Manufacturers' Association of Information Technology (MAIT), established in 1982, is the apex body representing India’s ICT (Information and Communication Technology) sector. MAIT is recognised by both the Government as well as the industry for its role in the growth and development of the IT hardware industry. In this interview, George Paul, CEO, MAIT, shares his views on some of the recent policy announcements and outlook for the electronics hardware industry.

How do you analyse the performance of the electronic hardware industry in recent years?

The electronics hardware industry is a sector much in the news over the last two years, beginning with the trade war between the US & China triggered by the need felt by the US to block transfer of technology to China in electronics, to the Covid set off burgeoning demand for digital connectivity and infrastructure, the shortage semiconductors and the PLI (Production Linked Incentive) led initiative to promote electronic manufacturing in India.

What are key challenges before companies operating in the electronic hardware industry?

The electronics hardware industry demands its companies to continuously innovate. In electronics, the evolution of technology and products is so rapid with product life cycles shrinking to as short as three to four months. Unlike other sectors, where once a company has mastered a value proposition, the same is relevant for at least a decade. This showcases the need for electronic hardware companies to invest in R&D. R&D is a high-risk expensive activity for an MSME, particularly during the covid crisis.

In December 2021, the government of India announced the PLI Scheme for semiconductors. How will the Indian industries benefit from this decision? Can India provide a conducive environment for semiconductor manufacturing?

The PLI scheme for electronics has an outlay of Rs 1.5 lakh crores to attract global companies to shift their manufacturing of products into India. These anchor companies in turn will drive the setting up or pulling in of upstream and downstream industries who will cater to them.

For example, just the PLI for products will trigger approximately $ 200 billion of electronics manufacturing. If one were to take a conservative 15% as the value of the mechanics i.e. plastics and metal that go into these electronic products, India has a $ 30 billion opportunity.

The product manufacturing by the anchor companies under the PLI scheme is an “Assembly Manufacturing” at a system-level assembly and the Printed Circuit Board (PCB) assembly. This assembly manufacturing will trigger the local manufacturing of the sub-assemblies of these products. As per MAIT projections, India should see at least $ 100 billion of sub-assemblies being manufactured by Indian MSMEs.

Each of these PLI’s has built them into PLI for sub-assemblies and components. These PLI schemes are targeted at MSMEs to manufacture components that are required by these products.