR 1 per unit
the State from captive at rate of Re. 1 for electronics
date of sources per unit industries
commercial
production --INR 1.5
per unit for
electronics
industries
categorized
as SC/ ST/
BC/ Women
enterprises;
Power tariff at
rates of INR 4.5
per unit for firms
in greenfield
electronic
manufacturing
clusters.
Skill Upgradation
Yuva-Yuva - Target to skill - All ESDM units New 30 skill

Program to over 1,00,000 eligible for Scheme with development
meet plug-play persons per reimbursement customized centres and
talent needs of year for next of training courses: on- high end IT
ESDM sector; 4 years - Tamil stipend; UP Skill floor training skills university
Internet of Nadu Skill development for skill to be set
Things (IoT) Development Mission to development up; IT,E&C
Developers Corporation as be aligned in ESDM Department,
Skilling; Implementing with required sector, with Department
Internship Agency; skill sets for an internship of Skill
Platform Electronics program Development
Skill and training
for Talent Industry and industry to
centre to be
Development- to (supported by work together
established
benefit students budget allocated to create
within every
with diploma/ by MeitY) industry ready
green-field/
degree in talent pool
Brownfield
electronics EMC;
Unique skill
training subsidy
for women
provided
51
Tax Reimbursement
- - Refund of - Eligible 100%
input SGST on ESDM units reimbursement
capital goods to be provided of net SGST for
to permissible reimbursement 8 years period
extent under of net tax
TNGST Act - limited to
2017 for ceiling of 90%
companies of GFCI made
facing inverted by unit;
tax structure 100% Central
Sales Tax
(CST) to be
reimbursed
for inter-state
sales; SGST to
be reimbursed
at tax rate
Interest Subsidy
Up to 6% - Large Large 5% p.a. to units 7% p.a. subsidy On term loan at

p.a. provided investments – investments – with investment for ESDM 5% up to INR
to registered 5% subsidy on 5% subsidy on up to INR 200 units with 1.50 Crores/
KESDM Start- loans capped loans capped Cr (up to a borrowings up year for 5
ups and MSMEs to 0.2 Cr p.a. to 0.2 Cr p.a. maximum of to INR 10 Cr; years period
for 5 years for availed up to 6 availed up to 6 INR 1 Cr p.a. For borrowing (only for firms
loans up to INR years; years; per unit for 5 between INR in greenfield
50 lakhs years) 10 Cr and electronic
Mega Mega
INR 1000 manufacturing
investments- investments-
Cr - subsidy of clusters)
5% on loans 5% on loans
INR 1 Crore
capped to 1 Cr capped to 1 Cr
and 2% of
p.a. for 6 years p.a. for 6 years
borrowings;
Ultra Mega above INR
investments - 1000 Cr -
5% on loans subsidy of INR
capped to 4 Cr 5 Cr and 1% of
p.a. for 6 years borrowings
Stamp Duty exemption
Registered 100% 50% stamp 100% 100% exemption Greenfield 100%
KESDM reimbursement duty exemption stamp duty on purchase/ EMCs to reimbursement
companies of stamp for Chennai, exemption lease of land for be entitled of stamp
exempt from duty and Kancheepuram, for land for individual ESDM to 100% duty as well
stamp duty registration Coimbatore, industrial use units; 100% reimbursement as transfer
paid for loan obtained from exemption on of stamp duty duty; 100%
agreements, charges Vellore, etc.; SIPCOT; first transaction; as well as reimbursement
credit deeds, 100% stamp 50% exemption registration fee of registration
duty exemption 100% back
lease deeds, etc.; on second towards lease/ fee paid on
for Dharmapuri, ended subsidy
transaction sale of land for sale and lease
100% for Start- for private
Madurai, Theni, for purchase/ the EMC deeds on the
ups and MSMEs; lands up to 50
Tenkasi, etc. lease of land for first transaction
75% for large acres
EMCs/ESDM only.
and mega
parks
enterprises
States have thus been complementing Central Technology Park for electronics production and
Schemes by investing in uninterrupted and subsidized development of technology. Major findings obtained
power and water supply, good quality infrastructure from analysis of States policies over the years are:
and easy process of acquiring construction permits
and transparency. Many States are extending their 1.
Focus on Growth of Semiconductor
support to MSMEs involved in the electronics and parts manufacturing: Electronics Policy of many
manufacturing and are adding to the incentives already States have been announcing about semiconductor
offered by the EMC scheme. In fact, the project cost manufacturing, but success is yet to be intellectualized:
(not already borne by the Central Government), would • Karnataka was one of the first States to have a
be provided for by the State governments and other specific Semiconductor Policy (2010). In 2018,
State Agencies. A minimum contribution of 50% for Semiconductor Fabless Accelerator Lab (SFAL),
EMC projects (Greenfield EMCs) and 25% for CFCs funded by Government of Karnataka in association
has been decided. Most States have planned for or with India Electronics and Semiconductor
have already established a minimum of one flagship Association (IESA), was launched in Bangalorelviii.
52
• Gujarat in its 2016 New Electronics Policy aimed strategies have/had in promoting the brands of the
at setting up two semi-conductor fab units in States’ ESDM sector.
Prantij region.
5. States with focus on international outreach:
• Uttar Pradesh in its 2020 Electronic Manufacturing Instead of opting the route of international dialogues
Policy announced certain special packages for through Central Government of India, many State
setting up FAB unit. governments used the option to forge partnerships
• Tamil Nadu in 2020 policy aimed for at least with international institute of repute for knowledge
two major FAB investments. Although the State transfer and strategic tie-ups. For instance, Tamil Nadu
has number of MSME Fabs, there are risks for in its 2020 Electronics Hardware Manufacturing
struggling fabrication units to turn into NPAs. Policy has suggested about twin-city agreements
• Madhya Pradesh in 2015 introduced Analog in countries such as Japan, Vietnam, South Korea,
Semiconductor Fabrication Investment Policy. Taiwan, and Israel. Such unique initiatives by State
governments can accelerate development of ESDM
2.
Skill Training provisions under States’ ecosystem in India through exchange of experience,
Electronics Policies: Human resource and their joint cooperation plans and industry-specific projects.
skills remain vital part for development of ESDM –
few States have included provisions: 6. Companies set up by State government: States’
policies by Gujarat, Andhra Pradesh, and Kerala have
• Andhra Pradesh and Madhya Pradesh provided also mentioned about creation of Single Window
50% reimbursement of the cost for providing skill Clearance Units to facilitate setting up of EMCs
training to the engineers that have domicile of and coordinate all activities under one umbrella.
their respective States. Companies such as ‘Keltron’ (electronics JV set
• Other States such as Karnataka, Maharashtra, up by Government of Kerala) and KARSEMVEN
Gujarat, Uttar Pradesh, Chhattisgarh and Haryana (semiconductor venture by Government of
have aimed at facilitating skill development through Karnataka) are unique initiatives by respective State
a State funded program or a nodal agency. Governments.
3. States’ Policies towards R&D and IP: States are 7. Progress at States’ level: Even though States have
required to facilitate R&D and IP creation to boost well detailed-out policies and vision for development
development of their electronics industries. However, of ESDM sector, there is less information available
only few States addressed them (either by offering regarding the progress of their strategies or
incentives or by laying out the targets): initiatives. Annual reports by MeitY give year-to-year
progress regarding the national schemes and also
• Maharashtra (50% of project cost), Telangana
about establishments of EMCs at States level, but
(20%) and Kerala (25%) have provided fiscal
the latter’s Governments lack proper documentation/
incentives for facilitating R&D projects from any
annual reports in the public domain with respect to
industrial unit.
progress of ESDM in their States/UTs.
• Gujarat’s 2016 Electronics Policy aimed to identify
Electronics laboratories of premier engineering 3.4 India’s Challenges in Electronics
colleges and develop them as ESDM Centre of Industry
Excellence and research centers by contributing
more funds to R&D, and promote creation of IP With sound policies, Indian electronics industry holds
and facilitate industrial internships for UG/PG potential to serve both the domestic and export markets.
students. However, India is still considered as a less attractive
destination compared to China and Vietnam due to
• Haryana’s 2017 Policy envisioned setting up IP several disabilities (Table 3.9) such as infrastructural
Facilitation Centre under Haryana State Council deficiencies, inadequate focus on upskilling of labour
for Science and Technology to raise IPR awareness force and on R&D, high manufacturing costs, etc.
among startups and assist them in protection and
commercialization of innovative and emerging Excessive reliance on imports has been one of the largest
technologies. challenges as India lacks full capability and economies
of scale, exacerbated by limited scope of activities by
• Tamil Nadu in its 2020 Policy strives to undertake OEMs to step up manufacturing in India.
a focused R&D program for fostering research
and innovation. As this industry is growing at a fast pace globally due
to high demands, India may face more problems in
4. States’ Brand Promotion: States have not only catching up, especially if challenges are not tackled
focused on provision of fiscal incentives, but also on timely. India must realize the strategic consequences
promotion of their State ESDM sector as a Brand. of heavy dependence on neighbouring Asian countries,
Telangana and Andhra Pradesh Electronics Policies which may have been using India as assembly base, that
focused on “Electronics Telangana” and “Electronics too only for certain durations. Thus, domestic efforts
AP” respectively, through Mega Electronic Events, must continue with stable implementation of policies to
to encourage road shows, establish Electronics keep up with the global competition and to drive exports.
Bazaar, create widely known point of contacts, set up This is because India’s potential in exports is found to
marketing fund, etc. However, there are still no reports be untapped at USD 2.7 trillion, as its share in global
so far to display the success that such marketing exports of electronics is just 0.3%lix.
53
Table 3.9: Key Challenges Identified for India’s electronics industrylx
Challenges/
Key issues/matters (obtained from secondary data analysis and survey results)
Constraints
Cost Disabilities • High-cost disabilities in logistics due to absence of logistic subsidy, compared to China and
Vietnam, where logistic subsidies contributed to cost reductions of 1% and 0.5%, respectively, as
of 2019; High power cost
• High costs of capital required for production activities, viz. mobile phones manufacturing is highly
capital- and technology-intensive, due to requirements of latest high-volume machinery, thereby
necessitating huge investments
• Increase in tariffs/BCD on imports of P&C also risks the rise in the cost of final products; Also,
continuous rise in BCD is proposed wherever subsidies cannot be granted, but tariffs also do not
guarantee more revenue generation (as exemplified in Table 3.5)
Insufficient • Increase in need for specialized skills owing to greater technological complexities, viz., IoT, AI;
labour skills although rise in demand for skilled workers and design engineers, but supply of such workers still
and persistent not sufficient
demand-supply • Continuous reliance on other nations, such as China, for technicians who specialise in the setups
gap of the sophisticated machinery and technical assistance
• Higher expenses on reskilling of workers raises manufacturing costs
• Lack of industry-friendly labour laws
• Lack of proper design institutes solely for skill generation for this industry
Inadequate focus • Weak base of R&D in India due to low level at exploration of in-house technologies, mainly
on R&D promotion because of long gestation periods which acts as disincentive
• Low R&D subsidies by Indian government (0.15%) as compared to those in other countries, i.e.,
China (2%) and Vietnam (1%), as of 2019
Weak IP Rights • IP base is not strong enough in terms of development and facilitation as well as protection of
regime rights
• Low subsidies on patent costs that affect innovations in India
Limited Designing • India lacks competence in chip design due to very few semiconductor fab units in India (despite
Activities & NPE’s focus on chip design)
Presence of Fabs • Challenge for Semi-Conductor Laboratory (SCL) established at Chandigarh – it only has
in India – a must 28-nanometer fab, which needs to be upgraded to 65-nanometer and 228-nanometer
for growth of • India is hardly into designing of electronic items in GVCs – these are required to support
Indian electronics manufacturing system
Lack of developed • Limited Indian companies involved in manufacturing of mobile phones and sub-assemblies;
manufacturing even low production operations by foreign firms established in India – more focus on assembly
ecosystem in operations
India, inefficient • Assembly activities on the rise for smartphones but still at a low scale; much lower in case of
resource computer hardware
allocation • While global firms such as Xiaomi, Samsung, Apple, Vivo, etc., have made initial investments in
mechanism, India, they fail to penetrate much due to lack of developed manufacturing base in India and that
Presence mostly too at large scale (unlike China, Vietnam)
in assembling (but • Overall weak domestic ecosystem and value chains in areas such as industrial and consumer
that too not grown electronics, which lack policy impetus; Less growth in EoDB, rendering India 10-20% less
to full scale) competitiveness than China and Vietnam, as of 2020
Still higher import • Evidence exists for Q2 2020 that few Chinese firms located in India, including Xiaomi and Oppo,
dependence, imported smartphones from China due to issues in pushing up production in Indian factories for
mainly on China, meeting high demands
particularly during • India’s restriction on Chinese imports during May-June’20 also delayed production by OEMs in
COVID-19 India due to lack of stock of materials, inputs, etc.
• Smartphone manufacturers (including the ones working under PLI) are highly dependent on
China for components and related equipment; Evidence from July-August 2020 also suggests
that China placed undue restrictions on the exports of components
Constraints • ITA-1 largely consists of parts and components used to manufacture finished goods; but despite
related to WTO- some imports of inputs and even of final hardware items, there has not been commensurate rise
ITA in domestic competitiveness of ITA-1 items nor of their exports; rather, exports of ITA products
grew at an average rate of -0.2% during 2003-18
• WTO members namely Taiwan, Japan and EU challenged India’s imposition of custom duties
on key electronic items, such as mobile phone and parts, base stations, ICs, data transmission
machines, etc., which they announce as higher than decided bound rate of 0% under the
Agreement – India however does not agree to it
54
Issues related to • Although several duty support has already been accorded to Indian exporters and importers, many
Duties levied on of them complain about lack of timely refund of IT/duties paid by them (issue across industries even
exporters and before GST due to pending settlement cases)
importers • For number of years, ‘inverted duty structure’ in this industry has been affecting indigenous
manufacturing as it is cheaper to buy imported goods; however, under GST, Input Tax Credit
(ITC) gets accumulated when the tax paid on output is less than the tax paid on input and can be
claimed as a refund
• Budget Speech 2021-22 mentioned about correction of inverted duty structure but in case of
textiles, petrochemicals, and metals, etc., while increased custom duty on certain inputs in
electronics industry to promote value added [with effect from 01.04.2021: Inputs, parts or sub-
parts for manufacture of specified parts of mobile phones (including PCBA, Camera module and
Connectors); Inputs, Parts and Sub-parts (other than PCBA and Li-ion Cell) for manufacture of
Lithium-ion battery and battery pack: 0 to 2.5]lxi
• Despite rise in BCD rates for inputs, some initiatives have been traced during 2020-21 to deal
with the overall structuring of GST such as in Budget Speech of 2020lxii; Tamil Nadu’s Industrial
Policy of 2021 also mentions provision of refunding Input SGST for firms who cannot utilise ITC
paid on capital goods due to inverted tax structure
Infrastructure and • Lack of mega manufacturing clusters and accompanying infrastructure
logistic related • Erratic power supply, polluted water sources
issues even in • Requirement of significant transportation facilities for sending finished products to ports, as
terms of costs many primary mobile manufacturing hubs (i.e., Uttarakhand, Delhi, Haryana, Uttar Pradesh and
Telangana) are inland – this further adds to costs
Low FDI • Low FDI inflows in this industry even in 2019 and 2020, see Appendix Table 4 (less than 1% of
total FDI inflows in India)
• Rising BCD and import substitution are meant to step up DVA content in domestic markets;
but India’s production and scale of manufacturing remained very low as compared to global
counterparts, and this has probably led to low FDI
• Uncertainty of investment environment in India also exists due to changing government policies
and US’s challenge over India’s export subsidy measures in the WTO
• India’s FDI policies have been more restrictive; in fact, during April 2020, it imposed prior
government approval condition for the countries sharing borders with India
Impact of Global • K-shaped recovery is predicted where developing nations like India can suffer more if the
scenario on Entire Government fails to offer proper industrial stimulus packages from time to time – although PLI,
economic growth SPECS have been the right initiatives by GoI but with slow progress
• US-China trade war has urged US companies to move away from China and relocate in case of
CE, telecom equipment, semiconductors, IT hardware, etc., thereby disrupting some supply chains
(fuelled by pandemic as well); Geopolitical challenges may further affect entire world as one set of
GVCs may witness changes due to a potential shift away from China (i.e., some countries may lose
due to rising polarization – crucial for developing ones like India who depend on imports from China)
• East Asia’s value chains are on the way of recovery with likelihood of more production activities –
decoupling from China may not be so easy in case of electronics
Challenges faced in R&D

