How Electronics Industry can Achieve 300 billion USD Target

Sudhakar Singh, Editor

Ministry of Electronics and Information Technology (MeitY), in association with India Cellular & Electronics Association (ICEA) recently unveiled a five year roadmap and vision document for the electronics industry, vowing to catapult the manufacturing output from the current 75 billion USD to 300 billion USD by 2026. It was the second volume of the two-part vision document, following the first one that was released in November 2021. As per the roadmap set in the vision document, the ministry has outlined some of the key products that would lead to the growth in electronics manufacturing.

The list includes mobile phones, IT hardware, consumer electronics, auto electronics, electronic components, LED Lighting, PCBA, wearables and telecom equipment, to name a few. Mobile manufacturing is expected to comprise 40 per cent of the ambitious growth projection. “As an important part of the trillion dollar digital economy of electronics manufacturing, we continue to handhold the industry, shepherd them and bring in more and more players into the electronics ecosystem,” said Rajeev Chandrasekhar, MoS, Electronics & IT to Economic Times.

Considering the fact that the electronics industry in India grew three-fold between 2014 and 2020, the goal set by MeitY does not seem far-fetched and is totally achievable. However, the path leading to the target is fraught with a unique set of challenges. Let us delve into the challenges and see if they are surmountable.

Undue Focus on Assembly

On the core manufacturing side, the electronics industry in India seems to be in dire straits. Getting most of the components imported, the manufacturing facilities have been reduced to mere assembly units. Close to 80 per cent of the components comprising processors, cameras, and memory chips are being imported. Consequently, the net value addition by production units is paltry 5-15 per cent. This is because in electronics manufacturing, most of the value-adding processes are executed before assembly stage.

So, the need of the hour is to start building the foundation for ultimate competence in electronics manufacturing. The first and foremost thing to do is setting up of semiconductor fabrication plants to produce microchips. In India, these fabrication plants are only present at Indian Space Research Organization (ISRO) and the Defence Research and Development Organization (DRDO) with their use only meant for space and defence systems.

Setting up the foundries is a challenge as it demands huge capital expenditure. The domestic players have so far refrained from venturing into this field owing to their incapability to compete with the global behemoths in this area.

Hence, in addition to rolling out a chain of production linked incentive schemes (PLI) for finished goods, steps ought to be taken to incentivize semiconductor fabrication as well. Moreover, effort also needs to be made to invite chip manufacturers like Intel and TSMC to set up foundries in India by creating a business environment that can offer better cost efficiency.

As a glimmer of hope, India has recently received proposals to the tune of 20.5 billion USD from five companies for manufacturing of semiconductor fabs and display fabs indigenously. Investments worth more than 13 billion USD are in store by companies including Vedanta in joint venture with Foxconn, Singapore-based IGSS Ventures Pte, and ISMC for manufacturing of chips. The chips will find their application in numerous industries ranging from 5G devices to electric cars.

Dwindling Product Life

As the lifecycles of electronic products continue to shrink, manufacturers are faced with the challenge of incessantly churning out newer and refurbished versions of the product. This is a challenge that can be overcome by leveraging technology. Product lifecycle management (PLM) has proven to be the right tool for streamlining the product development process and achieving enhanced efficiency.

The nature of work of the electronics industry demands collaboration between teams of different disciplines. Those who are responsible for design must engage with their mechanical and electrical counterparts to create products that are functionally robust. At the same time, to ascertain that the product is fit for market and viable from profitability standpoint, it must be weighed on the financial and marketing scale.

PLM solutions have the capability of creating such collaborative environment wherein product development can gain the required momentum. With better communication strategy and integration, the time to market of the products can be reduced significantly. Moreover, the information sharing also makes it easy to identify and resolve the pain points while zeroing in on the program risks and alleviating them.

Transition toward Sustainability

The challenges with regard to sustainability are primarily two-fold in electronics manufacturing. Firstly, the industry has to figure out efficient and viable ways of reuse and recycling. Given the pace at which new disruptive technologies are emerging, the scope of reuse is confined. Recycling on the other hand has yet to find viable methodology for realization of the RoI of the whole process.

According to a UN estimate, electrical and electronic (EE) waste generated every year is 50 million tonnes and only 20 per cent of it is recycled. Although e-waste comprises 2 per cent of solid waste streams, it accounts for 70 per cent of the hazardous waste in a landfill. Hence, recycling them for manufacturing purpose is a herculean task. The only way forward can be to revamp the manufacturing process right from beginning i.e the design phase. By making the design process aligned with circular economy expectations, provisions can be made for easier recyclability of electronic products.

Secondly, there are concerns pertaining to the performance of electronic products in terms of energy usage and emission of greenhouse gases. As the manufacturing process gets more sophisticated, reducing the energy consumption is going to be a difficult nut to crack in terms of the components to be used. Moreover, a challenge would also lie in meeting the fast changing standards of new regulations. The riddle of energy efficiency could best be solved by usage of power semiconductor devices, sensors, and microcontrollers.

On the emission front, steps will have to be taken to constricting the emission of fluorinated gases from the manufacturing process.

Looking at the future, it can be envisaged that the goal of 300 billion USD worth of manufacturing is indeed plausible if the approach is an amalgam of right strategy and vision both from the industry as well as the government.