The electronic manufacturing industry in India has a bright future ahead. This can truly be depicted by its current potential, unveiled here.

Growth

The electronics industry in India has huge growth potential. The industry reflected the biggest surge of 13.8%, the highest in the past six years. Not only this, the electronics industry is expected to grow at a compound annual growth rate of approx. 15.77 by 2027, as per the India Consumer Electronics market report.

Make in India

The Make in India program has been an impetus for the growth of the electronics industry. Many government initiatives, like Digital India and Make in India, have paved the way for electronic manufacturing units to be set up in India. The Make in India initiative has also encouraged FDI in the electronics manufacturing industry, allowing foreign manufacturing units to enter the Indian market and set up manufacturing units here.

In return, India is now also considered a hub for electronic chip design and embedded software in the Asia-Pacific region. Not only is India aiming to become a $300 billion electronics industry by 2025, but it also aims to touch $120 billion in electronics exports by 2025.

IT Industry

Major cities in India like Bangalore, Hyderabad, Pune, Ahmadabad, Mumbai, Chennai, Delhi, NCR, and Kolkata contribute to India’s IT industry sector. The industry has also started decentralizing to 26 other cities from these hubs, like Kanpur, Nagpur, Chandigarh, Vadodara, and many more.

The IT industry in India is thriving, and there is no shortage of highly talented and skilled IT forces in India. From engineers and software experts to technicians, India’s skilled IT labor has greatly contributed to developing electronics manufacturing and new technologies.

Industrial Parks and Special Economic Zones

The Make in India program to encourage setting up electronic manufacturing units in India calls for a strong infrastructural foundation. For this reason, the government, in collaboration with major companies like HCL, Boat Lifestyle, Vedanta, Mitibushi, Voltas, etc., has developed industrial parks and special economic zones primarily dedicated to electronics manufacturing.

One such unit, known as the Electronics Manufacturing Cluster (EMC), was set up in March 2023 at Hubli Dharwad, Karnataka, and is expected to create 18000 jobs alone. Another air conditioner and compressor factory was established in Tamil Nadu in collaboration with Mitsubishi Electronic India with an investment of $230.9 million.

Geopolitical Stability

The increasing trust of international companies in India’s potential post-pandemic has aided India in being one of the preferred destinations for establishing electronic manufacturing and assembly units. The efforts of the Indian government to welcome FDI in the manufacturing sector have been one of the main catalysts. Thus, depicting the powerful geopolitical relations of India with other countries.

The EMCs have been a successful move and are currently in their second phase.

Strategic Location

The strategic location of India has also been a major contributor to the growth of the IT sector. The fact that India’s location provides easy access to major global markets like Asia, Europe, and Africa via sea links and air has increased the potential of electronic manufacturing in India multifold.

Major foreign and domestic companies can use India’s strategic position to increase exports.

Lower Labor Costs

It’s a known fact that India is known for its cheap and talented labor force. On the contrary, major economies have seen a surge in labor costs, which makes it less preferable for companies to establish manufacturing units. India not only has lower labor costs but also a talented pool of skilled IT professionals that have been favorable in attracting manufacturers from around the world.

Strong Domestic Demand

As per the Statistics Consumer Electronics India survey, the average volume a person carries in the consumer electronics market is 0.6 pieces. This is expected to grow by 2% in 2024. This shows the rapidly growing demand for the electronics market in India.

Not to mention, India is already the second-largest manufacturer of mobile phones in India, with more than 200 mobile manufacturing units.

India’s vast population, augmented purchasing power, and escalating urbanization enable it to afford a wide range of electronic products, spanning from smartphones and tablets to refrigerators. This is enough for companies to establish manufacturing units and take advantage of domestic demand.

Favorable Business Environment

The government’s Product-Linked Incentive (PLI) Scheme has been a harbinger for domestic players to establish local units and achieve economies of scale. At the same time, FDI has opened doors for foreign companies to manufacture products in India. Furthermore, establishing EMCs, Make in India, software technology parks, and the National Policy of Electronics has contributed to creating a favorable business environment for electronic manufacturing to thrive in India.