India has experienced limited activities and/or year (declined from 0.30% in 2015-16).
weaknesses in implementation of strategies at pre- c. The electricals and electronics industry of India
manufacturing stage (R&D & design): received a mere 2% of the total public R&D
a. There have been successful efforts by Indian expenditure (INR 5,253 Crores) in 2017-18.
government, academicians, scientists, etc. for Majority of R&D budgets goes to defence, fuels
enhancing research, but the emphasis on R&D by and industrial machinery. Further, only 5.3% of the
government in the electronics industry has not been total private R&D expenditure was spent on this
adequate over the years. As per DST, Government industry during 2017-18, decreasing from 5.5%
of India (2020)lxiii, although public R&D expenditure during 2015-16. Thus, along with low focus on
on electricals and electronics industry increased R&D, private sector expenditures also remained
from INR 95.7 crores during 2015-16 to INR 102.3 considerably less.
crores during 2017-18, but reported CAGR was d. Availability of cheap/competitively priced products
quite low at 3.4% (less than rise in country’s overall at global level discourages R&D investments by
public R&D: 8.6% CAGR). Indian companies to design their own products.
b. In contrast to public expenditures, private R&D As identified from surveys, the global established
expenditure was higher at INR 1,935.5 crores manufacturers also have a very high profit margin,
during 2017-18, registering CAGR of 5.5% over which provides them sufficient flexibility to slash
2015-16 (when spending was INR 1,737.6 crores) their prices whenever any developing country like
– but expenditure comprised only 0.6% of the sales India develops a new product.
turnover of the industry during 2017-18. Latter Global companies should be encouraged to set up R&D
however remains higher than share of public R&D in India backed by fiscal incentives and a proper regime
expenditures that comprised 0.25% in the same to protect their IP and copyright.
55
India’s FTAs not leveraged enough
India signed several FTAs with ASEAN, with Singapore, FDI flows to Indian electronics industry continues to be
Japan and South Korea, and PTA with Malaysia during very low, which might be the real challenge. ‘Computer
mid-2000s to liberalize the tariff lines and attract greater software and hardware’ however attracted higher FDI
FDI flows for India’s integration into the electronics inflows even during COVID.
GVCslxiv. It has been postulated over the years that due In short, low FDI may be due to the fact that the scale
to high BCDs and low FDI flows to the industry, these of electronics manufacturing in India has not reached
FTAs may have not been leveraged enough to make to large value and volume levels to supply to the global
significant impact on the flows of investments into demand for electronics. Second, FTAs cannot be held
India especially from these partners. Using Appendix wholly responsible for affecting entire electronics
Table 4, FDI inflows into India from Singapore, Malaysia manufacturing in India. In fact, misuse of FTAs appears
and Japan, and ASEAN group as a whole (excluding to have been put under check vide a Government
some member nations and Korea) have been relatively notification, dated 21 August 2020lxv, which stipulated
significant and in fact rising especially from 2017 guidelines for verification of Certificates of Origin. It has
onwards. But, these partners may be investing in number had an impact on imports from FTA countries; however,
of industries of India. This is because percentage of this is yet to be fully evaluated.
Grey Market for High-End Phoneslxvi

High end mobile phones (with market price around INR 38%, and vis-à-vis US between 28-35%, till 31 March,
50,000 and above) attract BCD of 20%, along with 2020”, and this practice got a boost after rise in GST of
imposition of GST at 18% and cess (2% as Social Welfare 6% and in BCD of 2% since 1st April, 2020. Moreover,
Surcharge) as well as marketing costs, leading to almost unreported or smuggled handsets have been creating
doubled prices of such mobile phones as compared disincentive for the government in form of revenue losses
to their actual price. This creates an artificial arbitrage, (forgone GST collections) of about INR 200 crores per
thereby shifting demand from the legitimate markets to month. Franchise retailers selling the same are also at a
the grey markets. The industry represented this anomaly disadvantage as compared to the sellers in grey market.
vide representations by ICEA, MAIT and others to the During October 2019-March 2020 (as reported in ICEA
Government in the years 2019-2020. It was stipulated letter), sales in grey market constituted about 55-60%
that “the price arbitrage between India (whose taxes of high end mobile phones, and this has been expected
total up to approx. 44%) and Dubai ranges between 35- to rise further possibly upto 80% even during pandemic.
Inherent challenges, COVID-19 and Dominance of China

Indian electronics industry faces almost similar China has also been restricting its REE exports from
challenges before and during COVID with respect to three time to time. For instance, during 2014, WTO confirmed
elements of operating environment, i.e., infrastructure, a ruling against China’s previous attempts to impose
power and finance. Although improvements have been export restrictions on environmental and domestic
made due to infrastructure boosting schemes, but these demand grounds in a case brought by the United States,
elements together make cost of manufacturing higher the European Union and Japanlxvii. In December 2020,
by 5 to 6 points as compared with China and some China introduced the ‘National Export Control Law’ which
ASEAN countries (as gathered from surveys). included rare earth products. This law aims to regulate
the export of sensitive materials and technologies, further
Further, lockdown and disruptions to GVCs have resulted attempting to curb REE exports. It introduced new quotas
in production cuts of leading CE and smartphone in January 2021 to lower domestic mining and refining
companies. The Pandemic has affected the prices of of rare earth metals, which led to global shortage and
Indian electronic products as the lockdown has forced highlighted vulnerability of the supply chainslxix.
Chinese vendors to increase the cost of components
by 2-3% owing to the shortage of supplies. Although Furthermore, Chinese manufacturers capture a great
some immediate measures were taken in mid-2020 market share in chips for routers, semiconductors, circuit
to ship goods and arrange for air cargo facilities to boards, and electronic devices. To elaborate, China
lift consignments from China to India, but supplies of produces almost 80% of total value of the components
components and related equipment remained affected used in smartphones and almost 70% in case of TVs. In
that time due to shut down of factories in China too. fact, India has been importing most of them from China
viz. displays, open cell TV panels, PCBs, capacitors,
Secondly, it cannot be underestimated that India’s memory, LED chips, etc.
biggest competition in this industry is from China, which
has achieved high economies of scale with extremely There have also been acts of predatory pricing by Chinese
subsidized operating environment that is largely opaque companies having global negative spillover effects. For
in nature (especially as gathered from surveys). instance, China’s assistance has helped Huawei grow into
the world’s largest telecom-equipment company, which led
China’s dominance in electronics GVCs not only accrues to cutting of its rivals’ prices by around 30% (such policies
to its low manufacturing costs and good infrastructure, lower prices for competitive products more than what
but also in abundance of rare earth elements (REE) that market forces would do). Government of China and Huawei
are used in products such as sophisticated magnets are reported to be working together in 4G and 5G network
and cell phones, in missile systems and turbines. China equipment so as to reduce the power of the competitors in
provides more than 85% of the world’s supply of rare short run and remove them in long run – these efforts are
earth elementslxvii. being fueled by state subsidized predatory pricing.lxx
56
IV. FINDINGS AND CONCLUSIONS
Inadequate Data on Electronics Production
Data for Indian Electronics Production are currently Government officials, associations and their members,
available at much aggregated level for 7 broad verticals, private consulting firms, etc. may collaborate to
namely, Consumer Electronics, Industrial Electronics, understand why production data are not reported by
Computer Hardware, Mobile Phones, Strategic the firms located in India at disaggregate product level,
Electronics, Electronics Components, and LED – which and how they can form a better network to carry out
are provided by MeitY. Disaggregated level data are surveys or collect such information in a transparent
given in MeitY’s Annual Reports for few segments, such manner. As MeitY has also formed Task Forces for
as for TVs, PCs, etc. but they are reported neither for all the various product categories (with members from
the years nor as per India’s product classifications such
Industry, Associations, and Ministry) that help in the data
as NIC-08 (unlike US and Japan).
sanitization, it is suggested that their role could be made
Suggestion: Surveys need to be carried out by MeitY prominent in this matter. Ministerial Ordinance may also
along with the Industrial Associations on a larger scale be passed for mandatory disclosure by establishments
to collect production data, both in terms of values and about their production trends.
volumes (either quarterly or semi-annually or yearly basis
– such as in case of Japan). More learnings are to be This Study suggests developing production database in
brainstormed by using the best practices of international disaggregated format (indicated in Table 4.1), thereby
agencies such as IDC and country-specific organisations expanding 7 categories given by MeitY (can also add
- may be via workshops, seminars, etc. other communication equipment).
Table 4.1: Suggested Format for Production Database (for a particular year)
Production Production
Electronic Products
(Value terms) (Volume terms)
Consumer Electronics
Television (Colour, Smart, LCD/LED)
Audio recording equipment (radio, stereo, car audio,
car navigation system)
Video recording equipment (cameras)
Digital still cameras
Watches/clocks (digital)
Tablets
Others
Industrial Electronics
Electrical circuits
Inverters
Rectifiers
Batteries
Solar Cells
Strategic Electronics
Defence Equipment
Aerospace Equipment
Electronic Components/parts
Passives (Capacitors, resistors, etc.)
Connectors
Electronic Tubes
Diodes
LCD (large/small)
Other Display components (plasma, etc.)
ICs (and types)
PCBs (and types)
Microprocessors
Electronic boards and panels
Components used in communication equipment
57
LED products
LED lamps
Bulbs
Tubes
Panel Lights
Nano LEDs
High-powered LEDs
Computer Hardware
Desktop Computers/PCs
Laptops/Notebooks
Large computers
Computer Severs
Monitors
Keyboard
Storage Devices
Computer Terminals
Other Computer peripherals
Printers
Scanners
Mobile Phones
Smartphones
Other Cellular phones
Communication equipment
Data communication machines (routers, gateways)
Landline telephone sets
Dish, antennas. VSAT, etc.
Others
Source: Own Illustration (based on US and Japan databases, and as per NIC 26 categories’ descriptions)
Insufficient Participation in Electronics Value Chains

