India's electronics manufacturing value addition jumps to 70%, set to reach 90% by FY27

India rapidly emerges as a global manufacturing hub, particularly in electronics, driven by supportive government policies and a skilled workforce. Value addition in electronics manufacturing has significantly increased from 30% to around 70%. According to an Axis Capital report, it will reach 90% by FY27. Mobile phone exports have surged 77 times in the last decade, while imports of fully built air conditioners (CBUs) have dropped from 35% in FY19 to just 5% in FY25. Compressors, copper tubes, and aluminium coils are now being manufactured locally. In FY24, India imported 8.5 million RAC compressors but expects to produce all of them locally within the next two to three years. The demand for Printed Circuit Board Assembly (PCBA) has also risen in both business and consumer sectors, aided by higher import duties.

India's electronics exports have grown at a compound annual growth rate (CAGR) of about 26% from FY16 to FY25. Imports of mobile PCBAs, worth around Rs. 30,000 crore (US$ 3.48 billion) in FY18, have dropped to nearly zero in FY24. The government's Production Linked Incentive (PLI), Phased Manufacturing Program (PMP), and Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) have played a crucial role in this transformation. The corporate tax rate has been reduced to 15% for new manufacturing units, making India an attractive destination for global companies. As a result, India is now the second-largest mobile phone producer in the world, with 99% of phones sold locally being made in the country.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.