How Budget 2025 could power India's electronics sector
What's the story
The upcoming Union Budget for FY25 is expected to have a major impact on India's electronics manufacturing industry.
Contributing 3% to the GDP and employing 25 million people, the sector stands at a crucial juncture.
The government has set ambitious targets of achieving 25% of GDP through manufacturing services by 2025, and $1 trillion in exports by 2030.
Incentive impact
PLI schemes: A catalyst for economic growth
The government's Production-Linked Incentive (PLI) schemes have played a key role in propelling India's growth.
These schemes have already yielded impressive results in mobile phone manufacturing, with exports reaching $11.2 billion and FDI at $165.1 billion in electronics alone.
The next Budget 2025 is expected to further bolster these PLI schemes across sectors such as consumer electronics, semiconductors, and electric vehicle components.
Technological transition
Embracing Industry 4.0 for competitive advantage
The shift of India's manufacturing sector to modern industrial practices (Industry 4.0) is essential for its evolution.
Global trends of automation tools, artificial intelligence (AI), and data analytics need to be adopted to leverage competitive advantages.
Budget 2025 could be instrumental in creating favorable conditions for this tech revolution by offering fiscal incentives to small and medium-sized enterprises (SMEs) to adopt advanced technologies.
Supply chain resilience
Strengthening domestic infrastructure and fostering local production
The COVID-19 pandemic highlighted the dire need to build resilient and self-sufficient supply chains.
To lessen dependence on imports, especially from countries like China, India must focus on bolstering domestic infrastructure, encouraging local production of critical components and raw materials, and implementing policies to incentivize domestic manufacturing.
A renewed focus on research and development in fields like semiconductor fabrication will be crucial to secure supply chains.
Skill development
Upskilling workforce for advanced production processes
As India's electronics manufacturing sector flourishes, the need for a skilled labor force becomes increasingly pressing.
While millions are employed in this sector, many workers lack the technical expertise required for advanced production processes and emerging technologies.
India should invest in workforce skill development to prepare workers for Industry 4.0 roles, such as robotics, AI, and automation training.
Collaborations with educational institutions to develop electronics manufacturing curricula could become a priority to ensure that the workforce is prepared for the future.
Business ease
Enhancing competitiveness of electronics sector
India's $1 trillion export target by 2030 hinges on the competitiveness of its electronics sector.
To boost this, the budget could improve the ease of doing business for electronics manufacturers with reduced taxes, more subsidies, and improved logistics.
Investment in infrastructure, especially ports/airports, would reduce logistics costs while strengthening trade agreements with key markets like US, Europe, Asia would open new avenues for Indian electronics producers.