NITI Aayog released Report on “Electronics: Powering India’s Participation in Global Value Chains (GVCs)” | Current Affairs | Vision IAS
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    NITI Aayog released Report on “Electronics: Powering India’s Participation in Global Value Chains (GVCs)”

    Posted 19 Jul 2024

    2 min read

    Key Findings

    • Electronics market is estimated at US$ 4.3 trillion globally and US$ 155 billion in India (2022). China is world's largest electronics producer (60% of worldwide production). 
    • India exports approximately US$25 billion annually, representing less than 1% of global share. 
    • India to achieve US$ 500 billion in electronics production by 2030.
    • Over 75% of electronics exports are part of GVCs. It is not confined to a particular country. E.g. Mobile phone export.

    Driving Factors 

    • Rising demand in developing countries due to increasing broadband penetration.
    • Diversifying supply chain beyond China due to excessive concentration risks as observed during Covid-19, ongoing trade tensions between China-USA etc.

    Challenges in India’s Electronics Production

    • Relatively high import tariffs compared to China, Vietnam etc., making products uncompetitive in global markets. 
    • Lack of robust electronics component ecosystem. E.g. Ecosystem of semiconductors, discrete actives, etc. does not exist in India.
    • High cost of capital (9%- 13%). In contrast, countries like China, Vietnam, and Taiwan enjoy much lower interest rates of 2%-7% due to specific interest subsidies.
    • Other challenges include inadequate infrastructure facilities (logistics, high cost of land lease etc.), lack of R&D and design ecosystem, shortage of skilled engineers and trained workforce etc.

    Recommendations

    • Fiscal Interventions: Capital expenditure support for high-complexity components; Innovation scheme to promote R&D; Provision for localized regulations (e.g. labor laws) etc.
    • Non- Fiscal Interventions: Tariffs simplification and rationalization of Taxes; Supporting Industries for skilling and setting up Electronics skills training hubs; Simplify process of Tech Transfer & increased ease of doing business.

    Steps taken by India to promote Electronic Sector 

    • Electronics Manufacturing Cluster (EMC) 2.0 scheme, 2020; Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS); Design Linked Incentive Scheme; India Semiconductor Mission etc.
    • Tags :
    • Manufacturing Sector
    • India’s Electronic Sector
    • NITI Aayog Report

    Articles Sources

    https://economictimes.indiatimes.com/industry/cons-products/electronics/niti-aayog-moots-fiscal-fina
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