Key Metrics Supporting The Country’s Electronics Manufacturing Journey

The most recent metrics also depict the successful growth of electronic manufacturing in India. This is another encouraging factor that will help India reach its target sooner rather than later. Here are some of the key metrics to look at:

Top 3 Global Economies For Digital Consumption

India is one of the top 3 global economies regarding digital consumption, as per PwC analysis. Of this, mobile phone usage turns out to have the major share. India is already the fastest-growing economy and is set to surpass double the $3 trillion economy by 2031, as per Morgan Stanley Indian research. Digitization and growth in the manufacturing sector are considered the major contributors.

9,200 Million Market Shares Of IoT By 2025

The market size of the Internet of Things was $4200 million in 2020. This is expected to reach a sky-high of 9200 million by 2025. The Internet of Things covers all the devices, software, sensors, and processing abilities that can be connected to other devices over the Internet and exchange data.

The growth of electronic manufacturing in India and various other factors like digitization, urbanization, internet penetration, and the adoption of smart devices all play a considerable part in the market share.

70% of India’s manufacturing profile is spread across four main segments: mobile phones, consumer electronics, electronic components, and IT hardware. If we dig deeper, this includes producing various mobile parts, adapters, chargers, battery packs, etc. The government has also been pushing investments in the in-house production of other telecom equipment like routers, modems, optical fiber equipment, data networking systems, and more. This will make India self-reliant in launching faster internet services.

~1.4 Million Digitally Skilled Employee Base

India has approximately 1.4 million digitally skilled employees, which is a direct outcome of the government’s Skill India Digital program. However, there is still a demand and supply gap for digital talent in India, per Skills Strategies for a Strong, Sustainable, and Balanced World of Work.

India still needs 30 million digitally skilled professionals by 2026 to meet the growing demand. The report also said that 50% of the present workforce needs to upskill in emerging technologies to bridge the demand and supply gap.

Connecting the dots, it won’t be wrong to say that the number of employment opportunities in the coming years in the engineering, AI, and manufacturing sectors will be on the rise. The youth of today can take advantage of the opportunities that will arise in the future and add to the digitally skilled employee base.

6th Largest OTT Market

With the rise in mobile phone consumption in India, global mobile commerce is at its peak. India is first in global mobile e-commerce, and the use of digital payments has leaped 160 times in the past two decades, as per the Nasscom India Digital Payments 4.0 report. It also reveals that 50% of internet users in India use digital payments. The CAGR of 2025 in m-commerce is likely to be between 25% and 27%, up from the current CAGR of 46%.

The OTT market in India is also blooming and is expected to reach a 36% CAGR in 2023 with a 12000 crore market. It will then become the 6^th largest OTT market in the world. It is expected to reach 30,000 crore by 2030. India currently has 45 million OTT subscribers. Mobile devices see a fair share of OTT users, which is directly linked to the high demand for mobile phones and electronics in India.

65% of Data Revenue from 5G Services by 2026

Though only 27% of India’s mobile subscribers are expected to adopt 5G by 2026, it still has the potential to generate 65% of the data revenue for telecom companies. Mobile data usage with the adoption of 5G services is expected to rise by 29% by 2026, according to Global Data.

This is again a key indicator of rising mobile phone usage and how well the mobile manufacturing industry of India has been able to meet the growing demand through local production and mobile assembly units.

Mobile Phone Manufacturing Grew At A CAGR Of 32% In The Last Two Decades.

The above metric also takes us to the annual growth of the mobile phone manufacturing industry in India. Mobile phone manufacturing has shown exemplary growth in the past seven years. Mobile phone production rose from 60 million in 2015 to 310 million in 2022. The cumulative production in India of mobile phones crosses 2 billion units under the Make in India initiative.

Mobile phone manufacturing, which also encompasses the production of subcomponents and the assembly of mobile parts, together employed 7 lakh people, making ‘Make in India’ a successful initiative.

Government Initiatives

Government support has been indispensable throughout the journey. Here is more on how different government initiatives will continue to drive India towards a $1 trillion electronics and manufacturing industry by 2025.

Make in India

Make in India has been at the forefront of the Electronics System Design and Manufacturing (MSDM) industry. The initiative was launched in 2014 and welcomes companies to set up manufacturing units in India and start production locally. The government also provides tax incentives for its successful implementation.

The Electropeneur Park (EP), one of its kind, was set up as part of the Digital India and Make in India programs.

