India's Electronics Strategy and Export Growth
India needs to transition from an assembly-led electronics strategy to a component-led manufacturing approach to enhance its electronics goods exports, as highlighted in the NITI Aayog’s Trade Watch Quarterly report.
Current Market Scenario
- The global electronics market is valued at $4.6 trillion.
- India's share in this market is approximately 1% as of 2024.
- Key markets for high-tech components like integrated circuits and semiconductors are dominated by China, Hong Kong, and Taiwan.
Strategies for Improvement
- Address Structural Cost Disadvantages: Tackle cost issues to make Indian exports more competitive.
- Leverage Free Trade Agreements (FTAs): Utilize FTAs to enhance external market access.
- Promote Strategic Component Manufacturing: Encourage local production of essential components.
- Predictable Domestic Procurement: Establish a consistent domestic procurement policy.
- Export Finance and Regulatory Simplification: Simplify regulations to attract investments.
- Enhance Global Value Chain Integration: Improve trade facilitation and domestic value addition.
Export and Import Trends
- Export Growth: Electronics exports are mainly directed to the USA, UAE, and Netherlands, with mobile phones constituting 52.5% of the export basket.
- Import Composition: Dominated by integrated circuits (23.7%), mobile phones (17.5%), and data-processing machines (10.6%).
- Trade Growth: Merchandise and services exports rose by 8.5% year-on-year, driven by strong demand from Hong Kong, China, and the U.S.
Free Trade Agreements
- India has finalized negotiations for an FTA with the European Union, marking its 19th trade deal.
- Since 2014, India has concluded seven trade pacts with countries including Mauritius, Australia, UAE, Oman, the UK, EFTA nations, and New Zealand.
Conclusion
To achieve the $500 billion manufacturing target by FY2030, India must focus on component-led production and leverage FTAs effectively, ensuring a robust electronics export strategy.
