The evolution of electronics industry and way forward for India

Abstract

Electronics Industry is poised to be a major growth driver for the Indian Economy, with the industry expected to clock a growth of over 56% CAGR in the next 5 years, potentially reaching a size of $400 Bn from $118Bn. This exponential growth can have benefits in terms of employment generation, generating domestic wealth and creating a strategic position for India in the global electronics landscape. Asian countries like China, South Korea and Japan have made unparalleled progress due to policies like technology transfer, selective trade tariffs and incentive driven schemes. USA and other western developed nations, on the other hand had experiences a relatively more organic growth, driven by entrepreneurs inside and outside the country. With an objective of creating a framework to maximize the chances of success of the electronics industry by learning from the experience of countries with demonstrated history of success in the electronics industry like China, US and Japan, the paper builds two key frameworks – “novelty-quality frontier” and “kickstart effect” – which defines and structures the essentials of the electronics industry. The paper then provides a policy recommendation for a country looking to excel as electronics manufacturing hub based on benchmarking across global peers – a three step process consisting of letting the companies enter, making them innovate domestically and protecting the domestic market. This is built upon the frameworks, and gives the reader a holistic perspective on the potential impacts and implications of the recommended policies. The findings have relevance for policy making, and the report aims to influence national level policy making by the Ministry of Electronics and Information Technology (MeitY) and potentially play a role in making India the next manufacturing hub in the electronics industry.