NITI Aayog electronics sector

NITI Aayog Proposes Simpler Tariffs and Fresh Incentives to Boost Electronics Sector

NITI Aayog, India’s premier policy think tank, has proposed a range of measures aimed at boosting the country’s electronics sector. The report, titled “Electronics: Powering India’s Participation in Global Value Chains,” outlines strategies to elevate India’s electronics industry from $100 billion to $500 billion by 2030. Key recommendations include simplifying import tariffs, offering fiscal incentives for domestic manufacturing, and providing support to design-focused companies.

Key Points

Current Challenges:

High Tariffs: India’s average tariffs on electronics components are about 7.5%, significantly higher than China (4%), Malaysia (3.5%), and Mexico (2.7%). This discrepancy makes Indian electronics exports less competitive globally, creating a 5-6% cost disadvantage.
Limited Industry Participation: Despite existing incentive schemes, industry participation has been limited due to the schemes not addressing the unique economic realities of component manufacturing.
Import Dependency: India relies heavily on imports for components such as microprocessors, GPUs, ancillary chips, and power management chips, NITI Aayog electronics sector, which hampers the country’s ability to scale up electronics exports.

Proposed Solutions:

Simplified Tariff Structures: NITI Aayog recommends streamlining and reducing tariffs to enhance India’s export potential.
Fiscal Support: The report suggests fiscal incentives for both design-focused companies and technology transfer processes. This includes opex (operational expenditure) support for less complex components and capex (capital expenditure) support for more complex ones.
Component Scheme: Emphasis on the need for a specific component scheme in the electronics sector to boost domestic manufacturing and value addition.
Electronics Manufacturing Clusters (EMCs): Development of large greenfield and brownfield industrial clusters to make EMCs more attractive for SMEs and large players. The report also calls for an audit of existing EMCs to evaluate their effectiveness.
Skilled Labour: Improvement of access to skilled labour by expediting visa approvals for training purposes and establishing Electronics Skill Training Hubs.
Technology Transfer: Establishing a convenient and economically viable technology transfer process to empower domestic electronics manufacturing.

Goals:

Growth Projections: With the implementation of these measures, India’s electronics sector could grow to $500 billion by 2030, with exports accounting for $240 billion.
Employment: The sector could generate employment for 50-60 lakh people.
Market Expansion: A scenario where GST rates on electronics are reduced to boost domestic demand could see the market grow to $625 billion by the end of the decade.

Conclusion

NITI Aayog’s comprehensive report lays out a strategic roadmap for India’s electronics sector to achieve significant growth by 2030. By simplifying tariffs, offering fiscal incentives, and improving the technology transfer process, India can enhance its role in global value chains and become a major player in the global electronics market. The proposed measures, if implemented effectively, NITI Aayog electronics sector ,could lead to substantial economic benefits and job creation, positioning India as a competitive hub for electronics manufacturing.

FAQs

What is the primary goal of NITI Aayog’s recommendations?

The primary goal is to boost India’s electronics sector from $100 billion to $500 billion by 2030.

Why are high tariffs a problem for India’s electronics exports?

High tariffs make Indian electronics exports less competitive globally, creating a 5-6% cost disadvantage compared to countries like China, Malaysia, and Mexico.

What types of support does NITI Aayog recommend for component manufacturing?

The report recommends operational expenditure (opex) support for less complex components and capital expenditure (capex) support for more complex ones.

What is the significance of Electronics Manufacturing Clusters (EMCs)?

EMCs are crucial for attracting SMEs and large players by providing the necessary infrastructure and support for electronics manufacturing. The report suggests developing new clusters and auditing existing ones to improve their effectiveness.

How can India improve access to skilled labour in the electronics sector?

By expediting visa approvals for professionals visiting for training purposes and setting up Electronics Skill Training Hubs.

What impact could these recommendations have on employment?

The implementation of these measures could generate employment for 50-60 lakh people by 2030.

How does the report suggest boosting domestic demand for electronics?

By reducing GST rates on electronics, which could lead to a market expansion to $625 billion by the end of the decade.

What is the role of technology transfer in boosting domestic electronics manufacturing?

A convenient and economically viable technology transfer process is essential for empowering domestic electronics manufacturing and integrating into global value chains.