As a result, the manufacturing industry showed an average growth of 6.9% p.a. within the first five years of its launch and a higher growth of 11.4% in 2022.

Production-Linked Incentive (PLI)

Product-linked incentives are another important government initiative to promote domestic manufacturing of electronic components by providing incentives worth $5.5 billion to well-established electronic manufacturers.

As a result, 19 companies filed for the PLI scheme for IT hardware products as of March 31, 2021. The expected production and export figures as part of this scheme included $US 21.62 billion and $US 8.06 billion, respectively. This figure comprises both domestic and foreign production.

As of now, 40 companies have signed the PLI scheme and have to choose 2023, 2024, and 2025 as base years for starting production. The scheme is reported to be oversubscribed, and the production figure is projected to achieve more than the targeted amount.

The PLI scheme covers 14 industries in three sectors: solar panel production, electronics, and automobiles.

Electronics Manufacturing Clusters (EMCs)

EMCs, or Electronics Manufacturing Clusters, are a government initiative that aims at setting up EMCs in different states of India that can act as hubs for electronics manufacturing. The first EMC was approved to be set in March 2023 in Hubli-Dharwad, Karnataka.

The central government has approved the establishment of a total of 23 EMCs in 16 states. The respective state governments will oversee these EMCs in accordance with the central government’s directives.

National Policy on Electronics (NPE)

The National Policy on Electronics (NPE) is another path-breaking initiative by the Indian government. The policy aims to envision India as a prime hub for ESDM by creating an environment conducive to developing electronic components, including chipsets, in India.

The initiative was launched in 2019 and laid out its objective to make the electronic industry of India the world’s largest and fastest-growing industry. It also envisions producing 1 billion mobile handsets by 2025. Other objectives include promoting ease of doing business, encouraging R&D in ESDM, exports of electronic goods, providing incentives for manufacturing core electronic components like optical fiber and lithium-ion cells, assembly-packing-marking-packaging of semiconductors, and more.

India’s electronic manufacturing industry undoubtedly has a bright road ahead. A digitally skilled labor force, record-breaking electronic consumer demand, government support, and manufacturing hubs are all forces favorable to pushing India’s manufacturing industry to new heights. The sky is the limit.

Nanta Tech: Leading From The Front In Electronic Product Engineering And Manufacturing

Nanta Tech aims to contribute considerably to India’s manufacturing industry. We think of innovation and have been pioneers in manufacturing core audio-visual products such as HDMI cables, AVA accessories, and a lot more.

Nanta Tech is a proud participant in the Make in India initiative and aims to leverage the resources laid out by the government in the manufacturing sector. We have needed expertise in manufacturing premier audio-visual components that can act as a major contributor to electronic manufacturing and thereby play a pivotal role in pushing India towards its goals.

India is the second-largest importer of audio-visual products globally, after Hong Kong, as per updated data for 2023. It imports most of the devices from Vietnam, China, and Singapore. Nanta Tech aims to bring about change and reduce audio-visual imports. It promotes making the component devices available in India through its skilled workforce and expertise.

Nanta Tech is driven forward to take advantage of government initiatives and even expand our solutions towards robotics. As automation and machine learning are beginning to thrive, robotics can be the next big thing that can take digitization to the next level. We are focused on upgrading our manufacturing capabilities to meet the growing demand.

Join hands with Nanda Tech and take advantage of our high-end electronic product engineering and manufacturing.

FAQs

• What is the future of manufacturing in India?

India is projected to become a $1 trillion market by 2025 and a $20 trillion market by 2047 in the manufacturing industry.

• What is the scope of audio-visual components in India?

The audio-visual service sector is one of the fastest-growing sectors in India due to its wide consumption. From being an extensive part of the film industry, music industry, broadcasting industry, coaching services, and talent agent services to consumers, the audio-visual components form an indispensable part of many industries.

• Do you think GOI is going in the right direction for incentivizing the manufacturing of Electronics?

Yes, GOI’s push to incentivize electronics manufacturing has added confidence in the industry, thus encouraging the growth of new-age startups like Nanta Tech.

• What are the advantages of Indian electronics companies over the ones belonging to China?

Besides the fact that buying Indian products boost the Indian economy, there are additional advantages like quality assurance, price benefit, and reduced carb