In a significant development for India’s reputation as a manufacturing hub, the domestic production of electronics has shot past imports for the first time in 2016-17. After oil, it is India’s penchant for electronic products that facilitate the most significant drain on our foreign exchange reserves.
Speaking to the Times of India, government officials have stated that figures for domestic production of electronic goods for 2016–17 stood at $49.5 billion, above the $43 billion spent on imports. After years of criticism, this probably one of the earliest signs that the Make in India initiative has made some inroads towards improving the state of the domestic manufacturing sector.
Favourable business policies for the domestic electronics sector have undoubtedly played their part, particularly in the manufacturing of smartphones, set-top boxes, televisions and other appliances.
In the past two years, many domestic units have availed of government’s Modified Special Incentive Package Scheme (M-ISPS) and electronics manufacturing cluster (EMC) initiative.
What has also worked for the government is implementing duty incentives for local manufacturing firms, which has driven various multinationals operating in India like Foxconn from Taiwan, Apple, and China-based Oppo, Xiaomi, and Huawei to not only manufacture in India but even source their parts from local suppliers.
Also, the government raised the customs duty on a whole host of electronic imports, especially those from China, which continues to flood our market with their products. What this spike in the domestic manufacturing of electronic goods has done is apparently create more jobs for our young demographic that is struggling for employment.
It is imperative to note that this jump in domestic manufacturing was not sudden, but a result of steady year-on-year growth. From $30 million in domestic production of electronic goods and $37.6 billion for imports in 2014-15, it grew to $37.4 billion and $41 billion respectively. What we saw in 2016-17 was just a continuation of this apparent changing dynamic in the domestic manufacturing of electronic goods.
“The policy initiatives of the Modi government have resulted in accelerating local manufacturing in electronics. We are confident that this momentum will be sustained in the coming years,” said Information Technology Minister Ravi Shankar Prasad, to the Times of India.