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View from India: India prepares to become global manufacturing hub

The Indian semiconductor component market is projected to grow to USD 32.35 billion by 2025, while the electronics industry is estimated to grow into a trillion dollar industry by 2025. These two sectors are expected to create thousands of direct and indirect jobs, as well as opening up unexplored vistas. Going by these forecasts, several state governments are wooing entrepreneurs and startups with friendly policies.

The time has come for India to emerge as a manufacturing hub. In an attempt to strengthen its hold in this sector, the country has also rolled out policies to facilitate the manufacturing of electronics in the country. Manufacturing clusters are also in place.

“India has a 3D advantage viz. democracy, demography and demand. Annually, the electronics industry has a growth demand of 20 per cent and production of 30 per cent. In order to make manufacturing cost competitive and lower operational costs, it’s important to incentivise it,” said Sanjay Rakesh, joint secretary, Ministry of Electronics and Information Technology (MeitY), speaking at the 13th Edition of the India Electronics and Semiconductor Association’s (IESA) Vision Summit.

Andhra Pradesh has framed a manufacturing policy like other states, complete with power subsidy, training facilities and capital expenditure (CAPEX). Its USP lies in the fact that it can be tweaked according to the needs of the end consumer. “Our aim is to create employment opportunities locally and we felt this can happen by opening out manufacturing facilities in the state. A move in this direction is to focus on low-hanging fruit like mobile phone assembly,” added Bhaskar Reddy, CEO Electronics Promotion, Andhra Pradesh Electronics & IT Agency (APEITA), Government of Andhra Pradesh. Mobile clusters have been created for mobile manufacturing and assembly. With the result, two out of 10 mobile phones assembled or manufactured in India probably happens in Andhra Pradesh.

India is one of the world’s largest consumers of electronics, telecom and 5G. “A fibre network mega-project to the tune of Rs 1,000 crore is coming up in the state. Our state has human capital, it’s important to tap it and fine tune the manpower to develop skills and create a demand-supply in the domestic market. We would also like to open out new streams of revenue in forms of energy like power and electricity and make it commercially viable,” explained Dr Jaysankar Prasad, Special Officer, Hardware Mission, Government of Kerala.

Chhattisgarh, a state traditionally sought after for investments in mining, cement and steel and power sector has strengthened its digital services. The state is trying to create an ecosystem for IT and healthcare. “Ever since the Electronics Policy came into existence in 2015, our vision is to benchmark ourselves on par with global standards,” explained Keerthi Laal Kala, Head of Investment Promotion, CHiPS, Government of Chhattisgarh. An acronym for Chhattisgarh Infotech Promotion Society, CHiPS is the nodal agency propelling IT growth and the implementation of IT and e-Governance projects in Chhattisgarh.  

When we look at the semiconductor industry’s future, India should ideally rank among the largest semiconductor economies globally. “India should be a top choice when it comes to design, especially chip design, Our processes should become more intelligent as innovation moves closer to customization,” reasoned Dasaradha R Gude, CEO, INVECAS, a leading provider of silicon proven IP Solutions and ASIC Design Solutions optimized for Advanced Process Technologies as well as Embedded Software and System-level Solutions.

An ecosystem for chip design is required, whereby chip designs will be automated and cycle times will shrink. One hopes to see the rise of new-age chip companies involving virtual reality (VR), augmented reality (AR), drones, artificial intelligence (AI) and machine learning (ML). Likewise, startups should focus on mobile infrastructure, mobile application development and other niche areas such as voice-to-action instruction, which is different from speech to text operations.

Our country already has a track record of successful ecommerce companies like Flipkart. India’s startup economy is approximately estimated to be around $20bn as the country is home to around 10 Unicorns. In finance terms, Unicorn refers to startup companies valued at over $1 billion. Such success stories only speak of a small section of the society and we need more such people.

Realistically, people representing the bottom of the economic pyramid should be given encouragement to set up manufacturing units as well as startups. In both cases, the thrust should be on cost-competitive efforts which can happen if state governments and apex bodies incentivise operational expenditure and logistics. Apart from opening out channels for manufacturing units and startups, state governments also need to create vistas for their public procurement.

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