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How India can be among top electronics exporters in three to five years

Ease of doing business and predictable, facilitating and stable policies are very important for achieving efficient Global Value Chain participation and an increase in exports.

How India can be top electronics exporter in three to five years VPN
New Delhi, First Published Nov 3, 2021, 8:50 AM IST
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India's electronics sector has the potential to become one of the top exports of the country within the next three to five years, together with a number of products that could emerge as important exporting hubs, Minister of State for Electronics and IT Rajeev Chandrasekhar said on Tuesday.

According to a vision document titled 'increasing India's electronics exports and share in Global Value Chain (GVC)', which was released by MoS Chandrasekhar on Tuesday, given the critical role of electronics in other economic sectors (within electronics, automotive sector, medical devices), and its importance for implementing social policies and public services, it would continue to be a priority sector for many years ahead. The sector will also play a key role in implementing the PM’s vision of a ‘digital India’.

The report notes that Centre-state collaboration and cooperation are essential for achieving Prime Minister Narendra Modi's vision to increase India's exports manifold. It further says that without the Centre's support, the impact of state-level policies would be below their potential. 'States should strive to adopt granular policies similar to those followed in China and Vietnam. These policies need the support of the Centre,' the report said.

Providing an overview of the policy approaches of China and Vietnam while focusing on their main differences with regard to India, the document highlights that not only do these two countries have a highly comprehensive and supportive policy approach, which played a big role in expediting the set-up of the supply chain in these two regions, but they also have lower import tariffs and duties than India. The report also discusses policies that would be of strategic importance to encourage relocation to India, while keeping in mind the wider security concerns of the country.

The vision document focuses on a number of key electronic products, particularly those for which major export hubs can be established in India. These products include mobile phones, IT hardware, and hearables and wearables. 

Putting forth statistics that show how nearly 80 per cent of electronic exports come from GVCs, the document reaffirms that ease of doing business and predictable, facilitating and stable policies are very important for achieving efficient GVC participation and an increase in exports. 

The document noted that nearly 70 per cent of GVCs of several electronics products are located in China, and a significant shift in the near term would require creating tiers 1, 2 and 3 operations within India. 'Such a process of relocation has begun with firms looking more at Vietnam and Mexico, whose FDI policies are investor and GVC-friendly
than India, because they allow linked contract suppliers to shift together with the lead firm,' it said.

India is currently a very small participant, with its GVC exports accounting for only about 1.5% of global GVC exports. For India to competitively integrate with supply chains of electronics, policies that are supportive of the key factors need to be expeditiously implemented, the document outlined, adding that these include reduction in production and logistics costs; reducing tariff barriers, particularly on inputs; improving skills and production capabilities; and introducing innovative practices and techniques.

According to an official statement, the document, which was compiled by India Cellular Electronics Association in consultation with the industry, is the first of a two-part series. The second volume will focus upon product-wise strategies and forecasts to build a $1 trillion Digital Economy.

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