Indian electronics industry is still linked at lower ends finished products, in comparison to that of laptops and
in GVCs mainly with a key role in assembling, thereby tablets. OEMs have played a major role. Indian companies
affecting its gains in pre-manufacturing or manufacturing however displayed little progress in manufacture of
stages. The results show more developed smartphone hardware. The results also indicate India’s greater
value chains in India, owing to a growing presence of participation in post-manufacturing stage mainly with
R&D centres, assembly plants and rising exports of presence of after-sales services centres (Table 4.2).
Table 4.2: Indicative Participation in Value Chain Activities

Manufacturing Assembly After-sales
R&D and Designing, Exports and
Product Class of parts and activities in services (viz.
IP development Domestic Sales
components India service centres)
Moderate (but improving
Narrow yet Moderate to
Smartphones due to more work High High Presence
growing High
allocated to R&D centres)
Very Thin (due to
Tablets Shallow Shallow Narrow High Presence
low assembly)
Very Thin (as very
Laptops Shallow to Moderate Shallow Narrow High Presence
low assembling)
Source: Findings based on Value Chain analysis (Chapter II)
Divergent Export and Import Trends

After years of stagnation, there is a new lease of life electrical appliances) have nearly doubled in the past
in India’s electronic manufacturing industry, albeit from five years – from USD 9 billion in 2014 to USD 15 billion
a very low base. India’s electronics exports (including in 2019 (Figure 4.1).
58
Figure 4.1: India’s exports of Electronics in USD Billion parts of phones, PCs, data transmission machines, parts
of LCD/LED TVs, ICs, cameras, and servers - covered
under ITA-1 or Free Trade Agreements (FTAs) with
Covid-19 ASEAN, Singapore, Japan, Korea, and Preferential Trade
pandemic
16 Make in Agreements (PTAs) with Malaysia. FTAs however did not
India: 2014 :2020 contribute much to boost foreign investment inflows into
14
Global
12 Financial
this industry – perhaps due to a lack of holistic export led
10 Crisis: 2009 strategy for entire industry and owing to low production.
8
6
It is worth noting that the signing of ITA-1 has been
4
(wrongly) blamed for rising trade deficit in electronics
2
products – one of those instances where the correlation
-
has been interpreted as causation – overlooking the
overall benefits of imports in terms of consumer welfare
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
and its contribution to the competitiveness of exports of
modern services from India.
Source: WITS Software (electrical appliances are included in the data) Suggestion: India must strategically strive to link into
electronics GVCs from the side of exports of parts and
India exported electronic items globally, namely to USA, components as well, by exporting more to East and
some European countries like Netherlands, Germany, South-East Asian countries. Rise in investment flows
few ASEAN and South, East and Central Asian from these countries in electronics can be a boon.
economies, and the Middle-East. For instance, India
exported smartphones during 2019-20 to UAE and Non-Availability of Brand-Wise Export Data
Russia, followed by South Africa, Turkey, etc. Conversely, While comprehending export-based results (Chapter II),
India has been mainly importing from East and South- one of the key issues has been non-availability of brand-
East Asian countries, thereby reflecting India’s lack of wise exports data for smartphones/mobile phones.
integration in the electronics value chains. Absence of such information led to the shady picture
India’s top exported items during 2019-20 included about Indian exports, viz., clarity is missing whether higher
exports of smartphones to UAE, Russia, US, etc. have
smartphones (increased to USD 3.8 billion from USD
been made by Indian companies who are themselves
0.24 billion in the last five years), battery chargers,
making phones in India, such as Lava, Intex, Micromax,
inverters, solar cells, electric apparatus for electric control
etc. or they are exported by Samsung or Xiaomi firms
and their parts, voltage stabilisers, and data transmission that are located within India.
machines. It is interesting to note that share of exports for
parts of mobile phones, set top boxes and Printed Circuit Suggestion: Brand-wise exports database can be
Boards (PCBs) declined from 2013-14 to 2019-20, generated for smartphones by both Indian and foreign
while exports of final products increased over the same based brands located within India (Government may
period. Given the two-way nature of trade in electronics depute industrial associations or any consulting agency
products, imports have been higher (much more than the to undertake firm-level survey) – sample data format is
exports). Top imported items during 2019-20 included given in Table 4.3.
Table 4.3: Exports Data for Smartphones/Mobile phones as per brands Located in India
Firms (Foreign Brands in Intra-firm (Exports to firms located Exports from India to other countries
India) outside India in HQ country)
Firm A
Firm B
Indian Companies Exports to countries where Exports from India to other countries
Company’s branch is located
Company 1
Company 2
Evolving Ecosystem with mobile phone as champion segment; Recent Initiatives in 2021 for IT
Hardware, but still Lower Emphasis on Consumer Electronics
India’s electronics industry has transformed from 2011-12 are thus some of the successes of the current policies. To
when NPE was launched, followed by ‘Make in India’ and elaborate, electronics manufacturing firms such as Apple,
‘Digital India’ since 2014, and PMP in 2017, NPE-19, and Samsung and Xiaomi have begun moving manufacturing
2020 schemes: the mobile phone has emerged as a poster to India. These firms or their contract manufacturers have
child with a share of more than 40% of total electronics made early investments in India. Further, assembly has been
production during 2019-20. Increased domestic value growing, and there has been a shift from Semi Knocked
addition and the rise of a nascent electronics ecosystem Down (SKD) to Completely Knocked Down (CKD) level
59
showing progress in value added content. Several firms Revamped Policies for Electronics Industry
are choosing to develop smartphone value chains in India.
Centres of Excellence have been set up along with rise in The revamped NPE-2019 has the target of achieving
R&D activities, accompanied with some designing and IP turnover of USD 400 billion by 2025 with emphasis on
registrations, but progress has still been very slow. entire ESDM value chains but mostly on mobile phones,
semiconductors, R&D, electronic parts, etc. Most useful
The consumer electronics (CE) segment is fast growing
too, especially with TV segment experiencing a variety schemes were launched during pandemic, as potential
of new technological developments (from CRT TVs to alternatives to MEIS, namely, PLI (where 16 Indian and
LED/LCD TVs to Smart TVs). foreign firms, viz., Samsung, Wistron, Foxconn, Pegatron,
However, first, the production shares declined for CE Lava, Micromax, etc. have been given approval during
by 13 percentage points from 2014-15 to 2020-21. October 2020 in case of mobile phones and specified
Second, many CE items such as refrigerators, washing electronic components), SPECS, EMC 2.0, and RoDTEP
machines, microwave, etc. did not have much boost like (rates are yet to be announced). These are likely to
mobile phones due to lack of specific and dedicated establish India as a global hub for electronics, where
policy initiatives for the segment. both domestic demands and exports will be catered.
Further, in case of computer hardware, the shares These schemes are perceived as key steps in the
of production also declined from 10% in 2014-15 to direction to decouple the dependence on China. These
4% in 2019-20. But this is the area where maximum schemes jointly are expected not only to increase the
opportunities are likely to be tapped given growing electronic manufacturing by INR 15 Lakh Crores, but
demands for laptops, PCs, etc. due to more WfH. Note also to increase the domestic value addition and provide
that PCs have been one of the main imported items
employment to more than 10 Lakh people (as obtained
by India (also trends during COVID do not show much
decline in their imports by India). Although PLI has been from Surveys). Ever since launch of PMP scheme, there
approved for IT Hardware in March 2021, but there is a has been a shift in assembly from SKD to CKD mode
long way to tap the success in this segment. for sub-assemblies, thereby showing some rise in the
Suggestion: Detailed value chain analysis for key areas domestic value-added content. But, as per our analysis,
within CE & hardware such as TVs, refrigerators, washing with PLI in action to lead to a fresh era in mobile phones
machines, desktop PCs, laptops, tablet, etc. are required growth in India, there may remain little need for PMP.
(firm-level participation will help to find gaps). In fact, in short run, there is a need to maintain the
Along with PLI for hardware, the Report presents balance between import substitution strategy and
indicative 5-years Strategy mainly for consumer export promotion incentives, as they are shown to be
electronics like TVs: incompatible in today’s harsh global environment. Caution
• Brainstorming and pre-Planning Stage (September- must be exercised while moving ahead with protectionism
December 2021) – phase for covering round of policies with continuous rise in basic customs duty (BCD)
talks between industries/companies (domestic and rates (as revenue collections from tariffs have declined
foreign), Associations, Government officials (from for the entire economy). Importantly, review analysis
MeitY, DoC, NITI Aayog, DPIIT, MoF, ESSCI, etc.) to further shows that schemes involving capital subsidies
brainstorm existing and expected demands, assess
the current supply capacity, and identify the gaps. like MSIPS could not help this industry to grow.
• Planning Stage (January-April 2022) – meant The aim must be to build competitiveness in the economy
to identify those regions within India where new to drive up exports. So, there must be movement away
production factories/units can be set up (by foreign from subsidies to market-linked incentives for promoting
firms and by domestic players), to plan how to export-led growth.
revamp capacities in existing factories involved
in manufacturing and assembling of those items, It is noteworthy that PLI’s success graph in case of
and specify exact demand in short period for both smartphones halted in 2020 due to restrictions of
domestic and export markets. lockdown, which affected companies, except Samsung,
• Restart and Boost the production (mid-June 2022 to meet their incremental sales’ targets as envisaged
onwards) in at least two existing plants to meet the in the scheme. However, in the quarter ending March
short-term targets. 2021, PLI applicants together had invested close to the
25% mark as enshrined in the PLI investment targets.
• Launch new factories over next 2-3 years (till
2023/24) that can produce at a larger scale. Regarding requests to consider 2020-21 as the zero
year for PLI preparation, Government of India made
• Open new Centre in India only meant to design those announcement in June 2021 to consider investments
electronic products (with highly skilled manpower) –
around 2022-23. of 2020-21 as eligible ones, and to extend scheme by
a year, such that applicant companies can select any
• Initiate greater indigenous production of parts of TVs, of the five years. Moreover, the report suggests that
laptops, etc. in India (during 2023-2025) (Note that
scope of PLI needs to be extended to all the consumer
imports of critical inputs, not available in India, must
continue to stay cost-competitive). electronics and their parts.
• Promote lead firms from India who can develop new Note that most Central policies are meant to boost
value chains such as for TVs (2023-25), which would linkages into GVCs; a pertinent question to ask however
ultimately create more forward linkages. is the extent to which the objective has been realized.
60
Linking to GVCs requires a liberalised business setting. Even globally, US and many EU companies are already
States increasingly offer subsidies on land, power, etc., but attempting to relocate away from China, primarily due
such incentives have generally not been market-linked. to geopolitical tensions arising post-trade war and now
Interestingly, few States in 2020-21 have also introduced owing to COVID-19 that disrupted the global supply
schemes to offer incentives similar to PLI, viz. Andhra chains of major electronic brands. But these are also
presenting opportunities for India especially in mobile
Pradesh has its own PLI scheme to offer with financial phone segment, given India’s advantage of huge
incentives upto 5%; while Karnataka offers 1%. Tamil domestic market.
Nadu also has its own turnover based incentive scheme.
Deep-Rooted Disabilities or Challenges Faced
Potential Decoupling from China and not from by India’s Electronics Industry
GVCs based out of China
While production and exports of electronic products have
IIndia’s imports for electronic goods declined rapidly shown encouraging signs, the rate of progress has been
from China during early months of lockdown, mainly
for smartphones, but thereafter the trend has been extremely slow. Vietnam raised its electronics exports
different – Chinese exports picked up since Q3 of 2020 by seven-fold in five years after the entry of Samsung
and are driving the East Asian value chains. That is, (2010 to 2015), while India barely doubled its electronics
countries continue to depend on China for a number of exports in five years after the announcement of Make in
manufactured goods. India program (2014 to 2019). Our analysis shows that
The Study has also identified items where potential India’s electronics industry remains significantly less
decoupling can be done. These cover printers, disc attractive compared to competing destinations in East
drives, smartphones, parts of phones, colour TVs, LCD Asia because of four critical factors: unfavourable tariff
TVs, microwave ovens, electric boards, parts of ICs, etc. and tax policies; low scale-high cost trap; need of more
Alternative locations are also suggested as Hong Kong, complementary policies; and growing inconsistencies
Singapore and Malaysia, Japan, Korea and Vietnam (as between industrial and trade policies.
per different items). But there are also high possibilities
that India may be largely importing Chinese goods even 1. Current tariff and tax policies neither meet the
from these countries. industry needs nor maximize fiscal revenues.
Nevertheless, the identified items' list is largely indicative, India’s high tariff and BCD rates relative to the East
as quality and quantity of electronic items imported Asian countries continue to affect the competitiveness
from alternative locations may not be comparable to of the industry. The inverted duty structure – high tariff
those available directly from China. Importantly, proper rates for intermediates goods relative to final product
definition of decoupling is required, i.e., whether it will be – makes production less attractive than imports. High-
limited only to reducing imports from Chinese companies. end mobile phones also attract high BCD, GST and cess
61
(Combined average tariff arbitrage of over 40 percent), maintain cost-competitiveness in short run and to move
which are sufficient to create artificial price arbitrage up the value chains in long run, while exporting is the
and shift demand to the grey-market (viz. sales of around common thread that binds the two.
