Increasing digitization, rising personal income, and a growing consumer market are some of the factors driving electronic manufacturing in India.

Moreover, several factors can make electronic manufacturing in India a profitable venture for foreign firms. They are – industry-friendly government initiatives, the presence of a vast skilled workforce, opportunities for foreign investment and partnerships, infrastructural growth, and green initiatives.

There are also a few challenges in establishing operations in this market like handling complex global supply chains, adopting cost-effective manufacturing processes, etc. However, these challenges can be easily overcome by partnering with electronic components and semiconductor manufacturing consultants like Tecnova.

Semiconductor Manufacturing Consultants in India

Promising Future of India’s Electronic Manufacturing Industry

By 2026, India’s domestic electronics production is set to reach USD 300 billion. Some of the important factors behind this massive growth are increasing digitization, rising disposable income, and the presence of a vast consumer market.

Additionally, India’s start-up-friendly ecosystem, schemes for promoting India’s Electronic Manufacturing Industry, 5G rollout, and industrial usage of Internet of Things (IoT) technologies are contributing factors in this regard.

Thus, for multinational companies, manufacturing electronic goods can be an excellent choice. The country’s promising future in this segment can make starting operations in this market a profitable venture.

Keep reading this blog to find out why investing in India’s Electronic Manufacturing Industry can be a worthwhile investment.

Why Invest in Electronic Manufacturing in the India Sector ?

Here are some of the reasons why foreign companies can benefit from electronic manufacturing in India:

• Government Initiatives

To boost domestic production, the Indian Government started the Make in India scheme. Initiated in 2014, it aimed at developing world-class infrastructure facilities, along with providing skill development, fostering innovation, and facilitating investment.

As per recent reports, the authorities to increase domestic electronic manufacturing in India have started the following:

• Schemes for setting up Display Fabs
• Schemes for setting up Semiconductor Fabs
• Schemes for setting up Sensors / Silicon Photonics / Compound Semiconductor Fabs
• Design Linked Incentive Schemes
• Semiconductor assemblies, along with packaging, making and testing facilities

Additionally, there is the Semicon India Program which has an incentive outlay of USD 10 billion for developing sustainable display and semiconductor ecosystems in the country. There is also the government’s Product-Linked Incentive (PLI) scheme, which provides 4-6% incentives for incremental sales of Indian manufactured products.

• Skilled Workforce and Innovation

Another major benefit of the Indian market is the vast availability of a skilled workforce. Most of the youth have a degree in engineering, IT, or computer science, creating a talent pool that can greatly benefit electronic manufacturing in India.

Furthermore, research and development initiatives by Indian universities and research institutions have brought about several innovations in this field. For instance, AI applications and machine learning models can learn how to analyze data and perform various tasks, without the need for additional programming.

Apart from this, industrial automation can allow manufacturing electronic goods to run with the least human intervention, thus speeding up the production process.  Moreover, due to innovations like miniaturization, manufacturers can integrate multiple devices on a smaller scale, creating more sophisticated products.

• Foreign Investments and Partnerships

When it comes to investing in the electronics industry, companies can follow several strategies.

They can invest directly in electrical components manufacturers in India.

The government allows up to 100% Foreign Direct Investment (FDI) under the automatic route for electronics manufacturing in Indian companies. However, the investing organization must not be from a country sharing land borders with India.

Firms can also enter partnerships with Indian companies. They can also go for a joint venture, establish a wholly owned subsidiary, or a branch office. However, to do so, there are several legal and regulatory compliances which they need to adhere to.

Under such circumstances, opting for the services of electronic manufacturing services consultants is highly recommended.

• Infrastructural Growth

In recent years, the Indian Government has taken several measures to develop infrastructure for boosting the electronics sector in India. For instance, the PM Gati Shakti initiative involves schemes that plan to connect electronic parks, industrial corridors, and other economic zones all over the country via a network of highways, inland waterways, ports, etc.

Furthermore, the authorities plan on making Electronic Manufacturing Clusters (EMC) to develop architecture, which is specifically made for this sector. Apart from this, the development of Dedicated Freight Corridors and Inventory Control systems to develop the logistics infrastructure is also there.

Additionally, states like Telangana, Gujarat, Tamil Nadu, Karnataka, and Uttar Pradesh have been developing or establishing electronic clusters. The authorities of these regions are also introducing policies for expanding industrial parks, capital investment subsidies, competitive rates for utilities and land, etc. to boost this sector’s growth.

Thus, when setting up electronic manufacturing in India, infrastructure is the last thing that foreign forms need to worry about.

• Green Initiatives and Sustainability

Given the environmental-friendly policies adopted by every industrial sector, the electronic manufacturing in India segment is also moving towards green initiatives. Companies are actively investing in renewable energy sources like solar, hydro, wind, etc. in order to reduce their dependency on traditional fossil fuels.

In the long run, these energy options are very cost-effective and enable manufacturers to effectively reduce their carbon footprint. Intelligent manufacturing is another way in which companies are exercising sustainability.

They are actively integrating IoT technologies and AI into their operations, which can help automate tasks, increase efficiency, detect improper material usage, reduce waste, and streamline the overall supply chain.

Furthermore, some manufacturers are aiming to maximize resource utilization via refurbishment, re-manufacturing, and recycling. They are also searching for methods to use recycled materials for manufacturing their goods, to reduce environmental impact.

• Challenges and Solutions

Now, despite all the benefits of electronic manufacturing in India, there are a few challenges that foreign firms can face. Global competition and emerging innovations are constantly driving down the prices of electrical components. Thus, to maintain profit margins, manufacturers need to become more cost-efficient.

Moreover, they may need to source several components from various parts of the world to adhere to the current international standards. This can create additional challenges for the company, as it requires reliance on a complex global supply chain.

Apart from this, product lifecycles are short due to rapidly changing consumer preferences. Thus, companies need to constantly innovate to match their products with the current trends.

Given these challenges, foreign organizations have a viable solution: to opt for the services of electronic components and semiconductor manufacturing consultants. Several firms like Tecnova can help foreign clients find the right suppliers for their business.

Furthermore, they offer services like partner search, mergers and acquisitions, company incorporation and regulatory compliances, etc. which can help multinational businesses set up their operations with ease.

Conclusion

Increasing digitization, rising personal income, and a growing consumer market are some of the factors driving electronic manufacturing in India.

Moreover, several factors can make electronic manufacturing in India a profitable venture for foreign firms. They are – industry-friendly government initiatives, the presence of a vast skilled workforce, opportunities for foreign investment and partnerships, infrastructural growth, and green initiatives.

There are also a few challenges in establishing operations in this market like handling complex global supply chains, adopting cost-effective manufacturing processes, etc. However, these challenges can be easily overcome by partnering with electronic components and semiconductor manufacturing consultants like Tecnova.

Reference

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