India to Focus on Export-Led Growth in Electronics, Says Ashwini Vaishnaw

India to Focus on Export

India is shifting its focus to export-led growth in the electronics sector, according to communications and IT minister Ashwini Vaishnaw. This comes after the country achieved success in domestic mobile manufacturing.

Vaishnaw said that India has become part of the global value chain (GVC) for mobile phones and electronics. The ministry of electronics and IT (Meity) will work closely with the ministry of finance to make the movement of goods across borders smoother for export-led growth.

The minister noted that India’s domestic component ecosystem has started to develop. In electronics manufacturing, the volume of final products needs to cross a threshold before components start coming from domestic sources. India has reached that threshold, and 30% of components are now being produced domestically.

Vaishnaw also pointed to India’s success in developing a domestic ecosystem in a short period of time. In 25 years, China’s domestic value addition in the electronics manufacturing chain is 30-40%, while Vietnam’s is 20-25%. In just 9 years, India’s domestic value addition is around 15-18%.

The minister said that exports of several components, including mechanicals, chargers, and PCB assemblies, have started from India.

He also explained how the GVC works and why duties, processes, automation, and warehouses matter. In the GVC, goods cross the boundaries of at least two countries multiple times. For instance, components are imported, then assembled into a phone or laptop, then exported for server fitment, and then imported again for final assembly.

Warehouses play an important role in the GVC, as they may store products for several manufacturers and supply them with components.

The government has a MOOWR Scheme (Manufacturing and other operations in a customs bonded warehouse) to support domestic manufacturing for export purposes. However, the government has levied an 18% IGST (integrated goods and services tax) on such imports in the FY24 Budget. This has raised concerns from analysts and semiconductor manufacturers like Micron Technology.

Overall, India is moving towards export-led growth in the electronics sector, and the government is taking steps to support this growth.

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