55-60 percent). Studies show that the government is Although mobile phone segment is the driving factor,
losing revenues close to INR 2,400 crores each year it becomes critical now for Indian firms to grow
on the account of smuggled handsets and grey market technologically like Samsung, Apple, etc. This will require
operations. firms to develop and acquire patents for cutting edge
2. Caught in the vicious cycle of small-scale and mobile phone technologies. They can also develop
high costs. The scale of electronics manufacturing in technologies to augment production in case of mid-
India is small even by the size of its domestic market. It range mobile phones, where policy space exists. R&D
also operates at the lower ends in GVCs including the investments and designing capabilities can be enhanced
assembly activities for smartphones. India’s value chain in this segment due to high possibility to target growing
participation has been weighed down by limited activities middle class and people in rural areas/small towns.
in implementation of strategies at the pre-manufacturing Skill development is another key Intervention. Empirical
stage (R&D and designing) and non-existence of fabs. evidence points to the strong relationship between
3. Absence of complementary supporting policies. education and skills and GDP growth. East Asia is a very
Notwithstanding India’s improved ranking in the World good example in this context. Indian Government needs
Bank’s Ease of Doing Business indicators, the business to regularly monitor and update its skill development
environment remains a hindrance in attracting foreign programmes to generate skillful manpower, mainly
investors, mainly due to uncertain and unpredictable to promote development of semiconductor fabs. For
compliance requirements, poor infrastructure and logistics instance, more scholarships must be awarded under
to name a few. This is exacerbated by high capital and the ‘Visvesvaraya PhD scheme’ in streams such as
production costs. The FDI inflows to Indian electronics quantum computing, Blockchain, 3D printing, vehicular
industry have been low, even from FTAs partners. electronics, embedded systems, etc. to contribute to
Moreover, there is a lack of skilled workforce needed to overall ecosystem.
produce complex parts and components and particularly of Further, domestic players must be given incentives to
specialized technicians combined with policy uncertainty push up their manufacturing/assembling activities and
of shifting GVC’s international ecosystem partners. The allowed to showcase their designs and/or electronic
policies and institutions involving intellectual property products at global platforms in a number of International
(IP) are viewed by the industry as weak for development, Conferences, etc. – not only restricting to mobile phones,
facilitation and protection of rights. but also expanding to CE, LED, etc. However, assurance
4. Conflict between trade and industrial polices. of availability of required funding will always be main
The global electronics value chains comprise of guiding factor.
thousands of parts and suppliers scattered across the Large volume items can be specifically targeted such
world. Therefore, to make India their production base, as TVs, set top boxes, and even desktop PCs, laptops,
the investors need to be able to reliably import these servers and Datacom products, where global market is
parts to make their products globally competitive. said to be huge (around USD 360 billion, as gathered
This implies, for the ‘Make in India’ industrial policy to through surveys). Also, the reason is that demand for
succeed, the country needs an open and liberal trade many of such products has increased tremendously
regime. But the latter is at odds with the policy of PMP, during pandemic due to more WfH, online classes,
which requires continuous rise in BCD. Similarly, the rise etc. India should not miss this opportunity of raising
of anti-China sentiments and calls to rapidly end India’s production and attracting purchase orders from within
imports from China are counterproductive to the goal the country and from other Asian countries, US and
of making India a global production hub. Unlike India, Europe (who are planning to decouple).
China announced its ‘Made in China’ program in 2015,
at a time when it had already become the world’s largest Overall, India needs to increase its participation in ESDM
trading nation and had pursued a highly open trade and sector by upgrading its assembling activities and gradually
investment regime. moving towards being a large-scale manufacturer. India
must develop fabrication facilities that are crucial for
Suggestion: In order to reach the target of USD 400 growth due to the high demand of products like closed-
billion by 2025 (as per NPE-2019) and to USD 1 circuit televisions (CCTVs), cameras, computers, and
trillion by ICEA for boosting electronics hardware various telephonic instruments. There is also need to
manufacturing (ICEA, 2020), it is important to overcome learn from success cases while moving towards exports
the challenges to build a stable and safe environment for led growth such as from Taiwan, China, Vietnam and
entrepreneurs, investors and consumers. Thailand (Appendix Table 5). Also, benefits from FTAs
Rather than only focusing on reducing imports, the need need to be properly leveraged, given new guidelines by
of the hour is also to strengthen domestic value chains Government of India (vide August 21, 2020 order) to
as well as attract GVCs based out of China. The way is to prevent misuse of FTAs.
62
V. KEY POLICY INTERVENTIONS
While India is favourably placed to create a globally in the interim and to develop India’s electronics
competitive electronics industry, achieving such a manufacturing ecosystem, GVCs based out of China
breakthrough is neither assured nor automatic. It calls should be encouraged to set up base and expand
for strong commitment from the top leadership, stable in India. They have the required expertise, technical
and market friendly policies from the authorities and knowhow and experience to build manufacturing
sustained and effective implementation of policies to capacities and scale within a short period of time.
actions. Specifically, the report calls for the following five Experience suggest that these lead firms move with
broad interventions: their ecosystem. Preventing the GVC ecosystems to
• ontinuation of the PLI scheme. In absence
C shift will not only stifle large scale production, but
of radical tariff, tax and investment climate reforms, also adversely impact domestic value addition, as
India will have to continue to provide some form of lead firms will turn to imports for components.
incentives to make it an attractive destination for • Industrial policy can best succeed in a pro-
manufacturing. Our analysis suggests that capital- trade and pro-market environment. In the short-
based subsidies schemes have not been helpful, run, India should try to reap the maximum benefits
while output-based incentive schemes like PLI has from existing global players (GVCs) and from its
shown some success in boosting production and current FTAs as well as explore new trade partners,
exports. Therefore, the continuation of PLI as the and to scale up assembly activities in smartphones. All
guiding instrument for export promotion seems efforts need to be directed to build competitiveness
reasonable. Furthermore, scope of PLI needs to be domestically and to drive exports. Linking to GVCs,
extended to all the consumer electronics and their as well as inviting more FDI inflows, requires a
parts, similar to the mobile phones and IT hardware liberalised yet stable environment with a focus
policies. Studies have shown that PLI itself funds on reducing cost of doing business. Interventions
future PLIs and that the increase in exports and the include: (i) moving away from traditional subsidies to
forex exchange earnings will surpass the incentive production or exports based incentives, along with a
providedlxxi. single window clearance; (ii) the need to strengthen
• lignment of national and subnational
A enforcement mechanisms and IP system specially
policies. Historically, many States offer subsidies on to plug grey market operations in case of high-end
land, power, etc., but such incentives have generally mobile phones; (iii) time bound efforts for R&D with
not been market-linked and meant mainly to mitigate high funding options for Fabs; (iv) an enhanced
existing disabilities such as a relief from high tariff partnership between academia, government and
on power and excessive taxes. Encouragingly, in the private sector can help to pool right knowledge,
2020-21, several States, including Andhra Pradesh, strategies and finance; and (v) complementary
Karnataka and Tamil Nadu, have introduced schemes strategies involving curriculum changes in order to
to offer incentives similar to PLI. Linking incentives upgrade skilling in Indian electronics industry – role
to continuously expanding production, or preferably of ESSCI must be enhanced to bridge demand-
exports, would ensure that the system supports supply gaps in skills.
efficient and high productivity firms and not keep The focus on finished products, sub-assemblies,
zombie firms alive. This is also supported by Prime components, semiconductors, development of SEZs,
Minister Modi’s address on August 6 2021, which bonded manufacturing zones and clusters with world-
stated “Central government is working closely with class infrastructure, emphasis on flexible labour laws
the states to minimize the regulatory burden so as to and on R&D, and a market-based industrial policy are
increase export and investment. Healthy competition some ideas that, while not new to policy makers in
is being promoted between the states to make India, need to be implemented effectively.
export hubs in the states”. • ore investment on data and research. The
M
• ecision to reduce dependency on China
D non-availability of database for Indian electronics
needs to be strategic and meticulously production (value and volume terms) at disaggregated
planned. Some economic inter-dependencies level is a major limitation for undertaking credible
between India and China are not only inevitable but analysis. Empirically, there is also a lack of detailed
desirable in a globalized world. But if geo-political analysis of state governments’ policies and a paucity
considerations call for reducing these dependencies, of studies on value chain analysis for key electronic
such decisions need to be informed by deep items for India such as smartphones, TVs, PCs,
analysis of the global supply chain ecosystem in laptops, etc. MeitY and MoPSI, working together with
electronics. One strategy will be to develop lead other policy think tanks in the country, should make
firms in domestic value chains to capture a higher data collection and their availability to researchers a
share of the pie in GVCs over time. However, priority, so as to fill up the existing gaps.
63
APPENDIX
Appendix Table 1: HS Codes and Description of the 380 Products used in the study
HS Code Description
Machines which perform two or more of the functions of printing, copying or facsimile transmission, capable of connecting to an automatic data processing machine
84433100
or to a network
84433210 Line Printer
84433220 Dot Matric Printer
84433240 Laser Jet Printer
84433250 Ink Jet Printer
84433260 Facsimile Machine
84433290 Other (devices capable of connecting to an automatic data processing machine or to a network)
84433910 Ink-Jet Printing Machinery
84433930 Electrostatic Photo-copying apparatus operating by reproducing the original image via an intermediate onto the copy (indirect process)
84433960 Thermo-copying apparatus
84433970 Facsimile machine not capable of getting connected to automatic data processing machine
84433990 Others capable of connecting to an automatic data processing machine or to a network
Parts /accessories of printing machinery used for printing by means of plates, cylinders and other printing components of heading 8442 (machinery for making plates,
84439100
printing components)
84439910 Automatic documents feeders of copying machines
84439920 Paper feeders of copying machines
84439940 Other parts of copying machines
84439951 Ink cartridges with print head assembly
84439952 Ink cartridges without print head assembly
84439953 Ink spray nozzle
84439959 Other parts and accessories of goods of sub-heading 844331, 844332
84439960 Parts and accessories of goods of subheading 8443 39
84439990 Parts of other printing machinery and machines for uses ancillary to printing
Electronic calculators capable of operation excluding external source of electric power and pocket-size data recording and displaying machines with calculating
84701000
functions
84702100 Electronic calculating machines incorporating printing device
84702900 Other electronic calculating machines
84703000 Other calculating machines
84705010 Electrically operated cash registers
84709010 Electrically operated accounting machines
84713010 Personal computer (laptop, palmtop, etc)
84713090 Other portable digital automatic data-processing machine weighing <=10kg with a keyboard and display consisting of a central processing unit (personal computer)
84714110 Micro computer
84714120 Large or main frame computer
84714190 Other digital automatic data-processing machine comprising a central processing unit and an input and output unit whether or not combined
84714900 Other digital automatic data processing machine presented in the form of systems
Processing units other than those of 8471 41 or 8471 49, whether or not containing in the same housing one or two of the following types of unit: storage units, input
84715000
units, output units
84716010 Combined input or output units (parts of computer)
84716024 Graphic printer
84716025 Plotter
84716029 Other printers
84716040 Keyboard
84716050 Scanners
84716060 Mouse
84716090 Other (parts of personal computer)
84717010 Floppy disc drives (storage units)
84717020 Hard disc drives (storage units)
84717030 Removal/exchangeable disc drives (storage units)
84717040 Magnetic tape drives (storage units)
84717050 Cartridge tape drive (storage units)
84717060 CD-ROM drive (storage units)
84717070 Digital video disc drive (storage units)
84717090 Others (storage units)
84718000 Other units of automatic data processing machines
84719000 Other (parts of personal computer)
84732100 Parts and accessories of electronic calculating machines of subheading no. 847010, 847021/847029
84732900 Parts and accessories of other machines of 8470
84733010 Microprocessors (Parts and accessories of the machines of heading 8471)
84733020 Motherboards (Parts and accessories of the machines of heading 8471)
84733030 Other mounted printed circuit boards
84733040 Head stack
84733091 Network access controllers
84733092 Graphic and intelligence-based script technology (personal computer card)
84733099 Other (parts of mechanical appliances)
84734010 Parts of duplicating, hectograph/stencil machines
84734090 Parts of other office machines of heading no. 8472 (parts of office machines)
85011011 Micro motor with output <=37.5 w (vibrator)
85042100 Liquid dielectric transformers having a power handling capacity not exceeding 650 KVA
85042200 Liquid dielectric transformers having a power handling capacity>650 KVA but<=10000 KVA
85043100 Other transformers having a power handling capacity not exceeding 1 KVA
85043200 Other transformers having a power handling capacity exceeding 1 KVA but not exceeding 16 KVA
85044010 Electric inverters
85044021 Dip bridge rectifiers
64
85044029 Other rectifiers
85044030 Battery chargers
85044040 Non automatic voltage regulator and stabilizer
