IT Ministry Proposes ₹40,000 Crore Package to Bolster India’s Electronic Component Industry

The Ministry of Electronics and Information Technology (MeitY) is gearing up to seek the Union Cabinet’s approval for a comprehensive ₹40,000 crore initiative designed to enhance local manufacturing of electronic components. This move aims to strengthen India’s position in the global electronics value chain and reduce reliance on imports. The package could potentially roll out investments as early as April 2025, provided all necessary approvals are secured in December 2024.

Key Features of the Proposed Package
The initiative, which primarily focuses on non-semiconductor components, includes a mix of capital expenditure subsidies and production-linked incentives tied to employment generation. Industry experts view this as a critical step in creating a robust ecosystem for electronic component production in India.

According to a senior government official, the ministry is finalizing details to ensure a smooth rollout. The scheme is aligned with the government’s broader vision of boosting local value addition in electronics manufacturing, from the current 15-18% to 35-40% during its initial five-year tenure, eventually aiming for 50%.

Growing Demand for Electronic Components
India’s electronic component demand is expected to surge from $45.5 billion in 2023 to $240 billion by 2030, fueled by the growing production of mobile phones and other electronic devices. A report by the Confederation of Indian Industry (CII) underscores the importance of self-reliance in producing components like printed circuit boards (PCBs), camera modules, displays, and lithium-ion cells, which constitute a significant portion of the materials used in mobile phones and IT hardware.

Addressing Local Manufacturing Gaps
Despite the success of production-linked incentive (PLI) schemes in scaling up the final assembly of electronic products, local value addition has lagged behind. This package seeks to bridge that gap by fostering the production of high-priority components. Government officials estimate that the scheme could attract investments totaling ₹82,000 crore and facilitate the production of components worth ₹1.9-2.0 lakh crore over its tenure.

Industry Collaboration and Global Partnerships
The program also emphasizes collaboration with international technology partners and supply chain players, including companies from Taiwan, South Korea, Japan, and China. Industry stakeholders have urged the government to expedite approvals for joint ventures and technology transfers, which are vital for the success of this initiative.

“Smartphone and IT hardware brands are actively engaging their supply chain partners to invest in India under this scheme,” said an executive from a leading contract manufacturing firm. These collaborations aim to establish a strong foundation for component manufacturing and integrate domestic firms into global production networks.

Strategic Focus Areas
The initiative targets key components critical to reducing import dependency. These include PCBs, camera modules, displays, mechanical components, and lithium-ion battery assemblies, which collectively accounted for 43% of the component demand in 2022, according to the CII report. By 2030, the value of these components is projected to grow to $51.6 billion.

The government is ensuring that the scheme’s design avoids potential setbacks seen in previous PLI programs. For instance, there are ongoing deliberations on whether to provide incentives based on capital or operational expenditure or a mix of both. Incentive structures may also be linked to employment generation to maximize economic impact.

Road Ahead: Challenges and Opportunities
Once approved, the industry will have a 90-day window to prepare for investments. This timeline underscores the urgency of securing technology partnerships and identifying potential customers. Industry executives have expressed optimism but also highlighted challenges such as navigating bureaucratic hurdles and securing timely approvals for joint ventures.

The government’s commitment to fostering local manufacturing comes at a crucial juncture as India positions itself as a global electronics manufacturing hub. The proposed scheme complements existing PLI programs and aligns with the nation’s ambition to increase its footprint in advanced manufacturing sectors.

Conclusion
The ₹40,000 crore package proposed by MeitY represents a significant milestone in India’s journey toward becoming a global electronics manufacturing powerhouse. By addressing critical gaps in the domestic supply chain and fostering international collaborations, the initiative holds the potential to transform India’s electronics industry. If implemented effectively, it could not only reduce import dependency but also generate substantial employment and bolster economic growth in the coming decade.

The image added is for representation purposes only