India Ranks 2nd in Global Mobile Handset Production, Says CRISIL: What’s Next for Electronics Industry ?

In its India Progress Report released last month, CRISIL, a credit rating agency, highlighted that India’s smartphone exports have grown at an impressive 50% CAGR between 2019 and 2023, making it the second-largest mobile handset manufacturer by volume.

However, India’s electronics market remains relatively nascent, comprising only 4% of the global market. The global electronics market is valued at $4.3 trillion as of 2023, with China dominating, accounting for over 50% of global exports, whereas India’s share is currently less than 1%.

Despite this, CRISIL notes that there is growing confidence in India’s electronics manufacturing capabilities, fueled by the introduction of the Production Linked Incentive (PLI) scheme under the National Policy on Electronics (NPE) 2019.

Let’s take a closer look at the current state of India’s electronics sector and its future growth prospects.

How Big is India’s Electronics Export Market?

In fiscal 2024, mobile phone exports alone jumped by around 40%, reaching $15 billion. The total value of India’s electronics exports, including components like semiconductors and components for consumer electronics, is growing steadily.

Despite accounting for only 4% of the global electronics market, the sector is on an upward trajectory. Looking forward, NITI Aayog projects that India’s share of the global electronics market could rise to 6% by 2030

Snapshot of India’s Electronics Industry

• Mobile Phones and Accessories: This segment accounts for 43% of India’s electronics market.

• Consumer Electronics: This includes products such as televisions, refrigerators, air conditioners, and washing machines. This segment makes up 12% of the market.

• Semiconductors and Electronic Components: Resistors and transistors are in high demand, driven by the mobile, consumer, and industrial electronics sectors. This sector accounts for 11% of the market.

• Automotive Electronics: The government’s push towards EV adoption is expected to drive further growth in this segment, which currently makes up 12% of the market.

• Industrial Electronics: This segment includes power electronics, automation, and industrial robots. This sector comprises 12% of India’s electronics sector.

Other segments of India’s electronics industry include LED lighting, which makes up 3% of the market and is used in both residential and industrial applications. The IT hardware sector, accounting for 4%, is expanding due to advancements in AI, IoT, and PLI scheme incentives. The “Others” category, including strategic electronics, wearables, and automotive electronics, represents 16% of the market.

India’s Import-Dependent Ecosystem

India’s electronics industry remains heavily reliant on imports, particularly electronic components like integrated circuits and micro-assemblies, which are essential for mobile phones, consumer goods, and IT hardware.

Between fiscal 2018 and 2023, electronics imports grew at a 12% CAGR, with these components now accounting for 20-23% of total imports. China continues to dominate as a key exporter, holding a steady 70-75% share of this market

What Role Did PLI Schemes Play in Electronics Growth?

As per the CRISIL report, the PLI scheme for large-scale electronics manufacturing launched in 2020, attracted 32 companies with a total investment commitment of ₹11,324 crore. By June 2024, these companies had invested ₹8,282 crore. Similarly, the PLI scheme for IT hardware, launched in 2021 and expanded in 2023, saw investments from 27 companies, totaling ₹2,955 crore. By June 2024, ₹464.66 crore had been invested, showcasing strong progress.

This growing investment highlights rising confidence in India’s electronics manufacturing capabilities. In fiscal 2023, the sector demonstrated resilience, marked by increasing domestic production and exports, signalling a reduced reliance on imports.

Conclusion

India’s rise to the position of the second-largest mobile handset manufacturer globally signals a promising trajectory for its electronics industry. With mobile phone exports growing rapidly and investments flowing into key sectors through initiatives like the Production Linked Incentive (PLI) scheme, India is positioning itself as a significant player in global electronics manufacturing.

However, challenges remain, particularly in reducing the sector’s dependency on imports, especially from China. Nevertheless, with continued investment, government support, and a focus on innovation and manufacturing capacity, India’s electronics market is expected to expand, with its share of the global market projected to increase in the coming years.

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