85044090 Others (industrial electronics and static convertors)
85045010 Choke coils (chokes)
85045090 Others inductors
85049010 Parts of transformers
85049090 Parts of other electric power machinery of heading 8504
85051110 Ferrite cores (electro magnets)
85051190 Others (electro magnets)
85051900 Permanent magnets and articles to become permanent magnets after magnetism (not of metal) (electro magnets)
85068010 Button cell
85068090 Other cells or battery
85112010 Electronic ignition magnetos
85165000 Microwave ovens
8 5171110 Push button type (Line telephone sets with cordless handsets)
85171190 Others (Line telephone sets with cordless handsets)
85171210 Push button type (feature phone) [valid code for feature phones till 2019-20]
8 5171211 Mobile Phone- other than push button type (smart phone) [valid code for smartphones April 2020 onwards]
85171219 Mobile Phone-Push button type (feature phone) [valid code for feature phones April 2020 onwards]
85171290 Telephone for other wireless networks [valid code for smartphones till 2019]
85171810 Other push button type
85171890 Other (Not push-button type)
85176100 Base stations
85176210 PLCC equipment
85176220 Voice frequency telegraphy
85176230 Modems (modulators-demodulators)
85176240 High bit rate digital subscriber line system (HDSL)
85176250 Digital loop carrier system (DLC)
85176260 Synchronous digital hierarchy system (SDH)
85176270 Multiplexer, statistical multiplexer
85176290 Other Machines for reception and transmission or generation of voice, images or other data (like smart watches)
85176910 ISDN terminals
85176920 ISDN terminal adapters
85176930 Routers
85176950 Subscriber end equipment
85176960 Set top boxes for accessing internet
85176970 Attachments for telephones
85176990 Other apparatus, for carrier/digital line system (parts of telephone)
85177010 PCBA of cellular mobile phones
85177090 Other parts of telephonic/telegraphic apparatus (display)
85181000 Microphones and stands there for
85182100 Single loudspeakers, mounted in their enclosures
85182200 Multiple loud speakers; mounted in the same enclosure
85182900 Other loud speakers, whether or not mounted in their enclosures
85183000 Headphones earphones and combined microphone/speaker sets
85184000 Audio-frequency electric amplifiers
85185000 electric sound amplifier sets
85189000 Parts of heading 8518- Microphones and stands
85192000 Coin, bank notes, bank cards/disc-operated record players
85198100 Sound recording/reproducing apparatus using magnetic, optical or semiconductor media
85198910 C.D. (audio compact disc player)
85198920 C.D. changer including mini /laser disc player
85198930 Time code recorder
85198990 Other record-players without loud speakers
85211011 Professional video tape recorders with 3/4 or 1 tape - cassette tape-type
85211019 Other cassette tape-type video tape recorder
85211029 Other video recorders-spool type
85211099 other video recorders-other type
85219020 DVD player
85219090 Other video recording/reproducing apparatus (digital video recorder)
85221000 Pick-up cartridge
85229000 Other parts and accessories of heading 8519-8521
85232100 Cards incorporating a magnetic stripe
85232920 Video cassettes for recording phenomena other than sounds
85232940 3/4 inch and 1inch video cassettes
85232950 1 /2 video cassette suitable for betacam SP/M II and VHS type VCR
85232990 Other for recording sounds
85235100 Solid-state non-volatile storage devices
85235210 SIM cards
85235220 Memory cards
85235290 Other (smart cards)
85235910 Proximity cards and tags
85235990 Other
85238010 Gramophone records
85238030 Audio-visual news/views
85238060 2-D/3-D computer graphics
85238090 Other media for recording sound/other phenomena, other than gramophone records, audio-visual tapes,2D/3D computer graphics
85255010 Radio broadcast transmitter
85255030 Broadcast equipment sub-system
85255090 Other Transmission Apparatus
65
85256011 Walkie talkie set
85256012 Marine radio communication equipment
85256013 Amateur radio equipment
85256019 Cordless handset
85256092 Other satellite communication equipment
85256099 Amateur Radio Equipment – PIHPSDR controller
85258010 Television cameras
85258020 Digital cameras
85258030 Video camera recorders
85258090 Other (cameras)
85261000 Radar apparatus
85269120 Instrument landing system
85269150 VHF omni range equipment
85269190 Other Radio Navigational Aid Apparatus
85269200 Other radio remote control apparatus
85271200 Pocket-size radio cassette players
85271300 Other apparatus combined with sound recording or reproducing apparatus
85271900 Other radio-broadcast receivers able to operate without external source of power
85272100 radio broadcast receivers combined with sound recording/reproducing apparatus, used motor vehicles, cannot operate without external source of power
85272900 Other radio-broadcast receivers not capable to operate without external power, used in motor vehicles
85279100 Other radio broadcast receivers combined with sound recording/reproducing apparatus
85279919 Other radio-broadcast receivers, including apparatus capable of receiving radio-telephony/radio-telegraphy
85279990 Radio communication receivers : Other
85284900 Other cathode ray tube monitors
85285200 Other monitors capable of directly connecting to and designed for use with an automatic data processing machine of heading 8471
85285900 Other monitors
85286200 Projectors capable of directly connecting to and designed for use with an automatic data processing machine of heading 8471
85286900 Other projectors
85287100 Reception apparatus for TV not designed to incorporate a video display or screen (set-top box for tv)
85287211 Colour TV set of screen size up to 36 cm
85287212 Colour TV set of screen size between 36 and 54 cm
85287217 Colour TV set of screen size > 105 cm
85287218 LCD CTV set of screen size below 63 cm
85287219 Other LCD TV set
85287310 LCD black and white TV set of screen size below 25cm
85287390 Other reception apparatus for TV etc (back and white, Monochrome)
85291011 Dish antenna for communication jamming equipment
85291012 Dish antenna for amateur radio communication equipment
85291019 Dish antenna for other use
85291029 Other antenna for other use
85291099 Aerial parts for other use
85299010 Other parts for communication jamming equipment
85299020 Other parts for amateur radio communication equipment
85299090 Parts of LCD and LED TVs
85311010 Burglar Alarm
85311020 Fire alarm
85311090 Other alarm
85312000 Indicator panels incorporating liquid crystal devices (LCD)/Light Emitting diodes (LED)
85318000 Other electric sound/visual signalling apparatus
85319000 Parts of signalling/traffic control equipment
85321000 Fixed capacitors designed for use in 50/60 Hz circuits having a reactive power handling capacity of not less than 0.5 KVAR (power capacitors)
85322100 Other fixed capacitors, tantalum
85322200 Other fixed capacitors, aluminium electrolytic
85322400 Other fixed capacitors, ceramic dielectric, multilayer
85322500 Other fixed capacitors dielectric of paper/plastics
85322990 Other fixed capacitors
85323000 Variable/adjustable (pre-set) capacitors
85329000 Parts of heading 8532 (electrical capacitors fixed, variable or adjustable)
85331000 Fixed carbon resistors, composition or film types
85332111 Electrical resistance bare wire of nichrome
85332119 Electrical resistance bare wire of material other than nichrome
85332129 Electrical resistance wire, insulated other than nichrome
85332911 Other electrical resistance bare wire of nichrome
85332919 Other Electrical resistance bare wire other than nichrome
85332929 Other Electrical resistance wire insulated excluding nichrome
85333110 Potentiometers (not exceeding 20 W)
85333120 Rheostats (not exceeding 20 W)
85333190 Other variable resistors (not exceeding 20 W)
85333910 Potentiometers (exceeding 20 W)
85333990 Others (exceeding 20 W)
85334010 Other potentiometers
85334030 Thermistors
85334090 Other variable resistors, including rheostats and potentiometers
85339000 Parts of articles of heading 8533 (parts of variable resistors)
85340000 Printed Circuits
85364100 Relays for a voltage not exceeding 60 V
85364900 Other Relays
85371000 Boards, panels, etc. for a voltage<=1000 V (electrical apparatus)
85372000 Boards, panels, etc. for a voltage>1000 V
66
85381010 Boards, panels, consoles, etc. for industrial use
85381090 Boards, panels, consoles etc. for other use
85389000 Other parts of heading 8538 (electronic boards and panels)
85393110 Compact fluorescent lamps (CFL)
85395000 Light emitting diode (LED) lamps
85401110 Colour TV picture tube 20- and 21-inch size except 21 inch flat and full square TV tubes
85401190 Other Cathode Ray Picture Tubes
85402000 TV camera tubes, image converters and intensifiers; other photo-cathode tubes
85406000 Other cathode-ray tubes
85407100 Magnetrons
85407900 Other microwave tubes excluding grid-controlled tubes
85408900 Other valves and tubes
85409100 Parts of cathode-ray tubes
85409900 Other parts of the tubes and valves of heading 8540
85411000 Diodes, other than photosensitive or light emitting diodes
85412100 Transistors, other than photosensitive transistors with a dissipation rate of less than 1 W
85412900 Other transistor, other than photosensitive transistors
85413010 Thyristors
85413090 Photosensitive devices
85414011 Solar cells/photovoltaic cells not assembled
85414019 Other photocells
85414020 Light Emitting Diodes (electro- luminescent)
85414090 Diodes/LED (Diode)
85415000 Other semi-conductor devices
85416000 Mounted piezo-electric crystals
85419000 Parts of items of heading 8541
85423100 Monolithic integrated circuits – digital
85423200 Memories
85423300 Amplifiers
85423900 Other (electronic integrated circuits)
85429000 Parts of electronic integrated circuits and micro assemblies
85431090 Others (e.g., cyclotrons)
85432010 Sweep generators
85432020 Impulse generator
85432090 Others (e.g., pattern generator)
85433000 Machines and apparatus for electro-plating, electrolysis/electrophoresis
85437012 Metal detector
85437019 Other (Electric fence energisers)
85437022 Mixing systems or consoles
85437029 Other audio special effect equipment
85437039 Other video special effect equipment
85437041 Computerised editing system controlling >3 video editing machines
85437049 Other edit control units
85437061 Broadcast amplifier
85437062 Amplifier - limiting/video distribution/stabilising
85437069 Other amplifiers
85437072 Synthesised receivers
85437091 RF power amplifiers and noise generators for communication jamming equipment
85437092 Equipment or gadgets based on solar energy
85437093 Professional beauty care equipment
85437094 Audio video stereo encoders
85437095 Time code generator
85437099 Others (audio video machines/ mixers)
85439000 Parts of articles of heading 8543 (audio visual machines/ mixer)
85442010 Co-axial cable
90121090 Other microscope other than optical microscopes; diffraction apparatus
90129000 Parts and accessories of heading 9012 (microscopes other than optical microscopes; diffraction apparatus
90132000 Lasers, other than laser diodes
90138010 liquid crystal devices (LCD)
90138090 Other devices, appliances and apparatus
90139010 Parts and accessories for LCD
90139090 Other parts and accessories of heading 9013 (LCD not covered in other headings)
90142000 Instruments and appliances for aeronautical or space navigation (other than compasses)
90148010 Echo sounding instruments
90148090 Other instruments and apparatus
90158010 Hydrographic instrument
90158020 Meteorological instruments
90158030 Geophysical instruments
90159000 Parts and accessories of surveying, photo grammatical, hydrographic instruments, etc. excluding compasses
90160010 Electric balances
90172020 Mathematical calculating instruments; slide rules, disc calculators
90181100 Electro-cardiographs
90181210 Linear ultrasound scanner
90181290 Other electro-diagnostic apparatus
90181300 Magnetic resonance imaging apparatus
90181400 Scientigraphic apparatus
90181910 Electro-encephalographs
90181920 Echo cardiograph
90181990 Other electro-diagnostic apparatus
90182000 Ultra-violet/infra-red ray apparatus
67
90185030 Ophthalmic laser
90214010 Frequency modulated hearing aid system
90214090 Other hearing aids, excluding parts and accessories
90215000 Pacemakers for stimulating heart muscles excluding parts and accessories
90221200 Computed tomography apparatus
90221300 Other apparatus for dental uses
90221410 X-Ray generators and apparatus (non-portable)
90221420 Portable X-Ray Machine
90221490 Other x-ray machines for medical uses
90221900 Apparatus based on use of X-Rays, for other uses including radiography/radiotherapy apparatus
90222100 Apparatus based on use of alpha, beta/gamma radiations or medical, surgical, dental/veterinary use including radiography/radiotherapy apparatus
90222900 Apparatus based on use of alpha, beta/gamma radiations for other uses including radiography and radiotherapy apparatus (radiation equipment)
90223000 X-Ray tubes
90229010 X-Ray valves
90229020 Radiation generation units
90229030 Radiation beam delivery units
90229040 X-ray examination or treatment table, chair
90229090 Others (radiation equipment)
90251910 Digital thermometers
90271000 Gas or smoke analysis apparatus
90272000 Chromatographs and electrophoresis instrument
90273020 Spectro-photometers
90273090 Other devices
90275010 Photometers
90301000 Instrument and apparatus for measuring or detecting ionising radiation
90302000 Cathode-ray oscilloscopes and cathode-ray oscillographs
90303100 Multimeters without a recording device
90303200 Multimeters with a recording device
90303310 Ammeters, voltmeters and wattmeters
90303320 Spectrum resistance meters
90303330 Capacitance meter
90303340 Frequency measuring apparatus
90303350 Megar meter
90303390 Other instruments to measure voltage, etc.
90303900 Other, with a recording device
Other instruments and apparatus, especially designed for telecommunications (for example, cross-talk meters, gain measuring instruments, distortion factor meters,
90304000
psophometers)
90308200 Other instrument and apparatus for measuring or checking semi-conductor wafers or devices
90308400 Other, with a recording device
90308910 Scientillator counters
90308920 Vectroscope
90309010 Parts and accessories of meters and counters
90309090 Other parts and accessories
90321010 Thermostats for refrigerating and air-conditioning machinery
90321090 Thermostats for other machinery
90322010 Manostats for refrigerating and air-conditioning machinery
90322090 Manostats for other machinery
90328100 Hydraulic/pneumatic instruments and apparatus
90328910 Electronic automatic regulators(controllers)
90328990 Other automatic regulating/controlling instruments and apparatus
90329000 Parts and accessories of instruments of 9032 (Automatic regulating or controlling devices)
9101110 0 Wrist-watch, electrically operated, whether or not incorporating stop-watch facility with mechanical display only
91019190 Other watches
91021100 Wrist-watch, electrically operated, whether or not incorporating stop-watch facility with mechanical display only
91029110 Pocket watches
91029190 Other watches
91031000 Electrically operated clocks with watch movements
91051100 Electrically operated alarm clocks
91052100 Electrically operated wall clocks
91059100 Other electrically operated clocks
91061000 Time registers; time recorders
91069000 Other time recording apparatus
91081100 Electrically operated watch movements with mechanical display/with device incorporating mechanical display
91081900 Other electrically operated watch movements
96121010 Computers printer ribbon
96138010 Electronic lighter
68
Appendix Table 2: Domestic and International sources for Indian Electronics Production Data (Summary)
Organisation/ Indicators Used Basis of Classification (Years Covered) and

