Understanding India: Growing footprint in electronics


The electronics manufacturing sector has been placed on high priority to participate in the strong global upcycle, diversification and meet domestic demand.
Radhika Rao, Ma Tieying14 Sep 2021
  • India’s electronics focus has shifted to hardware manufacturing in the past decade
  • Key verticals have notched double digit production rates, with mobiles rising by the fastest
  • We explore the nuance for mobiles manufacturing sector, potential and challenges
  • Smartphone makers from China and Korea are the main investors currently; Taiwanese may catch up
Photo credit: Unsplash


This is a summary, please download the PDF for the full report


India has launched a series of factor market reforms in recent years, aimed at strengthening the economy’s appeal as a manufacturing base and to attract domestic as well as global investments. The electronics manufacturing sector has been placed on high priority to participate in the strong global upcycle, expand its footprint in the tech supply chain, move up the value chain and draw in investors to tap into the domestic growing middle class with rising disposable incomes.

Unwrapping the verticals

The sector is diverse, with verticals classified based by application and/ across processes, for instance design manufacturers, component suppliers, electronic manufacturing service providers etc. under the latter. Electronics hardware production grew by a CAGR of 17% between FY14 and FY20 before a marginal drop in FY21 due to the pandemic.

Strengthening the support architecture

Achieving self-reliance and boosting indigenous production of electronics (and sub-components) ties into the broader push to ‘Make in India’s as well as achieve ‘Digital India’ objectives. To strengthen the support mechanism, the National Policy on Electronics 2019 was launched, seeking to strengthen India’s position in the Electronics System Design and Manufacturing (ESDM) field and across the value chain.

Foreign investment in India’s electronics sector – a North Asia perspective

North Asian economies play an increasingly important role in investing in India, especially in the electronics sector. FDI inflows into India from China, Hong Kong SAR, Japan, South Korea and Taiwan amounted to USD36bn in 2011-2020, a sixfold increase compared to USD6bn in 2001-10. As a percentage of India’s total FDI inflows, North Asia increased to approximately 10% in 2011-2020, up from 5% in the previous decade.







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Radhika Rao

Senior Economist – Eurozone, India, Indonesia
radhikarao@dbs.com

Ma Tieying 馬鐵英, CFA

Economist - Japan, South Korea, & Taiwan 經濟學家 - 日本, 南韓及台灣
matieying@dbs.com


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