Why is Growth of Electronics Component Market Stunted?
As demand of digital devices soared in India, Electronics Component Market in India has shown great potential in uplifting pillars of manufacturing.
Housing an immense potential of the world’s youngest population, India lacks the most important aspect of growth and development and that is, a thriving Electronics Component Market in India as well as a manufacturing plant ecosystem that could compete at the international level.
And we are not just talking about the electronics field but unfortunately, the country fails to produce a mass level production of any commercial item that could compete in the international market that could place India at the top of the list.
Nevertheless, the most obvious fact that could not be ignored any longer remains unchanged that India has emerged as one of the largest markets for electronics products in the world in the last few years.
Whether the pandemic and forced lockdown period is the main instigator of this sudden sharp curve do not hold relevance, but according to some credible sources India’s electronics market hold a value of around $118 billion, which includes mobile phones (24%), consumer electronics (22%), strategic electronics (12%), computer hardware (7%), industrial electronics (34%), and LEDs (2%).
Before going full throttle to emphasize the fact about how important Electronics Component Market in India is for the country, let’s take a look at how effective the government’s policies on electronics over the years were and why did they fail to produce the desired impact in the long run.
Anecdotes of Government Policies on Electronics Component Market in India
With a fresh backdrop of nuclear testing and war with China going in the 1950s, the Indian government saw the potential of the electronics industry in the country and later in the 1960s, a committee on electronics was created under the leadership of Homi J Bhabha.
The committee emphasized the strategic importance of electronics and the need for a strong domestic electronics component base in its report and advised to focus on India’s policy of self-reliance while developing an indigenous Electronics Component Market in India.
And though the policy was transferred to the Department of Electronics (DoE) that was formed in 1970, amid the prevailing geopolitical context the implementation failed to produce the desired outcome.
The failure of promoting and setting manufacturing plants can also be attributed to a lack of self-awareness among people due to illiteracy and the firm grasp government holds in import substitution, forex conservation and license-raj.
And though the restrictions in Electronics Component Market in India and other related sectors got lifted in 1991 due to sudden changes in Indian economy policies when license-raj was finally removed, the heavy imports of Electronics Component remain in business.
Challenges of Electronics Component Market in India
Despite there being several government efforts and policy changes done in uplifting the Electronics Component Market in India that resulted in reduced import dependence, increased foreign direct investment and increased exports, India still does not possess a demanding presence in the export market.
One of the first challenges and the most unfortunate truth for the failure of India’s stagnant growth is the huge influx of electronics components imported coming from China at very low rates.
Counting the overall demand in Electronics Component Market in India, 70-80% of these components and 50-60% of products are still getting imported either from China or neighboring countries at very low rates, thus, regressing the domestic Electronics Component Market in India.
Another major challenge that is holding back the growth of the Electronics Component Market in India is the import of low-cost raw materials from manufacturing hubs like China and Taiwan.
Large foreign or domestic investments in promoting Electronics Component Market in India can only happen if India offers a cost advantage over other existing countries.
However, low value-added manufacturing will remain a dream if duty benefits are relaxed and made flexible in addition to the ongoing policies and initiatives going on for promoting Electronics Manufacturing in India.
For more insight on different government schemes going on promoting Electronics Manufacturing, you can read my previous article, “Journey of Schemes for Electronics Manufacturing So Far in India”.
Another unsung hurdle that everyone fails to mention whenever manufacturing is talked about is the lack of practical skills in our youth at the industrial level.
Since time immemorial India’s educational institutions have focused only on cramming old data while ignoring the practical aspect of learning, there is a big skill gap between a graduate student and a trained employee.
Scope of Electronics Component Market in India
To nurture a strong domestic Electronics Component Market in India, we require an in-sync tango of both government policies and strong investment capabilities.
If we aim to become atmanirbhar or self-reliant and gain the strength to compete globally in the electronics sector, it is imperative that India needs to house an array of Electronics manufacturing units across the country to satisfy not only the domestic demands but also the present global demands at the best competitive rates of the industry.