Sectors Included Format of Data Presentation Analytical Observations
Database (Definition) Source of Information
MeitY, Government Production Values (also Data for 7 sectors: Consumer • Products identified at aggregate level based on • Values in INR Crores • Composition of 7 sectors not
of India volumes for mobile Electronics; end users • Uses Financial Year (FY) given at disaggregated level
handsets, computer Industrial Electronics; • Latest data for 2020-21: available on website and to understand production of
• Annual data
hardware, etc.) annual reports; Collected through research works key P&Cs
Strategic Electronics;
from India Cellular and Electronics Association • Production data not explicitly
Electronic Components;
(ICEA) for mobile phones; Consumer Electronics given in volume terms except
LED products; and Appliances Manufactures Association for mobile handsets, PCs/
Computer Hardware; (CEAMA) for CE; Manufacturers’ Association notebooks (only for few years)
Mobile Phones of Information Technology (MAIT) for computer (Table 2.4)
hardware; Electronic Industries Association of
India (ELCINA) for other 4 verticals [GARTNER
provided for automotive electronics till 2013-14]
IndiaStat Database Value of production; Consumer Electronics; • Mostly based on finished categories • Annual Data in terms of values Data on production value by
Volume of Production Industrial Electronics; • Data Collected based on Secondary Research and volume sector sourced from MeitY, but
(Mobile handsets and from MeitY and other government sources • Values given in INR Crores yet not updated for 2019-20
Strategic Electronics;
subtypes of electronic including Rajya Sabha questions period
Electronic Components (plastic • Sector-wise aggregate data
components) • Data available from 2013-14 to 2018-19
film capacitors, TV receivers,
X-ray equipment, etc.); • Data on volume of production for subtypes of
LED products; electronic components available but only till 2011-
12 (Need for updating data)
Computer Hardware;
Mobile Phone handsets
Annual Survey of Gross and Net Value Manufacture of computer, • Cover broad segments (may include both finished • Data in Values in INR Lakhs India has low value added in
Industries (ASI) Added (NVA), Value of electronic and optical products and intermediate items) • Annual data available but only till 2016-17 and 2017-18 as shown
Total Output (Code: NIC 26) • Data in public domain on 3-digit NIC Codes (data 2017-18 by NVA to Output ratio
NIC 261: Manufacture of on 5-digit available only with subscription) • Data at 3-digit NIC code level Need to update the database on
electronic components • Latest NIC-2008 classification used (based on 261-268 a more frequent basis
NIC 262: Manufacture of concordance with ISIC revision – 4 of UN)
computer and peripheral
equipment
NIC 263: Manufacture of
communication equipment
NIC 264: Manufacture of
consumer electronics
Central Statistics Index of Industrial Covers Total manufacturing • Use-based classification- Primary goods, capital • Provide Monthly Indices Updated IIPs for NIC 26
Office (CSO), Production (IIP) – sector; Manufacture of computer, goods, intermediate goods, consumer durables/ • Indices of aggregate groups code show the growth rate
MOSPI • Item basket selected electronic and optical products non-durables, etc. (NIC-08 broad classification) of manufacture of computer,
from ASI data at NIC (NIC 26) • Based on 2-digit NIC codes electronic and optical products
3-digit level • Data published by CSO: latest available for April
2021
69
International Sources
70
CEIC database Production Values Consumer Electronics; Industrial • Based on final products for end users • Values in INR Billion at sector- • Sectoral disaggregated
Electronics; • Sources data through Secondary Research from wise aggregate level composition not specified;
Strategic Electronics; MeitY; Also, data from IMF, World Bank, UN • Annual data even constituent parts of Total
Electronics and IT are not
Communication and Broadcasting • Latest data available for 2017, 2018, 2019, 2020 • Uses Calendar Year
mentioned
Equipment; (2017: ‘Total Electronics and IT’
• Data is Scattered; Different
Electronic Components 2018: ‘Communication and broadcasting format of year used
Computers; equipment, Computers, Consumer Electronics,
• Definition of Hardware
Electronic Hardware; Electronic Components, Industrial Electronics,
Electronics not given
Total Electronics and IT Strategic Electronics’
• Production Values of all
2019/2020: ‘Electronics Hardware’)
sectors not updated for 2020
• Average production data available (1998-2017)
Statista database Production Values, Consumer Electronics; • Data updated based on Secondary Research from • Data provided in terms of • Most data as per MeitY
Revenue Data, Strategic Electronics; MeitY Revenue, Value, share & market • Data provided in different
• Production data for Strategic Electronics, shares currencies making compilation
Share in total Electronic Hardware;
electronics production Electronics Hardware till 2018; Share of Consumer • Values in USD Million, USD of information difficult
Electronic Components;
electronics production data available for 2020 Billion, INR Million • Data not available for every
Mobile Phones;
• Share datasets on consumer electronics provide • Data available sector-wise segment of electronics
Computer and laptops forecasts up to 2024/25 industry; Data not updated
• Uses Financial Year
• Data provided on Annual basis
OECD- WTO TiVA Production (Gross Products listed under broad head • Aggregate segment is defined for D26 • Annual values Data is relevant but not updated
(2018) Output); D26T27 – • Data available till 2015 (on TiVA 2018 version); • Production and VA in USD to show recent trends especially
Value Added; (Computers, electronic and 2020 version to be launched soon Million changes in electronics GVCs
electrical equipment), which during 2019 and during COVID
Value Added as a % of • Data sourced by this database from SNA08/ISIC • Data at highly aggregate level
comprises of period
Production Rev.4 version of the OECD STAN Database – D26
D26 – Computer, Electronic and
Optical products; and
D27 – Electrical Equipment
Appendix Table 3: Key International Production Datasets But not reporting Data for India (Summary)
Organisation/
Indicators and Formula Basis of Classification and
Database Sectors Included Format and Formula Used
Used source of Information Analytical Observations
(Country)
GDP by industry or Value added Total Manufacturing; • Broad sectoral classification • Data is available at an Whether concordance of NAICS is available
per industry; aggregate level (NAICS with other codes is not known
NAICS 334 – Computer and electronic • Based on NAICS classification
3-digit)
US Bureau Gross output by industry; products industry; (NAICS 334, 335) – this is US
of Economic own product classification • Values both at Quarterly
Value of Intermediate inputs; NAICS 335 – Electrical equipment,
Analysis (BEA) and Annual levels
Shares of gross output by appliances and component industry • Data collected through
(USA) Industry primary surveys • Values in USD Billion
• Updated Version: Data
available till Q1 2021
Industrial production (IP) index NAICS 334; NAICS 335 • Based on NAICS • Indices provided as per Covering period of January 1972 to May
FRED – Federal
(Monthly Index with 2012 month 2021
Reserve Bank • Sourced from Board of
as base year and seasonally
of St Louis Governors of the Federal • Data at Aggregate sector
adjusted; measures real output
Reserve system level (NAICS 3-digit level)
(USA) of all establishments in US)
Value added data NAICS 334 – computers and electronic • Based on Final and • Annual data Composition of Value Added not specified
products, including- intermediate products
(VA defined as those compiled • Data at disaggregate level
from information in Census of NAICS 334111 – Business Computers, • Based on 6-digit NAICS (6-digit NAICS)
Manufactures, Annual Survey of NAICS 334112 – computer storage 334 and 335 – Each 6-digit
• VA in USD Million2016
Manufactures) devices, NAICS 334118 – computer NAICS codes has further
(released in 2019)
terminal and other computer peripheral subparts on which data is
equipment, NAICS 334413 – provided
semiconductor and related device, NAICS
The Federal • Sourced from International
334412 – bare PCBs, NAICS 334418 –
Reserve Data Corporation (IDC)*,
PCBAs, NAICS 334512 – measuring and
Census bureau, Bureau of
(USA) controlling instruments and parts
labour statistics and own
NAICS 335 – Electrical equipment, Federal Reserve estimates
appliances and components, including-
NAICS 335221 – household cooking
appliances, NAICS 335222 – refrigerator
and freezer, NAICS 335228 – other major
household appliances, NAICS 335911 –
Batteries
Production data for Japanese JEITY’s Data as per 3 sectors: Consumer • Largely based on finished • Provide Monthly data from METI’s classification is very wide: production
Electronics Industry electronic equipment (audio and video); products, but also components January 2000 to January and business oriented machinery (office
Industrial electronic equipment (covering listed separately to show trade 2021 (changed product machinery, business service equipment,
6 segments: communications equipment, in intermediate products classification since 2000; optical appliances like cameras, watches
computers and information terminals, prior to this, uniformity and clocks, semiconductor, flat-panel
• Sourced from METI, Japan
electronic application equipment, electric in names of product display manufacturing system); Electrical
Japan who conducts monthly surveys
measuring instrumentation, electronic categories was missing as machineries, electronic devices,
Electronics and to obtain production trends
business machines); and Electronic decided differently by each information and communication equipment
Information - from those companies who
components and Electronic devices trade association) (encompassing communication equipment,
Technology produce goods as decided by
[Former covers passive components, consumer electronic appliance, parts
(JEITA) Ministerial Ordinance • Data at more disaggregate
connecting components, electronic for electronic equipment, electronic
level in terms of electronic
boards, electronic circuit jisso boards, • Basis of sectoral classification tubes, semiconductor devices and ICs,
(Japan) components
transducers, others; and Latter covers is as per number of electronic computers, batteries, etc.) –
[data by electronic tubes, discrete semiconductors, questionnaires, and not as • Production values in Million Detailed classification is given on METI
Ministry of integrated circuits (ICs), and Liquid crystal per any particular product or Yen (Database regularly for components and sub-products such
Economy, Trade devices (LDCs)] industry classification updated) as types of ICs as linear ICs, metal oxide
and Industry semiconductor ICs, memory, logic, hybrid ICs,
(METI), Japan] • METI as source of data etc.; LEDs, LCDs – small/large; parts like
for JEITA also provides capacitors, connectors; types of batteries
production on volume like dry cells, lead acid and alkaline storage
terms, which is not reported batteries; X-ray equipment, etc.; and number
by JEITA of consumer electronics including TVs,
car audio, car navigation system; for PCs,
notebook, computers; etc.
Sources: Own findings [*IDC is one of the most reliable sources of data for number of countries who report findings in format of reports and insights (although most reports available on subscription basis)]
71
Appendix Table 4: Country Wise and Sector Wise FDI Inflows over 2015-20
Country Wise FDI Inflows (in INR Million)
Country/Region 2015 2016 2017 2018 2019 2020
Austria 825.35 4406.85 3062.68 2020.56 2028.93 2615.57
Belgium 4430.06 12585.69 8642.84 10648.21 41974.09 18552.19
Bulgaria 54.79 16.80 20.00 57.37 174.20 8.18
Croatia 0.00 0.00 0.00 1.78 5.74 6.20
Cyprus 33186.79 44804.57 24392.29 26169.35 17413.54 64306.71
Czech Republic 173.18 124.04 89.51 58.04 1151.38 3913.43
Denmark 1724.20 841.40 2619.45 5707.46 3238.99 4672.70
Estonia 29.83 0.00 22.69 84.66 14.05 11.10
Finland 4066.90 202.53 2078.00 1230.07 4199.33 1025.55
France 27548.57 43769.36 42476.37 28812.83 35718.41 196591.37
Germany 72408.86 74123.56 74600.29 50247.23 46041.60 45107.98
Greece 7.88 0.00 152.78 8.56 0.06 0.00
Hungary 26.81 80.78 7.62 0.05 397.00 23.40
Ireland 1091.98 1062.89 8366.11 4830.13 26353.06 15799.06
Italy 15151.33 30955.86 21063.77 11061.96 12896.55 8292.02
Latvia 0.00 0.79 0.00 24.89 0.00 0.34
Lithuania 21.30 0.00 1.73 0.03 1.00 18.30
Luxembourg 50723.91 14329.05 18432.78 20617.69 19471.91 23680.98
Malta 2.76 4.09 37.59 63.63 79.60 22.69
Netherland 192548.62 200993.79 212468.50 232330.93 312006.54 396093.17
Poland 248.33 2948.53 372.93 147.08 844.20 124.95
Portugal 306.53 2242.29 761.89 1080.58 154.44 313.79
Romania 75.87 7.04 10.77 324.96 9.98 2.50
Slovak Rep 357.92 5.41 193.59 188.90 112.90 0.00
Slovenia 15.42 0.10 0.36 1.58 5.45 4.99
Spain 8943.21 10325.52 17371.20 14191.66 8102.77 37982.77
Sweden 6870.32 5735.08 10296.05 6377.41 6386.19 11073.08
UK 58794.91 111372.30 61273.41 80780.90 101607.93 156587.13
EU (Total) 479635.63 560938.32 508815.20 497068.50 640389.84 986830.15
Brunei 6.10 6.00 14.06 2.33 0.10 1.10
Cambodia 0.00 3.00 661.24 1892.52 962.91 0.00
Indonesia 145.47 134.05 141.14 41.88 513.32 161.44
Lao PD RP - - - - - -
Malaysia 3941.67 2815.92 2248.64 4041.37 8011.22 4345.43
Myanmar 0.02 0.30 0.00 0.00 0.00 2.01
Philippines 503.88 6341.55 679.26 425.82 4966.72 1658.50
Singapore 862990.95 659735.79 701090.08 1086273.03 1047584.91 1385531.32
Thailand 1608.80 4641.49 5296.03 6469.53 2462.67 6744.55
Vietnam 8.64 281.07 10.94 12.05 12.06 12.00
ASEAN (Total) 869205.53 673959.17 710141.39 1099158.53 1064513.91 1398456.35
Afghanistan 0.00 122.75 0.10 13.31 26.78 9.94
Bangladesh 1.50 0.00 0.00 1.00 0.74 0.00
Bhutan - - - - - -
Maldives 0.46 0.00 214.93 2.50 122.96 56.08
Nepal 13.48 14.33 0.00 5.00 52.01 56.08
Pakistan - - - - - -
Sri Lanka 311.14 270.16 1965.66 820.00 453.12 254.88
South Asia (Total) 326.58 407.24 2180.69 841.81 655.61 376.98
USA 252420.00 176027.49 141886.11 189911.02 252021.47 1055011.41
China 54874.52 19377.79 10693.23 26243.78 12184.34 7181.27
Japan 110843.79 388098.00 113515.47 174715.89 250533.16 7181.27
Korea 12.20 26.74 205.26 57.84 3.50 0.00
72
Sector Wise FDI Inflows (in INR Million)
Computer Software and Hardware 425370.39 161969.13 457018.44 417331.86 546170.83 1910912.50
Electrical Equipment 23329.06 149045.05 40310.25 58155.72 46758.58 103553.97
Electronics 13454.69 5904.72 8256.26 30090.90 22500.33 30184.62
Telecommunications 83373.33 389710.04 394292.84 162112.61 324084.08 37688.95
Grand Total 2451364.78 3116439.70 2827679.54 2906952.31 3346125.86 4786038.81
As a % of Grand Total (in %)
Computer Software and Hardware 17.35 5.20 16.16 14.36 16.32 39.93
Electrical Equipment 0.95 4.78 1.43 2.00 1.40 2.16
Electronics 0.55 0.19 0.29 1.04 0.67 0.63
Telecommunications 3.40 12.50 13.94 5.58 9.69 0.79
Source: FDI Newsletter, Department for Promotion of Industry and Internal Trade, Government of India
Appendix Table 5: Other Countries’ Case for Exports

