India needs multi-pronged approach for ESDM sector, says PwC India’s report

India needs a multipronged approach for the Electronics System Design and Manufacturing (ESDM) sector to leverage the momentum for value chain resilience, as the window of opportunity created by the current geopolitical context is very small, according to a report.

“Decisive policy action is the need of the hour,” said PwC India’s report on ‘The India Opportunity: Developing Resilient Electronics Supply Chains’.

It noted that India is uniquely placed among global economies, having garnered goodwill as a reliable partner for countries across the world.

“The country must now leverage this momentum to ensure that its internal strategy and operations enable it to become future ready. A multipronged approach is essential to ensure that the centre of the ESDM sector in India holds firm,” the report said. Emphasising that the next decade will be crucial for this, given the window of opportunity for India to be a part of the value chain — created by the geopolitical context — is very small.

The report highlights the country’s ascendancy in the global electronics market, particularly in mobile phones, consumer electronics, IT hardware, and electronic components, which account for over 70 per cent of the nation’s domestic manufacturing output.

It also outlines essential policy actions needed to enhance the sector’s stability and growth, from integrating production systems into global supply chains to fostering intraregional and domestic self-sufficiency in value chains. “As the global landscape evolves, India stands at a pivotal juncture to redefine its role in the global electronics supply chain.

“Through strategic collaboration, innovation, and conducive policy environment that focuses on inclusive growth, India can seize the immense opportunities ahead to become a resilient and competitive electronics manufacturing powerhouse,” said PwC Chairperson in India Sanjeev Krishan.

Reflecting on India’s exponential growth in mobile phone production, which increased from 60 million units in 2015 to 310 million units in 2022 (a CAGR of 26 per cent), the PwC report showcases how targeted policy objectives can spur manufacturing excellence.

Further underscoring India’s global economic potential, it indicates that India is on track to surpass the US to become the world’s second-largest economy by 2040, aiming to contribute 15 per cent to global GDP.

It said the current government schemes, offering incentives of 20-25 per cent on capital expenditure for electronics manufacturing, including smartphone manufacturing and its ancillary industries, are pivotal for nurturing the sector’s growth and competitiveness on the global stage.