Over the past decade, the Indian electronics hardware industry has witnessed significant growth and transformation with rising manufacturing and export volumes. India's share in the global electronics industry has increased significantly, rising from 1.3 per cent in FY12 to 3.75 per cent in FY22. According to the Ministry of Electronics and Information Technology, Indian electronics consumption reached approximately $ 140 billion in FY22, showing a consistent CAGR of 11 per cent over the past 5 years.

In fact, electronics has become the fourth-largest item to be exported from India in the first quarter of FY24, as the category grew the fastest among the top 30 exported items. According to the Ministry of Commerce and Industry, electronics exports grew over 56 per cent in the April-June 2023 period, reaching Rs 572.2 billion, as against Rs 365.33 billion in April-June 2022. Also, electronics was the only sector to record growth in the top five categories of exports.

Mobile phones, which have got big boost following the introduction of the Production-Linked Incentive (PLI) scheme in 2020, have been driving the growth in the electronics sector. Mobile phones have contributed 52 per cent to the total electronics exports (compared to 38 per cent contribution seen a year ago) from India in the first quarter of the current fiscal, amounting to Rs 300 billion. Apple’s iPhones made a big contribution to exports, constituting 35 per cent of all electronics exports and 66 per cent of total mobile exports in FYQ1.

On the other hand, the industry has witnessed a steady decline in the overall import of electronics goods over the years. Currently, electronics account for 10.5 per cent of the country's total imports compared to approximately 14 per cent in FY21. While the import percentage has been declining, exports of electronic goods remain at around 4 per cent of India's total exports. These trends signify a positive shift in the Indian electronic industry's dynamics, as efforts are being made to reduce import dependence and increase indigenous production. That said, we have a long way to go to be anywhere near the export numbers of even Vietnam. India was ranked 26th in electronics exports in 2021 with $14.3 billion while Vietnam was ranked at number 8 with $131.2 billion. In FY 2023, India's electronics exports touched $23.57 billion. The target set for India by FY 2026 is $105 billion to $130 billion and even if India does manage to achieve this, it will just be equaling Vietnam's 2021 performance that too after growing by an average of 75 per cent.

Dependency on chip imports and lack of semiconductor production facility within the country have been primary hindrances in exploiting the full potential of electronics industry in India. Last year, the government announced $ 10 billion of incentives under PLI scheme to encourage local chip manufacturing. The scheme has attracted firms like Vedanta and Taiwan's Foxconn, who promised multi-billion dollar investment in setting up units to manufacture chips, which are used in products ranging from mobile phones to cars. Recently, the US-based Micron has announced plans to build an ATMP (assembly, testing, marking and packaging) plant, involving investment of $2.75 billion, in Gujarat with the Union and State governments’ incentives. Though it is not a chip making unit, it will help in developing supply chain ecosystem over a period. 

Union government is also working on developing the design part of the semiconductor ecosystem with 30 startups, out of which five have received direct financial support from GoI. With the government aiming to achieve $300 billion in electronics manufacturing by 2025-2026, it is going to a daunting, yet exciting task.