TAIWANlxxii
Taiwan’s economy was mostly inward-looking till 1950s; however, policy reforms were undertaken during 1960s to become outward-oriented
– devaluation of New Taiwan Dollar and introduction of the Investment Law. This stimulated the production of transistor radios. By 1966, the
country had exported over 2 million sets, primarily to US. Success of consumer electronics in Taiwan was largely led by foreign investments (FIs)
since mid-60s. By 1963, 7 JVs had been formed by Taiwanese firms with Japan’s electronics’ manufacturers – these started manufacturing
electronic goods for domestic as well as export markets during 70s-80s. Taiwan liberalized by supporting private sector initiatives and placing
emphasis on manpower, R&D and technology. Since 1982, Taiwan moved to aggressive promotion of exports in high-tech areas.
Taiwan has always given prominent focus to development of ICs/ semiconductor segment which experienced USD 227.5 billion sales during
2005, increasing by 6.8% from 2004. It has set up various educational and research centres to promote innovation in the country, along with
science-based park. It also gained during US-China trade war, i.e., maximum trade diversification effects (amounting to USD 4.2 billion during
first-half of 2019) – recorded second-highest effects for communication equipment (USD 491 million), after Vietnam.
• To develop electronics industry, Government set up the National Chiao Tung University (NSTU) in 1958 and started offering electronics
and semiconductor-related courses in 1963.
• Industrial policy’s focus shifted to promoting greater skills and high-tech industries since 1970s. Taiwan tried to build its technological
capabilities since early years: founded Industrial Technology Research Institute (ITRI) in 1973, under which the research institute,
Electronics Research Service Organization (ERSO) was formed in 1974.
• Government of Taiwan set up the Hsinchu Science-Based Industrial Park (HSIP) in 1980 to attract high-tech companies engaged in
research and manufacturing, by providing financial assistance, tax breaks and R&D grants.
• As a result, R&D share of electronics industry rose from 41.6% in 1987 to 67.4% in 1999 and its shares in country’s total production
increased from just 13.9% to 34.4% over these years.
• Local universities, such as Jiao Tung University, were also set up near HSIP – Jiao Tung also houses the National Nano-Device Laboratory
for training students
• Patent registration in Taiwan increased at 54% rate from 1997 to 1998, and 63% from 1999 to 2000.
• In order to develop country’s semiconductor industry, Taiwan launched the Taiwan Semiconductor Manufacturing Company (TSMC) in
1987 as a JV with Philips and other private investors and marked the beginning of foundry model.
CHINAlxxiii
China opened up its economy to FIs in 1978 when it started pursuing an open-door policy. MNCs from Japan and NIEs started relocating
their production units to China during 1980s owing to latter’s low labour costs, which propelled growth of Chinese electronics industry. Other
countries too moved their labour-intensive assembly plans to China, over the years, to reduce their production costs. This resulted in significant
increase in China’s exports. Its share in the world’s electronics production also increased from 2% to 20% during 1992-2005. India, being
a labour-abundant country like China, can emulate its model to set up labour-intensive activities such as in the assembly of mobile phones.
• China shifted to industrialization-oriented strategy since 1980s, viz. Strategy of Technology Transfer in Exchange for Domestic Market
Access, to offer MNCs an access to domestic markets in exchange for transfers of advanced technology from them (this helped China
in significant technological advancements). It has also set up the Electronics Industry Development Fund (EIDF) in late-80s to support
R&D and production of four electrical components (software, ICs, computers, and program-controlled switching devices).
• In order to attract greater FDI, China followed decentralizing policies since 1990s, wherein policy implementation was left to the local
governments - this created healthy competition and prompted greater spending on infrastructure by local authorities; Also, proportion of
FDI in GDP was 3.1% in China during 2012 (compared to 1.3% in India).
• China launched four SEZs for export processing in Guangdong and Fujian provinces with the involvement of FDI between 1979 and
1983 to tap into investable funds in Hong Kong and Taiwan - FDI were encouraged to gain technology transfer opportunities, and this
created positive spillovers in terms of greater export sophistication by end of 1990s.
• The country further established various special Economic and Technological Development Zones (ETDZs), High Technology Development
Zones (HTDZs) and Free Trade Zones (FTZs) from 1984 to 1995.
• China offered various economic incentives under SEZs (its main focus segment), namely, lower corporate taxes, duty free imports of
export-related items, tax breaks, flexible labour laws, cheap and interrupted supply of power, schools, residences, etc. – these further
attracted more FIs.
• To make SEZs engine of growth, government changed its policies during 2000 to provide quality infrastructure, exemptions from direct/
indirect taxes to foreign investors, permit of 100% foreign ownership (via automatic route) for all manufacturing activities, etc.
• Government exempted imports of R&D equipment from VAT and custom duty from 2007 to 2016 to give sufficient time for the industry
to mature.
China has followed proactive FDI policy by offering preferential treatments to foreign invested enterprises (FIEs). It has always focused on
attracting export-oriented FDI as compared to market-seeking as in case of India, which led to development of former’s manufacturing sector.
73
THAILANDlxxiv
Thailand has emerged as a major manufacturing location by attracting FDI and integrating into the existing GVCs for production of electronics
and electrical (E&E) products. Its E&E segment took off due to progressive move towards export-oriented policies during early 1980s, which
shifted the focus for industrialization from domestic to international markets. Note that total trade of the country’s electronics industry during
2014 was recorded at USD 59.5 billion, of which exports were worth USD 32 billion. Thailand’s major exports during the same year were
computer components and ICs, accounting for around 56% and 24% share in its total electronics exports, respectively. The country is also
one of the main manufacturing locations for IC and semiconductor in ASEAN.
Thailand is also the second largest producers and exporters of automatic data processing machines [including hard disk drives (HDDs)], after
Singapore. Its exports of the same totaled USD 12 billion in 2014, growing by 7% from 2011. It houses two global manufacturers of HDD –
Seagate and Western Digital; and manufacturers of HDD parts – Apls Electric, Hutchinson Technology, Magnacomp Precision, Minebea, NHK,
Nidec, Nitto Denko and Seiko Instruments.
• The government started focusing on the creation of E&E clusters from 1980s onwards, as well as on boosting R&D activities – successful
particularly for HDD segment.
• Thailand’s government also promoted setting up of various SEZs in the country to attract foreign investors by offering various tax
incentives.
• During 1960-70, to promote import-substitution, JVs were formed with Japanese investors mainly for assembly of televisions and radios
for domestic consumers.
• During 1972-85, policy shift took place from import substitution to export promotion. Investment Promotion Act, amended during 1972,
provided incentives for exports and expansion of electronics industry, viz. exemption of duties for imports of machinery and raw materials,
exemption from export duties, reduction of business tax, etc.; Production facilities were also set up by major electronic producers, such
as Japanese Minebea Group, Seagate and Hana Semiconductor.
• During the fifth plan period (1982-86), Eastern Seaboard of Thailand was developed as an export-promotion zone – contributed to
increased production volumes, greater diversification and sophistication of exports range in electronics.
• Thailand’s eighth and ninth plan (1997-2001 and 2002-2006) placed emphasis on human resource development and SMEs in
enhancing country’s competitiveness
• Government of Thailand has been focusing on promoting SEZs along the border provinces to foster stronger regional integration and
gain advantage from lower labour costs of the neighboring countries. The Unit for Industrial Linkage Development (BUILD) was created
by the Board of Investment of Thailand in 1992 “to encourage the development of support industries, strengthen linkages and help small
and medium-sized contract manufacturers improve their productivity, as well as to facilitate cooperation between foreign and domestic
firms” (Errighi & Bodwell, 2017). It established three large-scale clusters of E&E during 2005-10.
• Further, under “Thailand 4.0 policy”, Thailand aimed transition to knowledge-intensive production by increasing investments in
infrastructure, human capital, and R&D projects.
• As of 2019, Thailand provided various corporate tax exemptions to promote electronics industry: tax holiday of 10-13 years for core
technologies development project and up to 8 years of tax exemption for targeted industries; In addition, it offered 15-years tax holiday
for high impact investment and new technologies.
• Thailand has developed world-class industrial clusters, which also house supporting industries to manufacture majority of the components
required in the assembly of HDDs. The HDD clusters are concentrated majorly in the country’s central and northeastern regions that
lie near Bangkok and provide “premiere efficiency, cost-savings, and readily-available expertise synergies” (Errighi & Bodwell, 2017).
• Thailand has also set up certain institutions for technical training: Thai Microelectronics Centre (TMC) and Western Digital HDD
Technology Training Institute (HTTI), established for research in HDD advanced manufacturing, HDD components, data storage
technology and application
Thailand’s government policies have thus played a central role in the creation of a successful electronics industry. Initiatives like opening up to
FDI, lower tax rates, provision of infrastructure support through creation of industrial clusters and SEZs, focus on development of science and
technology (S&T) capabilities have contributed to the industry’s growth.
VIETNAMlxxv
The rise of Vietnam began after the Doi Moi reforms of 1986, which shifted the focus of the country from import-substitution to export-
promotion. Prior to that, Vietnam was essentially a centrally-planned economy. The reform process removed restrictions to international trade
and approved the Law of Foreign Investment in 1987. The law covered reductions on corporate tax for foreign investors (full tax exemptions for
the first four years and 50% reduction for subsequent nine years), exemption of duties for imports of fixed assets required for production, and
exemption/reduction in land rents. Further, value added of the country’s electronic industry was registered at USD 12.875 billion in 2016 and
grew at 41% over 2006-16 period and 47% over 2011-16. Electronics industry in Vietnam however is majorly limited to assembly operations
for famous foreign brands and manufacture of certain parts and accessories.
• Vietnam lowered its electronics tariffs from 15-20% to 0-5% following its participation in ASEAN Free Trade Area (AFTA) – various major
global electronics manufacturers thus shifted some of their production lines to the country.
• Vietnam amended the Law on Enterprise Income Tax and other legal acts to improve its investment environment – exempted payments
for lease of land and water surface for a period of 11 years, imposed tax rates of only 10% on earnings of hi-tech enterprises.
• It developed industrial zones (IZs), economic zones (EZs) and export processing zones (EPZs) to encourage export production since
1990s.
• There had been benefit of lower average monthly base salary (USD 216) of industry/enterprise workers during 2017 as compared to
other countries (USD 378 in Thailand, USD 314 in Indonesia, USD 356 in Malaysia and USD 470 in China, etc.).
• As of 2020, Vietnam has well-developed shipping infrastructure – 44 ports, capable of handling 470-500mm tons capacity annually
• As of 2019, Vietnam provided import tax holiday for importing goods that are not produced domestically for use in EPZs. Manufacturers
also exempted from VAT on goods imported in EPZs. Vietnam has simplified the process of issuing construction permits.
Therefore, Vietnam has provided attractive incentives to foreign investors over the years such as tax and duty exemptions. It has also led the
establishing of various industrial and EPZs to provide appropriate infrastructure and preferential treatment in the form of tax exemptions.
Investors have also cited other factors to invest in Vietnam such as relatively lower labour costs, political stability, Vietnam’s strategic location
(proximity to China and Taiwan), etc.
Conclusion and Learnings: Case studies of these 4 countries offer a number of lessons for India. The latter can learn from Taiwan
and Thailand with regard to promotion of technological capabilities and skill levels. Greater focus on research by Taiwan has promoted its
semiconductor and IC segment, which is must for India. China has led the development of various SEZs and other clusters, with adequate
infrastructure and flexible labour laws. Further, country’s focus on acquiring advanced technologies from other countries and its success in
case of assembling can provide significant learnings for India. Similarly, open FDI policies of Thailand that have facilitated the growth of its
HDD industry are key-points for India. These countries have set up manufacturing/industrial clusters with tax breaks, quality infrastructure,
and emptions from various duties, etc. – India also needs to step up and build similar clusters.
74
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India’s Electronics Industry:

