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.