India’s Electronics Industry:

Authors: Neha Gupta, Priya Kumar and Rachit Saini

1. Centrality of India’s Electronics Industry���������������������������������������������������������� 11

1.2 Review of Literature and Existing Gaps����������������������������������������������������������������������������12

2. Production, Trade and Value Chains����������������������������������������������������������������������14

2.1 Domestic Production: Trends and Issues�������������������������������������������������������������������������14

2.3 Changes in Electronics Ecosystem�������������������������������������������������������������������������������������� 25

3. Decoupling Opportunities and Challenges����������������������������������������������������39

3.1 Decoupling by India and Opportunities����������������������������������������������������������������������������� 39

3.4 India’s Challenges in Electronics Industry����������������������������������������������������������������������� 53

these countries suggest that unless India, which

Box 1: Renewed emphasis on export promotion?

1.1 Background and Rationale

Average Average Average

Source: MeitY, Government of India (2017a, 2020a, 2021)

Figure 2.1: Indian Electronics Production Shares in % (2012-13 to 2020-21)

Consumer Electronics (CE) Industrial Electronics Computer Hardware

Figure 2.3: Indian Electronics Production Forecast: 2017-25

60 55.9 52.9 52.8

Source: Own Calculations, Export-Import Bank of India, DoC, Government of India

Source: Own Calculations, Export-Import Bank of India, DoC, Government of India

Indicator 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-2021

2.2.1 Export-Profile of Indian Electronics

Source: Own Calculations, Export-Import Bank, DoC, Government of India

Source: Own Calculations, Export-Import Data Bank, DoC, Government of India

Share in Total Percentage point Changes in Shares

Source: Own Calculations, Export-Import Data Bank, DoC, Government of India

Figure 2.8: India’s Exports of Electronics during 2020-21

Source: Own Calculations, Export-Import Data Bank, DoC, Government of India

Figure 2.9: Projected Growth of India’s Exports of Electronics

2.2.2 Import-Profile of Indian Electronics

Source: Own Calculations, Export-Import Data Bank, Government of India

Important inferences from the analysis are:

Source: Own Calculations, Export-Import Data Bank, DoC, Government of India

Figure 2.13: India’s Imports of Electronics during 2020-21

Source: Own Calculations, Export-Import Data Bank, DoC, Government of India

Figure 2.14: Decline in CBU Imports

Imports as a % of Total Imports as a % of Total

Research and Development

Most parts and components imported Mostly sourced

Assembly of P&C to produce Most ﬁnished electronic products imported

Source: Own Illustration

Figure 2.16: Domestic Electronics Value Chain and Ecosystem (2019-20)

Designing, R&D, IP Raw Materials Assembly by ODMs/EMSs Final Output

Parts and PCBA Other parts

Source: Own Illustration

Table 2.6: Mobile Phone Companies Registering for Design in India

Year Mobile Phone Companies (No. of Registrations)

Mobile Phones- The Champion Segment

Deviations in Demand for CE & Hardware

in Noida (SRI-D) . Up until 2018,

Samsung had a TV manufacturing plant

production for entire electronics industry

• 15 million units of • Started with manufacture of colour • TV market dominated by

India’s Top Import Partners India’s Top Export Partners

China, Germany, Hong Kong,

HS Code (GLI: Intra-Industry

Table 2.12: Highly Demanded Smartphones in India (Q4 2019 to Q3 2020)xxxvi

Table 2.13: Highly Demanded Tablets in India (Q4 2019 to Q3 2020)xxxvii

LenovoLenovo HP Inc.HP Inc. Dell Technologies

(e) Laptops and PCs (f) Laptops and PCs

22.9 LenovoLenovo HP IncHP Inc LenovoLenovo Dell Technologies

1. Centrality of India’s Electronics Industry�� 11

1.2 Review of Literature and Existing Gaps��12

2. Production, Trade and Value Chains��14

2.1 Domestic Production: Trends and Issues��14

2.3 Changes in Electronics Ecosystem�� 25

3. Decoupling Opportunities and Challenges��39

3.1 Decoupling by India and Opportunities�� 39

3.4 India’s Challenges in Electronics Industry�� 53